The Myth of Made-in-China

For high-end brands, from Moniker to Apple to Nokia and Prada, “made in China” is a myth.   

While researching Globality for the Boston Consulting Group, I spent a lot of time exploring the idea of ‘global advantage’.  High-end brands today are reconfiguring their operations worldwide, looking at each thing they do and deciding where in the world it can be done best — taking into account both uncompromised quality standards and the best price.   

China, it turns out, usually fits in somewhere.  “China is the last step on the global assembly line.”  Words I wish I had coined, but spoken first by David Hale, an economist, in the Jan/Feb 2008 issue of Foreign Affairs magazine.  (He argues that the US shouldn’t try to revalue China’s currency, since China’s currency has less to do with exports to the US and more to do with imports from around the world by corporations who send their semifinished production to China for final assembly.)   

In Moniker’s case, less than 20% of the value of our products is created in China; the other 80% of the cost originates in Italy or England or Germany or France or Sweden or Japan, where the fabrics, threads, cotton, linings and machinery originate.

Apple is the most famous and successful example of a company whose last step is China.  On the back of every Apple product, from its iPhones to its iPods to its MacBook Airs, is the almost iconic phrase: “Designed in California, assembled in China.”

Technology is one thing, but what about fashion?  The entire fashion world now assembles in China — including shops along London’s Savile Row, the global epitome of professional menswear.   While searching for production partners, I came across Camellia Universal, a Ningbo, China based custom clothing house.  When the founder, Biao Wang, went overseas to London for his MBA, he took with him the idea of extending his family’s operations abroad.  He brought on several Savile Row tailor shops as clients, and today a number of them do some or all of their custom clothing work through Camellia Universal’s workshops.

(Obviously, its Savile Row clients are careful to guard this fact, since it will be difficult to maintain the price positions otherwise.) 

For the same reason, the world’s big luxury names, from Hugo Boss to Armani to Zegna, don’t advertise the joint ventures and manufacturing partnerships that they have set up on the Chinese mainland since 2001.   

Myself, I don’t believe in the long run you can deceive your customers and win.  Brands are going to have to come clean about their China operations and defend them in terms of quality and best price.  Moniker, transparent from the beginning, is going to pile on that pressure.