Tuesday, 7 June 2016

‘Made in China’ may become the New High-Quality Standard for Luxury Products

Harjeev Kandhari

Goods that are made in China have long had a negative association. This assumption is a global phenomenon, so much so that Chinese manufacturers exporting to Japan changed their labels to say ‘made in PRC’ rather than ‘made in China’. The little known acronym for People’s Republic of China was less likely to elicit a negative response among Japanese than the traditional label associated with so-called, ‘Chinese quality’.

Yet this assumption is becoming more and more out of touch with reality. Chinese companies now manufacture quality products in almost every industry, some with a uniquely Chinese flavour like the apparel company, Shanghai Tang. Shanghai Tang employed a western style advertising strategy with extensive social media marketing to become one of the most popular domestic brands. It then moved on to earn an international reputation in upscale clothing, with a combination of traditional Chinese silks and fresh fashion designs that couldn’t have been created anywhere else on the planet. More than ever, Chinese labels are starting to proudly display their origin as a mark of premium quality and unique Chinese originality, including companies like Lenovo, Ming jewellery, Wei Beauty and Tsingtao Beer, just to name a few.


 Half of Europe’s Tyre Brands Originate in China

In some parts of the automotive industry, Chinese manufacturing actually dominates. More than half the tyre brands of Europe are of Chinese origin, but with names like Westlake, Kapsen and iLink, this isn’t easy for consumers to intuit. Future-orientated industry leaders would like to change that. Harjeev Kandhari, CEO of Zenises Group, a global tyre distributor headquartered in the UK, proudly displays the Chinese origin of his Westlake tyre line on the company’s website. The manufacturer, Hangzhou Zhongce Rubber Company of China, is one of the world’s top 10 tyre companies, producing approximately 100 million tyres every year, among which Zenises’ Westlake line is the most internationally recognised brand. Kapsen tyres, another Zenises Brand, are produced by the less well known Huasheng Rubber Company, yet surprisingly this state of the art facility is one of the most modern in the world.

A well-known advocate for driver safety, Harjeev Kandhari is more concerned about the quality of his products and building long term consumer relationships than he is about boosting immediate sales. Zenises brands combine high performance with value. The company’s tyres offer the subtle control necessary for the most demanding of drivers, without compromising safety and durability. Impeccable wet grip and fuel economy ratings make them a favourite among European drivers. With four Chinese brand names meeting Kandhari’s high standards, this is an incredible testimony to the meaning of ‘Chinese quality’.  

A Predictable Pattern

As the latest arrival to the international business scene, China is still struggling to make its mark. Yet few people remember that the Japanese manufacturers of the 70’s were also associated with inferior products. This has shifted completely. In the current market, Japanese car brands, like Honda and Toyota, are the gold standard for quality and energy innovation. Japanese technology products are not far behind, and overall ‘made in Japan’ suggests a high standard of quality.

China is on track to follow this predictable value based learning curve. As a society modernises and increases its manufacturing capacity, the initial efforts are marked by products that are somewhat substandard. Experience breeds better industry specifications and the development of a unique style. As the cycle continues, countries start to develop their own original innovations. New players ultimately expand the field, and, fuelled by the desire to compete on an equal footing, often outdo their original leaders to become the new standard of quality.  

Challenging the Status Quo

There are many signs that China is currently moving into the upswing. As far back as 2012, Bob Lutz, a Swiss-American automotive executive, wrote on this subject in Forbes Magazine. He described his surprise as he easily put together the components of a very reasonably priced, outdoor furniture set. The box bore the tell-tale mark, ‘made in China’ as well as the phrase that strikes fear into the heart of many consumers, ‘some assembly required’. Due to the precise manufacturing and quality materials the assembly went without a hitch.

Yet Lutz writes, ‘A feeling of dread crept in’ as he realised ‘these guys are good’. His statement aptly underlines the real reason the world clings so desperately to stereotypes about Chinese products. China is set to move from new player to industry leader, just as Japan did, forcing Western manufacturers to redefine themselves. It won’t take long for China to outrank every country but Japan in the production of luxury products. With immense natural resources and a huge population of hard working people, there is no telling how far the country could go. Yet rather than seeing this with fear, industry leaders would do well to embrace the benefits, as Harjeev Kandhari has done with Zenises’ tyre brands. A Chinese challenge to the status quo offers a positive force for change and a new market for global companies focused on quality.