[Viewpoint] The irresistible discount strategy and its consequences

December 2025 Editorial

HiFi Discounting and Other Predatory Dumping Strategies

Author: Lucio Cadeddu - TNT-Audio Italy
Published: December, 2025

The phenomenon known as dumping is well established in economics: it occurs when a company sells goods in a foreign market at a lower price than in its domestic market. It is a strategy frequently used by Chinese companies which, thanks to lower labour costs and often substantial injections of state capital, can flood foreign markets with products sold below cost, creating a form of unfair competition. To counter these practices, the European Union has introduced anti-dumping measures designed to mitigate their impact - tariffs on imported goods and, more recently, even restrictions on customs exemptions for small parcels coming from China.

It is understandable that Europe tries to defend itself, even though - at least in my view - it is a losing battle, given the enormous imbalance in resources between Europe and China, its aggressive industrial policies and, not least, its labour conditions policies.

However, this is not the phenomenon I want to focus on, not least because there is very little we can realistically do about it. What interests me more is predatory dumping, often practised not by foreign companies but by domestic ones. In a monopoly, the sole firm sets a price where marginal cost equals marginal revenue in order to maximize profits. When a competitor enters the market, the monopolist may lower its selling price below marginal cost (this is technically predatory pricing), thereby reducing its profits or even incurring temporary losses. Such a sharp price cut wipes out competition that may not be healthy or resilient enough to respond, potentially forcing the competitor to exit the market.

The temporary losses suffered by the predatory firm are naturally recouped once it regains its effective monopoly. To the consumer, this may appear beneficial at first, but the advantage is only short-lived: in the long run, once monopoly conditions return, the benefits compared to those of a healthy, competitive market are much reduced. Antitrust policy exists precisely to counter these behaviours, preventing the escalation of predatory dumping and penalizing companies that engage in it.

I bring up this topic because I have recently witnessed an alarming trend of improbable (to say the least, unbelievable) discounts in Hi-Fi sales - discounts approaching 50% off - which strongly suggests a form of predatory dumping. On one hand, such massive price cuts undermine the market by putting smaller retailers at a severe disadvantage; on the other, they send the equally damaging message that the real prices of Hi-Fi components are disproportionately inflated, even for entry-level products.

When a Hi-Fi enthusiast sees 50% discounts or even free components bundled with the purchase of others (e.g., “free amplifier with a pair of speakers”), the reasoning is simple: “If they can sell at 50% off, they're probably still making a profit - so what is the real value of what I'm buying?” And, more importantly: “How badly was I overcharged when I paid full price?” We're not talking about seasonal clothing that must be cleared out because it cannot be sold next year; we're talking about Hi-Fi equipment that typically stays on the market for several years.

The negative effects of this situation include:

The real devaluation of Hi-Fi components, which begin to be perceived as cheap and therefore low-quality. This is bad for everyone, especially HiFi Companies;
The destruction of the second-hand market: if new items are sold at -50%, the usual discount for good second-hand equipment makes no sense, and much used gear will remain unsold in retailers' inventories. Consequently, stores will lose interest in accepting trade-ins altogether.
The disappearance of small local businesses, with all the resulting consequences: fewer opportunities for in-person auditions and fewer trade-in options.

Whichever way you look at it, this harms the entire supply chain and effectively constitutes a system of predatory dumping. Enthusiasts may benefit in the immediate term, but in the long run the entire ecosystem suffers. Dear enthusiasts: when new equipment is sold at such steep discounts, it is very likely being sold below cost with the sole aim of wiping out competition. It is not so different from the kind of unfair competition coming from the Far East, which so many audiophiles loudly complain about. Think twice before rushing to the next 50%-off sale.

As for small retailers - although they hardly need advice from me - I strongly suggest they begin coordinating among themselves to file a complaint with the antitrust authority.

Did you enjoy this article? You can support our free, advertising-free magazine with a small Paypal donation using the button below. Thank you!

DISCLAIMER. TNT-Audio is neither a shop, nor a HiFi company or a repair labouratory for HiFi components. We don't sell anything. It is a 100% independent magazine that neither accepts advertising from companies nor requires readers to register or pay for subscriptions. If you wish, you can support our independent reviews via a PayPal donation. After publication of reviews, the authors do not retain samples other than on long-term loan for further evaluation or comparison with later-received gear. Hence, all contents are written free of any “editorial” or “advertising” influence, and all reviews in this publication, positive or negative, reflect the independent opinions of their respective authors. TNT-Audio will publish all manufacturer responses, subject to the reviewer's right to reply in turn.