Tuesday, August 25, 2015

Does country of origin matter?

When it comes to manufactured goods there is a legal imperative in most countries to mark products with the country of origin. But do customers care?

At one time a nation's expertise in manufacture was often looked at as an umbrella brand for the products its companies made. Thanks to the legacy of the industrial revolution the British had earned a reputation for building solid, reliable products. If testimony was needed look no further than the railways constructed throughout the Empire where steam locomotives built in Glasgow or Birmingham still huff and puff along narrow gauge lines even today. Old Morris and Austin cars are still going, even factory machinery with still produce basic goods in many parts of the world. 'British Made' stamped on a product offered a reassurance of that dependability, while at one time 'Made in Japan' was a euphemism for junk. But how things changed. The Japanese who seemed to have cornered the market in plimsolls by adding a pink rubber diamond logo glued to the sole saying 'Empire Made' managed to ride on the back of the old British Empire preference, without going so far as to say it was actually made in the Japanese Empire.

But change things did and it was the Japanese who by the nineteen sixties were laying claim to leadership in high quality goods, particularly in the manufacture of cars, motor bikes, consumer electronics and cameras. It left British goods looking old fashioned and clunky. The British had by then developed a fascination for the antics of the young movers and shakers of the so called 'swinging sixties'. The British Union flag became a symbol of the new era in clothes fashions and in popular music. Meanwhile poor old manufacturing industry had lost the design edge too, if it ever had one, to the Italians and Scandinavians who produced much more elegant, stylish and desirable products. British industry suffered not only from generally poor design, but under investment in new equipment, over manning and militant trade unions in its factories, all seriously affecting productivity and competitiveness.

So industry started moving offshore. I was working in consumer electronics in the late nineteen sixties at the advent of colour television. Thanks to government pontification,  several years had been lost deciding which standard would be adopted for broadcast - the established American NTSC for which we had technology licensing in place from our American commercial arrangements, or the French SECAM system for which we did not. We mounted interesting little demonstrations of colour television in our laboratories for years as we waited while the big decision of which standard to recommend was delayed. Eventually the government opted for neither and backed the later  entrant the German PAL  system and so the race to get  TV sets on the market had begun. The probably unique thing about the British market was the widespread preference to rent televisions owing to their poor reputation for reliability. The company I worked for owned the majority of outlets, originally intended as the channel to feed the production of its own factories into the market. But the pent up demand from rental customers couldn't quickly be met, so additional TV sets were sourced from Japan. Soon to be joined by  radios, record players, tape recorders etc. to which a British brand label was attached. By then the company had also bought most of the leading British brand names. It was joked in-house that the Japanese designed and manufactured the products and the British decided where to glue the label. But even that task was done in Berlin thanks to some customs quirk dating back to the war. This apparently attracted some financial preference to goods entering Europe through that city then isolated in a soviet landscape as a show case of western consumerism.

By this time the buying public had generally lost interest in country of origin and rarely turned the product upside down to see where it had been made. Then just when it seemed Japan would make everything that bubble burst and the country entered recession. But even that did not matter, they had been off shoring themselves to the Philippines and the Tiger economies as  labour costs rose at home. Then into the mix came China as a huge manufacturing operation with even lower labour rates. Big brands,  designed where in the world suited them most, then had the products built in China.  By now brand had usurped country of origin in the consumer's mind. Most don't care how its made, what working conditions are like, or even can they get spares because the product's desire will have expired long before it breaks and its time to buy the latest model!

There have been signs for some years now that low labour costs are less significant as the market for many classes of product demands greater levels of customisation. Robotics become more widespread.  Filling whole containers for shipping for months is less economic specially if the whole load has manufacturing defects and is rejected ... and at some stage the economy in China will have to adjust and correct. May be that is what is happening now!


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