Model Portfolio timbo56:SSOF1

This conversation will take place at different times in different industries. But gradually more and more U.S. importers will have this conversation:

Mr. Smith: Mr. Chan if you do not shave another 5% off, we will just have to take our business elsewhere.

Mr. Chan: OK. Good luck with that.

Mr. Smith: Perhaps you did not here me aright. I SAID, we will have to TAKE OUR BUSINESS ELSEWHERE.

Mr. Chan: OK. Good luck with that.

Mr. Smith: But don't you know that you need our business. We sell in the United States of America, the world's richest market. From the Texas Oil Billionaires, to the swanky shops of New York City, to the inestimable wealth of Silicon Valley and even Redmond, Washington, home of Microsoft. That is a market you cannot pass up. You need to sell through us, into the world's biggest, the world's baddest, the world's richest market.

Mr. Chan: Actually, right now the United States accounts for 12% of our sales, and we don't make any money off of it because you drove such a hard bargain last year at this time. We're in business to make money. If you want to go elsewhere, go.

Mr. Smith: That is impossible. You are bluffing.

Mr. Chan: No, 40% of our sales are in China, another 20% are in the rest of Asia, then 20% in Europe, and finally 7% in the Americas outside of the U.S. and 1% in Africa and Oceania. Those sales are growing, so if we lost 12 % of our least profitable sales, it would only mean a temporary disruption. And we would actually be more profitable.

Mr. Smith: Well, OK. You don't have to lower another 5%.

Mr. Chan: Actually, we are going to have to raise our price by 5%.

Mr. Smith: Oh well. I guess that's life.