The Volume Advantage: Why Competitive Pricing and High Turnover Beat High Margins in a Value-Driven Market - by Nik Zafri

A simple business scenario:

 The cost of one product is RM0.50.

• Seller A buys 1,000 units and resells them at RM1.00 (a 50% margin)
• Seller B buys 500 units and sells them at RM0.80 (a 30% margin).

Both offer the same product quality and service. However, within one week, A only manages to sell 100 units, while B sells all 500 units and continues receiving similar demand.

1. Lower Margin, Higher Volume Can Outperform Higher Margin, Lower Volume

• A sells at a higher profit per unit (RM0.50) but only manages to sell 100 units.
• B sells at a lower profit per unit (RM0.30) and manages to sell 500 units, fully clearing stock.

 In absolute profit terms:

• A’s profit: 100 units × RM0.50 = RM50
• B’s profit: 500 units × RM0.30 = RM150

So, B earns 3 times more profit despite a lower margin.

Lesson 1 - A business strategy cannot rely solely on high margins. Competitive pricing + high turnover often leads to better total profit.

2. The Market Dictates the Price - Not the Seller

Both products are identical in quality and service. Yet customers prefer the cheaper option.

Lesson 2 : Customers will gravitate to the price that feels fair and offers value, especially when comparing identical products. Pricing must align with what the market is willing to pay.

3. Accessibility and Affordability Expand Your Customer Base

A higher price reduces your reachable market. B’s lower price makes it accessible to more buyers, which increases volume.

Lesson 3 : Sometimes, the best approach is to reduce your margin but widen your reach.

4. Cash Flow Matters

• B sells all 500 units, turning stock into cash quickly.
• A sells slowly, locking capital in inventory.

Lesson 4 : High turnover improves cash flow, reduces risk of dead stock, and allows faster reinvestment.

5. Customer Behavior: Perception of Fairness and Trust

Even if quality and service are the same, customers may perceive A’s pricing as too high, creating resistance.

Lesson 5 : Customers are more likely to trust a price that aligns with their perception of value.

6. Long-Term Advantage - Repeat Customers

If B continues providing good value, customers remember the “fair price” and come back.

A risks losing customers permanently if perceived as overpriced.

7. Strategy Must Match Market Conditions

• A is using a premium pricing strategy in a market that behaves like a value-driven market.
• B is aligning with what the market wants.

Lesson 6 : Choose a strategy that fits the market, not the seller’s personal preference.

In short : A’s mistake is prioritizing profit margin instead of total profit and turnover. B wins because of competitive pricing, faster cash flow, and better alignment with customer expectations.

8. Understanding the Surroundings

What Seller B is doing reflects a deeper understanding of economic reality and customer psychology during a downturn.

i. B Recognizes Reduced Purchasing Power

In a slow or uncertain economy, customers:

• become more price-sensitive
• compare options more carefully
• cut back on non-essentials
• prefer lower-priced alternatives even if quality is the same

Seller B's pricing aligns with this behaviour, making it easier for customers to continue buying.

 

ii. B Reduces the Customer’s Financial Burden

By lowering margin and offering a fairer price:

• customers feel less “pain of paying”
• they can buy more or more frequently
• they perceive B as understanding and trustworthy

This builds loyalty - very valuable in tough times.

iii. B Helps Customers Regain Purchasing Power

When a seller provides value pricing:

• customers conserve money
• they can buy other necessities
• they feel more in control of their spending

This creates repeat demand because customers feel respected.

iv. Pricing Strategy Reflects Situational Awareness

• Seller A uses a premium-pricing mindset in a value-driven market.
• Seller B uses a market-aligned strategy, showing awareness of inflation, declining disposable income, cost-of-living pressures and competitive landscape

This awareness is a major advantage, especially when consumers are cautious.

v) B Gains Trust During Hard Times

Customers remember sellers who:

• remained affordable
• did not take advantage of the situation
• provided consistent value

This often results in long-term loyalty even after the economy improves.

In short : Yes - Seller B’s success strongly indicates that:

• B understands the economic downturn
• B empathizes with customers’ reduced purchasing power
• B adapts pricing to match real-world conditions

 

9. B Hires a Worker (10 sen/day) While A Sells Alone

a. B Invests in Leverage while A Relies Only on Himself

B understands that:

• One person alone can only sell so much,
• By hiring help, he increases capacity, reach, and speed.

Even though the worker is paid 10 sen per day, B trades a small cost for a large increase in sales volume.

A, however, is limited by time, physical ability, energy, customer reach

This is a classic difference between working IN the business vs working ON the business.

b. B Converts Cost into Growth

B’s commission cost is tiny compared to his profit:

• Total profit: RM150
• Worker cost (example: if 7 days × RM0.10): RM0.70
• Net profit: RM149.30

The worker cost is less than 1% of B’s earnings (to me, this is good trade-off)

This shows B understands scalability.

c. A Avoids Expenses but Also Avoids Growth

A tries to “save money” by doing it alone.

This is common among small businesses, but:

• Saving costs does not equal making profit.
• Doing everything alone slows the business.
• Opportunity cost becomes huge.

A’s choice actually costs him more because he misses out on potential sales.

d. B Creates Employment and Strengthens Community Trust

Hiring someone even for a small commission:

• builds goodwill

• creates local support

• strengthens reputation

• increases customer trust (“This seller is growing”)

Customers often prefer businesses that create jobs rather than solo traders who appear stagnant.

v) B Understands That Cash Flow Is King

The faster the stock clears:

the faster money returns, the faster B can reinvest, the faster B grows

Hiring help accelerates this cycle.

A, by relying on only himself, slows everything down.

vi. B Is Playing a Long-Term Game, A Is Stuck in Day-to-Day Survival

• B is building a system.

• A is building self-dependence only.

Systems win long-term.

In summary

Seller B shows understanding of:

• leverage
• business scaling
• cash flow management
• customer behaviour
• market environment
• productivity
• long-term business mindset

Seller A focuses on:

• saving costs
• doing it alone
• short-term thinking
• limited growth

CONCLUSION

The scenario of Seller A and Seller B decisively illustrates that a successful business strategy cannot rely solely on high margins. Seller Bs victory, earning triple the profit (RM150 vs. RM50) despite a lower margin, highlights the power of competitive pricing, high turnover, and strategic alignment with customer expectations. 

By recognizing reduced purchasing power in the market and prioritizing cash flow and accessibility , Seller B not only maximized absolute profit but also cultivated customer trust and loyalty by offering perceived fairness and value. Furthermore, Bs willingness to leverage a worker for a small cost demonstrates an understanding of scalability and long-term systems thinking over As focus on cost-saving and self-dependence. 

Ultimately, success comes from choosing a strategy that fits the market, not the sellers personal preference.

The ASEAN Equation: Unity in Uncertainty - Overview by Nik Zafri

Please also read the previous article 

Given the attendance of major powers such as President Donald Trump - United States, reps from China and Russia, the key topics agenda would likely be :

1. Trade, Economics and Supply Chain resilience

The U.S. and China are in trade talks on the sidelines. The U.S., under Trump, is threatening big tariff hikes on Chinese exports and seeking concessions; the China leadership sees ASEAN as a priority partner.

The ASEAN region is concerned about how U.S. tariffs and shifting global trade flows affect its export-and-manufacturing base. 

China is pitching its upgraded “Free Trade Area 3.0” with ASEAN, emphasising digital economy, green economy, and production/supply-chain integration. 

ASEAN is also seeking to expand partnerships beyond the traditional powers (e.g., Latin America, Africa) as host Malaysia emphasises “inclusivity and sustainability.”

2. Regional Security, Maritime Disputes and Neutrality

The summit will discuss the broadening power competition in the region: the narrowing of ASEAN’s “space for neutrality” as big-power rivalry deepens (trade, tech, security) was explicitly flagged by Malaysia’s foreign minister. 

Maritime issues especially in the South China Sea and unresolved border or access disputes will be on the table. 

Internal ASEAN conflict management remains a key focus particularly the recent border clashes between Thailand and Cambodia. Malaysia has played a pivotal role in facilitating the ceasefire, a contribution publicly acknowledged and appreciated by President Trump. The summit is expected to witness the formal signing or endorsement of the ceasefire agreement or a broader peace framework.

3. ASEAN’s Internal Cohesion and External Partnerships

The 10 current ASEAN members plus the accession of Timor‑Leste as the 11th member will be formalised at this summit. 

ASEAN is going to meet with “dialogue partners” (China, U.S., Russia, Japan etc) in separate sessions.  It is not known if BRICS is going to be discussed.

The bloc is under pressure from multiple directions (economic, strategic) and must manage its collective identity and voice especially with members having differing alignments. 

4. Big Power Diplomacy and the U.S. - China – Russia Axis

With Trump attending, the U.S. may signal a renewed high-level engagement in Southeast Asia and trying to shore up trade and security ties. 

China will engage ASEAN pushing its economic agenda as well as its strategic footprint in the region. 

Russia and some countries will have representation (though the head of state may not attend) and is part of the conversation, especially via its linkages to China and in broader regional security issues. 

5. Other Cross-Cutting issues

Myanmar’s ongoing crisis remains a thorn in ASEAN’s unity and credibility; how the bloc deals with it will come up. 

Technology, cyber security and supply-chain issues: China has urged the U.S. to stop cyber-attacks; ASEAN will be mindful of technological dependencies and the “new economy” challenges. 

Environmental, “green economy” and “sustainability” framing (the theme of the summit is “Inclusivity and Sustainability”) though less emphasised in media, it provides an entry for ASEAN to project a positive agenda. 

6. WHAT TO WATCH

• Trade deal/announcements: Will the U.S. (with Trump) clinch new trade arrangements with ASEAN-members or announce tariff/market-access concessions? Media say yes.

• China-ASEAN FTA 3.0 implementation: Will there be formal commitment, timeline or institutional mechanism announced around the upgraded China-ASEAN free trade area? 

• Cease-fire or peace deal: Particularly the Thailand-Cambodia frontier conflict is expected to be addressed or formalised at the summit in presence of Trump via signing of Peace Deal. 

• Gaza - although President Trump has mentioned the ceasefire, it remains uncertain how extensively the issue will be discussed during the summit, as Palestine continues to face attacks despite the declared truce.

• Language on big-power rivalry: Expect statements around strategic autonomy, neutrality or how ASEAN will engage U.S., China, Russia without being drawn fully into one camp. The “space for neutrality” comment is telling.

• Commitments on supply-chain/green economy: Possibly new mechanisms or commitments to diversify supply chains, strengthen green/digital economy cooperation across ASEAN + China partners.

• Membership expansion and institutional developments: Timor-Leste’s entry, perhaps proposals about expanding ASEAN’s partnership footprint, may get spotlight.

7. Implications for Malaysia and ASEAN

For Malaysia (host): It means being centre-stage in regional diplomacy, enhancing its role as mediator and regional convenor.

For ASEAN's credibility: It’s a test of how the bloc navigates big-power competition while keeping its centrality intact.

For business/investment: Outcomes in trade and supply-chains could open new opportunities (or risks) for Malaysian and regional companies.

For security and geopolitics: How ASEAN positions itself vis-a-vis strategic competition (U.S.–China–Russia) will influence regional alignments for years.

8. Conclusion

The 2025 ASEAN Summit stands as a pivotal moment for Southeast Asia a region navigating the complex intersection of global power rivalries, economic realignments, and enduring humanitarian crises. 

With the presence of the United States under President Trump, alongside China and Russia, ASEAN faces the challenge of asserting its centrality while maintaining neutrality amid competing global interests. 

Yet, within this delicate balance lies opportunity: to strengthen internal cohesion, champion sustainable and inclusive growth, and reaffirm ASEAN’s role as a stabilizing force in an uncertain world. Whether through renewed trade cooperation, conflict resolution, or humanitarian advocacy, the summit’s true test will be how effectively ASEAN transforms dialogue into decisive, collective action for the peace, prosperity, and resilience of the region and beyond.

At the same time, I sincerely hope that the peaceful protests surrounding President Trump’s visit to Malaysia will not be met with penalties or suppression. In a true democracy, the right to express dissent is fundamental provided it remains orderly and non-violent. Many Malaysians, including the opposition and silent citizens alike, deserve the space to voice their concerns. Such demonstrations should not be seen as acts of hostility, but rather as a necessary form of check and balance one that reflects the maturity, integrity, and strength of Malaysia’s democratic spirit.

ASEAN SUMMIT - WHAT TO EXPECT – Overview by Nik Zafri

PHOTO SOURCE : MALAYMAIL

Disclaimer: The following reflects my personal opinion and interpretation, based on open sources available both internationally and domestically. The information presented here is considered to be in the public domain. However, readers are encouraged to refer to the original sources for accuracy and context. The author bears no responsibility for any inaccuracies, misinterpretations, or consequences arising from the use of this content.

US-China Trade Truce: A Strategic Pause or Temporary Relief? - Nik Zafri Analyzes

 

The recent de-escalation of trade tensions between China and the United States, marked by a mutual reduction of tariffs, is a major development in global economics. 

1. HOW

1) Negotiation Rounds: Trade officials from both countries likely engaged in extensive diplomatic talks behind closed doors, exchanging proposals and concessions. 

2) Agreement on Tariff Reductions: A phased reduction in tariffs was probably agreed upon, targeting key sectors (e.g., agriculture, tech, manufacturing). 

3) Public Announcements and Policy Changes: Both governments made coordinated announcements, possibly issuing official decrees or modifying customs schedules. 

4) Monitoring and Review: Mechanisms may be in place to monitor compliance and re-evaluate tariffs in case of disputes or economic shifts.

2. WHY

1) Economic Slowdown Risks: Both economies have felt the strain, higher costs for businesses, inflation, and supply chain disruptions.

2) Global Pressure: The IMF, WTO, and global investors often urge the world’s two largest economies to cooperate for global economic stability.

3) Political Calculations: Leaders may aim to secure domestic support or prepare for elections by easing tensions.

4) Supply Chain Security: Companies and governments want more predictable access to goods and materials.

3. ECONOMY

3.1 Positive

a) Trade Growth: Lower tariffs make goods cheaper, boosting import/export volume between the two countries.

b) Reduced Costs: Businesses save money on raw materials and components, improving margins or reducing prices.

c) Market Confidence: Investors view the easing of tensions as a sign of stability, boosting stock markets.

d) Inflation Control: Lower import costs can ease consumer prices, helping central banks manage inflation.

Global Spillover Effects

e) Revived Global Trade: Other economies benefit from more fluid trade routes and reduced global uncertainty.

f) Currency Stabilization: Less volatility in the yuan and dollar helps stabilize emerging market currencies.

g) Investment Recovery: Global investors may resume or expand investments in both Chinese and U.S. markets.

3.2 Potential Risks

a) Uneven Gains: Some domestic industries (especially those previously protected by tariffs) might face new competition.

b) Geopolitical Complexity: While tariffs ease, tech and military tensions may continue in other forms.

4. ONLY FOR 90 DAYS?

Whether the U.S.- China tariff de-escalation lasts only 90 days or becomes a continual process depends on several key factors:

4.1 If 90 days

a) Allow time for further negotiations.

b) Monitor initial compliance.

c) Defer harsher measures while assessing political and economic reactions.

Such a truce typically includes benchmarks both sides must meet (e.g., increased purchases, IP enforcement, transparency). If either side fails, tariffs could return or escalate.

4.2 If Continual

It will require:

a) A signed trade agreement or treaty with defined terms.

b) Long-term policy alignment on key issues like technology transfer, market access, and subsidies.

c) Mutual political will, especially through leadership transitions or election cycles.

If this current easing is part of a trial period, it's likely to last 90 days, with potential to extend. However, if both parties see strategic benefit, it could evolve into a more stable, ongoing trade relationship.

5. UNCHANGED TARIFFS

Automobiles & Auto Parts, Pharmaceuticals, Aluminum & Steel (Section 232 Tariffs)

These exclusions do still affect the economy, despite overall tariff reductions in other sectors.

5.1 Impact on Other Countries

 5.2 Global Trade Dynamics

• Trade Diversion: Countries not facing tariffs (like Vietnam or Mexico) might see increased demand.
• WTO Role: Allies may press the U.S. at WTO for consistent, rules-based trade policies.
• Investment Hesitancy: Companies may still hesitate to invest if tariffs on key inputs persist.

Even with partial tariff relief, leaving out major sectors like autos, pharmaceuticals, and metals keeps significant economic friction in place. The global response (especially from allies) will depend on whether the U.S. extends tariff relief beyond China or maintains a fragmented approach.

 

5.3 Why Keep Tariffs on Pharmaceuticals, Automobiles, and Aluminum/Steel?

 

Trump argued that leaving these tariffs in place serves one core purpose:

 

To bring manufacturing and strategic industries back to the U.S. 

("If it's made in America, it's better for our jobs, our national security, and our

 independence.")

 

5.4 Can This Be Done Without Hurting the U.S. Economy?

Here’s where economists are divided, because while tariffs protect jobs, they also come with costs. 

Bottom Line - Can it be done without economic impact?

Not entirely. There will always be trade-offs.

But Trump's approach is to accept short-term consumer pain or cost increases in return for long-term gains in industrial capacity, jobs, and strategic autonomy.

It's a "rebuild-from-within" philosophy (protectionist), but aimed at revitalizing U.S. self-sufficiency.

5.5 Global Impact Matrix

6.0 THE 2019 “GOOD DEAL” THAT WENT SOUTH

I believe it's important to revisit the 2019 U.S.- China trade deal, during which both countries were engaged in months of intensive negotiations aimed at resolving ongoing trade tensions

US stated that it was “great deal” reached or was close to being finalized that would:

• Open China's markets further to U.S. companies ("Open China" - which in the recent 2025 deal, China is said still thinking about it)
• Increase Chinese purchases of U.S. goods (esp. agriculture and energy)
• Protect U.S. intellectual property
• End forced technology transfer for American firms
• Include enforceable mechanisms to ensure compliance

In the final stage, US said that China revised key parts of the draft agreement.

They allegedly removed commitments related to enforcement, IP protection, and structural reforms (e.g., subsidies, state-owned enterprises).

Trump called this a “reneging” on a nearly finalized deal and responded by raising tariffs (e.g., from 10% to 25% on $200 billion worth of goods).

6.1 China’s Perspective (2019)

• The U.S. demands were too intrusive, especially demands for changes to sovereign laws.
• They wanted a more balanced deal, with tariff rollbacks included in exchange for concessions.
• The U.S. side, in their view, kept shifting goalposts.

China was reportedly even during that time - willing to buy more U.S. goods, but resisted deeper structural reforms, especially changing domestic laws and accepting unilateral U.S. enforcement mechanisms

And with tariffs on key sectors staying in place, China may think:

“Why make deeper concessions when the U.S. won’t even roll back current tariffs?”

 

6.2. Unchanged Tariff?

I think the unchanged U.S. tariffs on automobiles, pharmaceuticals, and aluminum/steel very likely played a contributing role in China’s alleged last-minute withdrawal from the trade deal. This was based on 2019 history:

During the trade negotiations, China expected that any deal would include:

• Phased tariff rollbacks, not just a halt on new tariffs
• Removal or easing of existing tariffs, especially those imposed under:
• Section 301 (general goods from China)
• Section 232 (steel and aluminum, affecting many nations including China)

But Trump’s position at the time was:

• Keep key tariffs intact as leverage
• Use compliance enforcement over time to maybe reduce tariffs later
• Exclude items like automobiles, pharmaceuticals, and metals from immediate relief

This mismatch in expectations led to a breakdown.

The excluded tariffs were on strategically sensitive on China’s side

If these tariffs remained, China may feel that the deal lacked good faith or reciprocity.

While not the only reason, the unchanged tariffs on autos, pharma, and metals were a significant sticking point that contributed to the collapse of the draft deal. China likely saw little benefit in making deeper concessions when key U.S. tariffs remained untouched, especially on sectors core to its national interests.

7.0 DID PRESIDENT TRUMP REVISITED THE KEY ELEMENTS OF 2019 US-CHINA TRADE DEAL?

The answer is almost a big “YES”. President Donald Trump is revisiting key elements of the 2019 U.S.- China trade deal especially the parts he considers strong negotiating wins as a template or leverage point for his 2025 trade stance, particularly as he prepares for a possible return to office. Here’s how :

 

Possible Risks in 2025 if President Trump Returns with 2019 Playbook

8.0  HOW GLOBAL STOCK MARKET REACT 2025 (I BELIEVE IT’S A MIRROR OF 2019)

General Market Reaction to the 2025 U.S. - China Trade Deal (Based on What I Unqualifyingly Analyze)

a. Initial Optimism

Global indices did rally on news of a truce or deal - markets often welcome de-escalation in trade tensions.

However, I’m unsure how positive did the investors respond on the recent truce:

• Did it really ease tariff threats?
• Did it really restore global supply chains?
• Did it really renew business confidence?

 Sectors That Benefit :

• Tech stocks (Apple, Nvidia, Samsung) - less risk from tariffs or component supply disruptions
• Industrial/export-heavy firms (Caterpillar, Boeing) - reliant on global trade
• Emerging markets - especially those linked to supply chains or raw materials

b. Cautious Optimism or Flatlining After Details Emerge

The deal might still lack clarity or enforceability, and I see the markets started to show sign of cooling off.

Tariffs that remain (e.g., on automobiles, pharmaceuticals, or metals) have somehow limit long-term investor enthusiasm.

Personally, the investors and I feel that the deal being more symbolic than structural.

c. Volatility Based on Political Rhetoric

Markets may react sharply to statements by US or Chinese officials, especially if:

• Talks break down again
• There’s backlash from Congress, WTO, or domestic industries
• Enforcement mechanisms are weak

Thus :

The 2025 deal mirrors earlier ones like in 2019, the market may be seeing:

• A short-term bounce
• Followed by sector-specific adjustments
• Then we’ll be seeing cautious trading until implementation details are confirmed

WHAT I REALLY THINK

What I feel (don’t quote me), the deal did happened but :

Temporary Stabilization, Not a Resolution

The agreement represents a short-term de-escalation rather than a long-term solution. Structural issues in U.S.-China economic relations remain unresolved, and both sides appear to be buying time rather than genuinely reconciling key differences.

Strategic Motivations Behind the Truce

The U.S. agreed to postpone additional tariffs to reduce pressure on domestic markets and consumers, especially ahead of elections, while China aimed to ease the economic slowdown and regain investor confidence.

Global Economic Reactions Are Cautiously Optimistic

While markets initially reacted positively, uncertainty lingers as no clear roadmap exists for addressing deep-rooted issues such as intellectual property theft, state subsidies, and technology transfer demands.

Underlying Rivalry Persists

The truce does not mark the end of U.S.-China strategic competition. Rather, it shows a tactical pause amid broader geopolitical rivalry spanning trade, technology, and global influence.

Long-Term Outlook Remains Volatile

Without meaningful and enforceable commitments, the risk of trade tensions resurfacing remains high. Future negotiations will test the political will and strategic priorities of both nations.