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Amazon, a case of maquila in the world of bookstores

Amazon, a case of maquila in the world of bookstores


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By Paco Puche

In the context of globalization, the maquila is a form of relocation. The landing of Amazon in Spain will serve to illustrate the case of the maquila bookstore.


In Coín, a peasant town in the province of Malaga, people can still be heard saying: "this year I am going to grind the olives in a factory." And in this town, as in the year 1020 in the Council of León (1), this term used to designate the portion of flour or oil that corresponds to the miller for grinding. But the word is even older, as it comes from Arabic and at its root means "measure." The term has derived and, for example, in Chile to extract maquila is "to obtain profit".

If we ask a Mexican about the maquila, he will tell us that “a maquiladora is a company that imports materials without paying tariffs, its product being one that is not going to be marketed in the country of origin. The term originated in Mexico where in 2006 it employed 1,300,000 people ”(2). Because from the second half of the twentieth century the term maquila came to designate more this type of production process of a company that is sent to a different one to be carried out, than the original payment in kind, although it retains the etymology fragmentation of the production process.

In the context of globalization, the maquila is a form of relocation. This is the case of textiles (Inditex), sports objects (Nike), etc. is illustrative. In the maquila, the technology, patents, and inputs are usually foreign and cheap labor is local.

Offshoring encourages maquila in the world of books

On September 12, 2011, the printed edition of El País carried out a report with the title “Earthquake in electronic commerce. The arrival of Amazon will lead to the closure of stores on the Internet, unable to compete with the giant. A few days earlier, in Babelia, another report on “The Fate of the Book” announced “They are here! Amazon, Google and Apple are targeting the Spanish language ”. One wonders if they plan to keep it, given the patenting fever that runs through the world.

What are these giants doing in the world of books? Like Inditex or Nike in the world of clothing, they reserve the most profitable and least painful stretch of activity. This economic rule has been baptized by José Manuel Naredo, illustrious economists but of the ecological version, as “the rule of the notary” (3). It is summarized like this:

According to this analogy, as in the processes that lead to the construction and sale of a building, it begins with great physical cost and little monetary value (excavation of foundations, manufacture of cement, etc.) and ends at the notary's table in which the developer and the developer, without incurring just physical costs, obtain for their work two “added values”, which are usually the highest in the entire process, as is the case with the rest of the economy. And the same occurs with the pain of work and its remuneration, which are inversely related (compare the tasks of being in the sun in summer, raising the structure of a building with the environment in the notary's refrigerated office, years later). In rich countries, companies are increasingly focused on management, commercialization and information management tasks, and in the poor, agricultural and extractive tasks and the early stages of industrial processing predominate.

Thus, by this rule, and the powers and institutions that promote it, a polarity is produced by which the rich countries become attractors of capital, resources and population while the poor supply raw materials, waste sinks and products. intermediates in a zero-sum game, because "the existence of rich countries today is linked to the fact of others that are not", since all countries cannot be net importers of materials or capital at the same time.

The physical dependence of the rich with respect to the rest of the world can be calculated in a single data: these countries have a net trade balance, of energy and materials input from the rest of the world, which in physical units, represents more than 2,000 million tons every year (4). (Rich countries are considered to be 31 countries that the IMF classifies as “advanced economies” based on per capita income criteria).

This rule gives rise to maquilas in many of the productive sectors. Let's see the textile case:

The cause of the textile maquila has its dynamics in the process by which multinationals contract with local companies to produce part of the goods, for example, the manufacture of garments that are already cut. These contracts have quality requirements and just-in-time delivery for a sum of money determined by the multinational, so this local businessman, in order to maintain the profit rate, hires labor for the lowest possible cost and tends to circumvent all the environmental conditioning factors. This dynamic reserves tasks with lower added value for peripheral countries and this means that this precarious work falls to women above all; between 70 and 80% of the total, according to the ILO.

The case of Guatemala can illustrate this situation: “in the maquilas it is forbidden to get pregnant, urinate more than twice a day and even drink water during the work day. It is also prohibited to complain or miss a single day due to illness.

For them, even age is a drawback. If they exceed 35 years, they are rejected immediately, while those hired, regularly between 16 and 30 years of age, must be willing to do so in inhuman conditions.

Overcrowding, poor ventilation and sometimes a lack of toilets and drinking water are situations that women must face when entering these galleries, where many times up to 350 people remain together.

And all in order to receive, at the end of the month, a salary that is lower than the cost of the basic food basket and equally small than that earned by the men who perform the same tasks as them, also under inhuman conditions, but without suffering such cruel treatment . " (5)


How does this apply to our bookstore sector? In a similar way, but in the commercialization segment and, for the moment, in the central countries, therefore without the working conditions described above.

The landing of Amazon in Spain will serve to illustrate the case of the maquila bookstore. This e-commerce giant (which sells many types of products) in the case of paper books, what it does when it lands in a country is to choose the best existing bookstores in each place and offers them a collaboration contract, in the that set the demands of quality, speed of delivery and economic conditions. The agreement distributes the papers: the multinational collects the orders online, collects them by means of an electronic payment card and the bookstores make available all the paper books in their warehouses, they take care of making the packages and the shipments corresponding. After several weeks they receive a settlement from Amazon for which they return the invoiced amount minus 15% of the total (play for a few weeks with the profitability of other people's money). The bookstores, in addition, have to pay a monthly fee and receive a settlement for the expenses incurred by shipments to the booksellers.

It seems that everyone wins and that it is a blessing to be co-opted by the multinational. But it is a great deal for Amazon: it does not invest anything, it does not keep any stocks, it does not have to handle the entry and exit of books, it does not stain its hands. With a simple centralized computer structure that handles the management, and with the promotion of the Amazon brand, the entire library infrastructure is available to you. In addition, since giving up 15% of the price of the book is giving losses, the bookseller that has employees will have to put pressure on the conditions of the workers in order to balance the balance. Here is the logic of the maquilas and compliance with the "notary rule" in the service sector. The issue of digital books follows other processes, which are basically summarized by saying that what Amazon is after is the monopoly of its e-books and the absence of intermediaries.

Amazon in Spain is not a "hole" for booksellers, rather, for those who accept the collaboration contract, a case of "fattening the executioner."

Fattening the executioner

Bookstore accounts are very easy to do. The selling prices of books, as a special case in market economies, are given to us by booksellers. On average, the gross profits of the sector are 31% above this sale price. Of each sale of 100 euros, 69 are to pay the publishers / distributors and 31 for the bookseller companies with which they have to pay expenses and, where appropriate, obtain net profits. The average of the general expenses of the sector is of the order of 29% and the net profit is 2% on the total sales amount.

With the payments that Amazon's “collaborating” booksellers have to make (15% of sales), in each sale that a bookseller makes through Amazon he loses 13% of the amount sold (15 minus 2 of net profits ). The booksellers claim that the collaboration with Amazon gives them liquidity and a lot of sales, and that the accounts work together.

But what they have not foreseen is the following rule: the more they sell through Amazon, the net benefits of total sales decrease until they reach zero, and if they continue to increase sales through Amazon they enter into losses.

When does this happen? With the assumptions from which we have started, and which correspond to the sociological reality of the bookseller's union, the bookstores “maquiladora” by Amazon enter into losses when 13.3% or more of their total sales are channeled through Amazon . At all times they are doing the business to the multinational until putting it at a point of "priming" that ends up annihilating the maquiladora. They can't help it. (In the annex at the end of the article, the accounts are made in detail).

Conclusion:

“It is better to die standing up than to live on your knees”, as Pasionaria said and many people in the world do not stop applying; more, much more than we usually say to consummate our surrender. On the other hand, it is unwise to put a veil of fantasy on our self-immolation. From the 13.3% of sales channeling through Amazon, we can already know that our decline is a matter of a short time: the “exploitation” account systematically shows losses.

Some savvy or desperate may argue that by not exceeding that line, it is better to work with zero profits than to have to close, but that is not the dilemma because 13% more or less in total sales does not solve any underlying problem and On the way, he helps us create an optical illusion that takes us back to our placid childhood pastures.

It is about finding our holes in which we can be irreplaceable.

"If we survive the bonfires, how can we not survive electronics?", Has left a paper book in the hand of El Roto, in another memorable sentence.

The Fahrenheit 451 sect, which Bradbury designed, becomes relevant again.

Cartesian Annex

We have made a simple model of how all this happens, which responds very closely to reality.

We start, on the one hand, from the average accounting data of the bookstores that we can obtain through professional associations and from our own experience. And of another of the conditions that Amazon offers to bookstores.

We have taken the following data to build the model:

commercial margin over fixed sale price = 31%;
overhead = 29% of sales;
net profit = 2% of sales.

And as for Amazon, we have only taken into consideration that it charges 15% of the sale prices for its management.

Thus, for each sale through Amazon the bookstore loses 13% and if the sale is through the bookstore channel it gains 2%. Therefore the net profit is a weighted average, as follows:

Net profit = x * (- 13) + (100-x) * 2/100, where "x" is the percentage of sales through Amazon.

This relationship is a linear function, or a line of the form: y = -0.15x + 2 (obtained by developing the previous equation).

Passing these relations to Cartesian coordinates we obtain the following graph:


If the conditions changed, for example that the net benefits were less than 2%, the resulting equation would have the same slope and would be represented with a line parallel to the one drawn in which the loss zone would begin before 13.3%. If the net benefits were greater than 2%, the line would be a parallel above the one drawn in which the loss zone would be after 13.3%. But the model would be the same. If 15% of Amazon's profits were to change, the resulting line would have a different slope and a different loss point, but the model is always maintained: there is a point from which the maquila work with Amazon ends with the company.

Paco puche - Bookstore and ecologist

Notes and references:

1. Corominas, J and Pascual, J. A. (1980), Spanish and Hispanic critical etymological dictionary, G-MA, p. 836, Ed. Gredos

2. Wikipedia: “Maquiladora”, word consulted on June 18, 2012

3. Naredo, J.M. and Valero, A (dirs.) (1999), Economic development and ecological deterioration, Visor, pp. 304 et seq.

4. Carpintero, O. (2010), “Between broken mythology and reconstruction: an economic-ecological proposal”, in Revista de Economía Crítica, nº9 second semester, p.151

5. Trejo, A. (2009), “Maquilas, two decades of discrimination and slavery for women, Guatemala”, Rebelión, June 9.


Video: An afternoon with Silvia Federici (June 2022).


Comments:

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  3. Nikki

    How to act in this case?

  4. Kaiser

    In my opinion, someone got stuck here



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