Made In China and brand positioning
I recently read a blog post from a company regarding ‘Made in China’. Usually such posts come about as a statement responding to people’s reactions, good or bad, to what you are doing. I’ve done them myself over the years, so I can sniff one out when I see it. Well written and equally well reasoned, ultimately it’s a defence as to why they are (now) having their stuff made in China and probably not somewhere in the EU, as they used to be when they started out.
The post is interesting in itself, talking about the quality and standards of the suppliers they use in China, stating that the label ‘made in China’ does not automatically denote rubbish quality. And they are right, it does not. Indeed some very good quality comes out of China, though interestingly enough there usually is an appropriate price tag associated with it because even in China, good quality costs money. Overall the post explained while many of the products they offer are now made in China, the only option for volume production, the quality is high and the working standards of the workers involved are good and improving. ‘Improving’.
There is no doubt that once you reach a certain volume and fall into the currently accepted distribution models, the facts demand more often than not, that you must move your production to Asia to maintain and grow your margins, ie. your bottom line. We in the West have been so smart as to put all our eggs in one basket while setting fire to the baskets in our own back yard, so in many ways there is little choice. But ultimately I find the thrust of the argument put forward in the post, that the backlash is about the quality, flawed. My suspicions are that complaints started coming in as customers were under the impression, based on the price tags and ‘messaging’, that the product being bought is still made in the West. I certainly was under that impression myself, until I recently discovered a ‘made in China’ label on one of the products in question. The ‘complaints’ I am guessing stem from this discovery and the natural assumption that if it’s made in China, should it not be somewhat cheaper, or more to the point, the messaging be a little more clearer?
‘Designed in Australia/USA/Cupertino/London, made in China’, companies like to gloss things up by using this on the ‘made in tags’ these days.
To me that’s the crux of the argument, one I feel was, and is, nicely replaced with it being about a question of quality rather than the values of the brand.
The core reason to move production to Asia is cost driven. As I noted before, quality need not be an issue and in a well managed and regarded factory, it’s not. Cost though, is. Simply, making stuff in the West is substantially more costly than making stuff in the East. The exact amount as to how much less varies but ultimately it’s less, especially in a country like China, where worker’s are paid not very much AND the central government knowingly keeps the currency, the Yuan, undervalued so as they have an unfair trade advantage in a supposedly open and fair ‘free trade’ environment. So the reason to move to a made in China scenario is to drop your base costs and ultimately increase your margins. Nothing wrong with that, people know and understand this fact and to most, the fact that something is made in China is of little concern, as long as it costs less (there’s a whole post on that mentality right there). Where the discerning consumer gets bent out of shape is when they are buying into an ideal, and are prepared to pay that little bit extra for doing so, only to find that what they bought is a ‘half truth’.
Brands and products today are more than just the sum of their parts and a pretty wrapping. For a sector of the market, there is an ingrained ‘ethical’ (for want of a better word) contract they have with a brand that underpins why they are buying into. For some it’s the design, for others it’s the material or where it’s made and for others again, it’s a combination of a number of different factors. Regardless, in today’s rampant mass consumer, churn and burn market, there is a growing sector that want to ‘feel good’ about what they are buying; they are smart and switched on, so pulling the proverbial wool over their eyes is a dangerous game because once you loose their trust, they are gone forever.
Naturally, when you offer a product and spend the time to convince your core market that they should buy into the philosophy tied to it but then, slowly, start to offer the same product but with a different ‘proviso’ attached, something has to give. Usually that’s the price. ‘We did this this way and it cost X. We now are doing it that way and it costs X-y. We hope you don’t mind but it IS cheaper’. For some brands, that works as the attraction to their product is not so deeply rooted in the story that such a switch would offend the core market. For other brands, it never really mattered to begin with. Mega brands float through changes like this because the customer base is so tied to the brand that they don’t care – Apple anyone? In Apple’s case, their offerings are so substantially better than the nearest competitor that it’s the design that pulls them through – ‘sure I’ll buy that for an inflated price because it is just better – designed in Cupertino but made in China? I don’t give a shit!’. For a high fashion brand, it’s the well protected prestige factor – ‘Yes, it’s made in China but it is Yves Saint Laurent darlink‘.
But some brands win their customer base by virtue of the messages they put in front of them. Such brands appeal to the discerning consumer, the ones that want more than a factory line product spat out of the East, as they invest in a brands quality, provenance, materials, history etc. So if you are not a mega brand, or a brand that has a product that people don’t really care enough about emotionally, this messaging is vitally important as is it is directly tied to the foundations of the brand itself. ‘Made in Australia’ can not become ‘Made in China’ and still hold the same mantle, especially if you have spent all your time tying what you do to being made in Australia. You might be able to pull it off if you start to charge less for it and change your message accordingly but keep the same product at the same price with the same message and you’ve got a bit of an issue on your hands. And fair enough too.
And this is where the two factors of messaging and profits collide. If you start out making your stuff in China, you are sending a clear message that the bottom line is an underlying element of your business – it’s important to source ‘cheaper labour’ than what you can locally and you’ll ‘tolerate’ all the associated implications. In this instance you tailor a message that is about other aspects of what you do and leave the provenance out of the equation – you won’t hide it but you won’t shine a light on it either. There’s nothing at all wrong with this and if you are on the ball, there will be absolutely nothing wrong with the product you are offering. What you can’t do is suddenly switch to having your stuff made in China yet still try to give the impression you are all about X, Y and Z but have the ‘made in’ tag tell a different story. In today’s market, it’s one or the other and the educated customer can work this out pretty quickly.
As they say, people can smell a rat and will abandon you, or worse, rail you on public forums because they have felt they have been led on.