I consider this phenomenon part of what I like to call the "Amazon syndrome", even though Amazon is far from being the only culprit. As China started flooding the rest of the world with cheap but decent products mass-produced in a random factory in Shenzhen, people turned away from brands they used to trust and towards no-name options from the likes of "Kxbnheb" or "Ypknwoj" in order to save a buck. Eventually the bi…
It’s not true that established brands made cheaper products to compete. Their prices remained the same or got higher, but quality still suffered. It’s just greed, no complex reasoning required. I recently bought a gym bag from Nike. Feels super cheap, like I could have gotten it from Aliexpress. The zippers keep locking into the fabric. Feels completely disposable. Bought a pair of running shoes from Skechers early l…
Primarily, there has been an extraction of excess profit on consumer goods rather than investment in more efficient production or better products. I have suspicions that this is because of the relative ease of growing a profitable (but easily copied) manufacturing business out of China over the last 20 years, but it really doesn't matter why.
The other example of this is Oil Majors who have very little incentive to invest in new oil production or refining (even though it may be needed for the next decade), and instead take all excess profits to pay out as stock buybacks or dividends. They are in the profit taking stage of the business not the growth and investment stage.