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Home arrow Market Research Findings arrow Economic Climate and Consumer Confidence arrow Global consumers are edgy about the Made in China brand
Global consumers are edgy about the Made in China brand PDF Print E-mail
Written by Euromonitor International   
15 Feb 2008

Author: Daphne Kasriel - Date published: 10 Oct 2007

The 'Made in China' brand has taken a knocking. While China remains today's global manufacturing powerhouse, consumers internationally, including Asian consumers, are increasingly worried about the safety of Chinese goods. This fear has been amplified by headline-grabbing worldwide recalls of Chinese goods including millions of toys and a long list of drugs, clothes, foods, children's jewellery and even pet foods.

Key trends

'Made in China' – a consumer boycott?
Asian consumer confidence in 'Made in China' down
Is anything being done to restore consumer trust?

Commercial opportunities

According to a consumer survey for the bestselling “The Black Book of Outsourcing”, the best way for brands to meet quality demands from consumers while strategising to contain costs to stay competitive, is to build stipulations like alternatives to hazardous or toxic chemicals, into their sourcing strategies;
Tap into the buying power of Chinese 'urbs' and 'affluential' consumers with high disposable incomes, actively seeking out 'quality' goods and services.

Background

China's willingness to cut corners in manufacturing processes, thus producing sub-standard and dangerous products, has hit the headlines due to recurring scares over Chinese products, and alarmed consumers worldwide. Recalls have hit FMCG including foods, toothpaste, and notably the toy industry – with Mattel recalling 20 million toys globally and US recalls almost tripling since June 2007. Chinese state controls are inconsistent. The government sets limits on lead content in toys but not in jewellery for children or adults, for instance. Quantities of e-waste, such as disused computers, end up back in China, and re-crafted into cheap accessories with hazardous lead content, 70% export-bound. Wang Xubin, owner of Xu Lin Decoration specialising in teen costume jewellery, admits to using metal alloy with 70-80% lead content, and claims that US companies and consumers, used to cheap Chinese imports, aren't willing to foot the bill for safer goods. Some manufacturers, however, claim to be moving away from lead alloy at the request of consumers, especially in Western Europe and the USA.

Mr Lehmann, an Asia expert at IMD, a Lausanne business school, says Chinese producers must now pay more attention to quality, brand development, governance and transparency to prevent further harm to the 'Made in China' brand.

'Made in China – a consumer boycott?

“It's simple: Stop buying Chinese-made products. Everything will come to a screeching halt” writes Robert, an angry Hong Kong-based consumer in an International Herald Tribune 'Cleaning up China' blog,

There have been renewed calls in Strasbourg for the EU to introduce 'Made in…' labelling on selected imports – with calls for transparency for the 500 million European consumers.

Journalists are debating the introduction of a 'China-Free' movement spurred by consumer concerns over the safety of Chinese goods. An online poll by U.S. news channel MSBNC showed that 77% of 9,865 people said they were for 'China-free' labelling.

Around 78% of Americans worry about the safety of Chinese imports, and a quarter have stopped buying food from China, with 23% no longer buying Chinese toys, and 16% imposing a total brand ban, according to a Reuters/Zogby poll released in mid-September 2007. The poll found more intense worry among poorer consumers and women.

With Christmas looming, parents are confused. When a popular Mattel toy is recalled for its lead paint, should they just avoid that toy, or all Chinese-made toys? “I think people are kind of stunned” says Greg Allen, who writes a blog for fathers. “You can't just cut out every made-in-china toy”. One mother, Ms. Sunnreich, was pleased she had online access via her phone “Otherwise, I'd have to carry around an extra little bag just for the recall lists”.

According to a mid-September Angus-Reid poll, 51% of Canadians are scrutinizing for a made-in-China label when shopping. 62% were interested in a temporary ban on Chinese imports until China ups safety controls.

Almost 40% of British consumers are less likely to buy Chinese-made toys because of Mattel's recent crisis, according to a YouGov survey commissioned by Marketing Week. Famous London toyshop, Hamleys, says it is considering sourcing more toys from Europe.

A Radio Netherlands vox pop found parents in a Brussels toyshop astonished that big companies didn't have tighter control over output.

Ebay, where recalled used toys appear, recently began directing bidders to toy company recall lists.

Asian consumer confidence in 'Made in China' down

The Korean Times newspaper noted in September 2007 that local consumers bought over 9.5 million bottles of black bean tea from Haitai Beverage featuring homegrown beans, despite the higher cost, because “the consumer perception on made-in-China goods has been dramatically tainted” itself causing companies to stay away from what consumers won't buy and delivering 'China-free' products to local consumers.

The country's trade-investment promotion agency urges Korean manufacturers to work on 'sophisticating' their brand image and differentiating their wares from China-produced ones to attract more foreign buyers seeking a shift in their sourcing.

The Manila Times, reported on the 'Made in China' problem on 23rd September 2007, and on several recent local recalls that shocked consumers, e.g. after formaldehyde was found in popular snacks for kids.

Increasing numbers of China's own, savvier, middle class shoppers are turning to international known brands e.g. in hypermarkets like Carrefour and Wal-Mart. Shaun Rein, founder of Shanghai-based China Market Research Group, believes multinationals are doing so well because of “a fundamental lack of trust in the business community of China”. A recent analysis of Chinese food buying habits by consulting firm, A.T. Kearney, revealed that 76% of Chinese consumers said they preferred shopping at super and hypermarkets because they carry a wide variety of safe foods.

A TNS survey of Chinese attitudes towards US people and products, published on October 3rd, 2007, found that in terms of “excellent quality products”, Germany and the USA claimed the highest associations (at 38% and 36%) among respondents, much higher than their own Chinese products, which only scored 15%.

Chinese consumers have unexpectedly shone in a new October Ipsos/Mori poll, examining environmental attitudes and behaviour, involving over 16,000 consumers and workers in 15 countries. It reveals that 67% of Chinese consumers prefer to purchase from companies with a strong environmental reputation (the highest percentage concurring, compared to fewer than 30% in France, the UK, Germany and Spain). This survey also questioned people about the measures they were prepared to take to reduce their carbon footprint. China came third with 52% of those polled saying they were doing things to be more environmentally responsible. According to Alnoor Samji, of Ipsos: “China coming out tops was quite a revelation. It could be that there is a stronger message coming from China because there is less available there, and it is the public that is doing the leading”.

Is anything being done to restore consumer trust?

The widely reported summer execution of China's former head of the State's drug and safety watchdog, for corruption, has reminded consumers about Chinese 'unreliability'. Chinese officials have pledged, however, to step up safety inspections of China's manufacturing plants and seek solutions to problems of inferior quality and unsafe products.

The China Daily views shared commitments of Chinese quality control teams and their US and EU counterparts via their bilateral agreements on product safety as “the best possible outcome for Chinese manufacturers as well as American and European consumers” It does, however, call for local media and consumers to adopt more of a 'watchdog' role to monitor rogue producers, and for firms to overcome their cheap means competitive worldview. A 26th September China Daily article, reports that 62% of Chinese suppliers are increasing spending on quality control according to a recent B2B company, Global sources. This is in response to foreign buyers' raised concerns after recent product recalls.

Both the EU and Mattel are hoping to push new safety standards in time for the seasonal toy-buying rush.

Damien Veilleroy, Carrefour China's vice president in charge of food has noted a rapid rise in customer desire for quality control, despite the increased cost. He believes that while foreign consumer pressure will inject urgency into local product safety moves, local consumer power will ultimately change China. “International pressure may accelerate the change, but the train was already in the station. It's the consumer that makes the difference over the long term”. He has noticed, for instance, the change in the way local officials have been mobilizing recently to help him find quality suppliers to help improve the safety statistics they report back to the capital.

Outlook

Pascal Lamy, WTO head, recently highlighted the power of consumers in developed countries, flexed via their pressure on companies, to effect change in developing countries like China. In his view, the recent scares outbreak will only increase this consumer push from 'concerned consumers'. He believes this could force emerging markets like China to themselves seek new legislation governing privately agreed safety standards, in a bid to prevent a dent in their exports. Mr Lamy remains optimistic about the future implementation of more stringent standards for the 'Made in China' brand.

Many commentators predict that international anxiety over Chinese imports is an important catalyst for lasting change, and that health gains will be reflected in 'Made in China' price rises.

Last Updated ( 14 Jul 2008 )
 
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