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“Made in China”- image change from cheap to innovative

“Made in China“ – image change from cheap to innovative

Apple, H&M, Diesel or Primark-they all may differ in significant ways but have one thing in common: they all produce in China. Why is that? Well, because it is way cheaper to outsource some processes to China, especially in terms of mass production. It is likely that every one of us has at least 10 items at home that are branded as “Made in China”. Among shoppers in the West the notion exists that products from China are cheap but low in quality. But the bad reputation is not accurate anymore, as the country tries to change its global image. During the last decade China developed steadily from an emerging market to a qualified competitor and so did the quality of the products.

The popular stigma

God made life, as the old joke goes, and the rest was made in China. Indeed, Chinese merchandise exports exceed those of any other nation. Additionally Chinese workers enjoy the reputation of the ability to work directly from samples providing greater expedience. But the problem of the negative reputation is partially due to domestic factors.

The milk scandal 2008 was the headline on newspapers worldwide although the government tried to cover it up. There have been serious quality problems in the past and there are still claustrophobic sweatshops that produce cheap clothes much to the workers regret. Every light has its shadow and while consumers in the West kept referring to Chinese products as “junk”, Chinese manufacturers kept manufacturing cheap in order to capture markets in which people do not want or cannot afford to pay for quality. So it seems to suggest that an interaction exists.

Quality not Quantity

Negative examples aside, there have been positive developments in several industries in terms of quality and leading economic countries have witnessed this change. For instance, the quality of Chinese-made clothes is rising quickly, accompanied by developing technology and better working standards. China’s garment industry has been investing in manufacturing technology and training for decades now and in the long run the country will be home to a highly skilled and highly specialized workforce. By now luxury fashion labels routinely produce in China. The cheap price combined with good workmanship induced labels such as Prada, Armani or Gucci to manufacture there. Another industry that provides great quality products is the telecommunications sector. Huawei and ZTE are some of the most innovative companies in the world and Huawei scores high on the consumer satisfaction index. Furthermore, Tenscent and Alibaba challenge each other by creating innovative new apps or mobile payment services which helps keep the competition in China on a high level. For instance, WeChat is already more innovative and versatile in most respects than WhatsApp.

“Made in China 2025” Strategy

Overall China has a strong motivation to change its products’ image and the future “Made in China” should be associated with shiny drones and popular smartphones. Companies are not the only ones aiming to compete with big global players; the Chinese government has also noticed the importance of precaution in terms of technology development. In order to promote and keep young talent, China invested heavily in its universities.

It has been almost a year since China announced its national plan “Made in China 2025”, which is the first plan of a trilogy designed to transform China into a leading manufacturing power by 2049, which will be the 100th anniversary of the founding of the People’s Republic of China. The central elements of the plan are nine tasks that include things like: fostering Chinese brands, strengthening the industrial base, enforcing green manufacturing and internationalizing manufacturing.

In order to fulfill those tasks the government will focus on major projects, including establishing a manufacturing innovation center. The main goal is to stimulate innovation in all possible sectors rather than focusing on only one industry. Indeed the initiative is supposed to have positive effects not only on the manufacturing industry but the whole Chinese economy. Currently the situation in China can be described as a stuck in the middle problem, as China is pressured to keep up with advanced economies such as the United States, Germany or the UK while maintaining distance from emerging economies such as India or Brazil. If the upgrade from a cheap manufacturer to a respected manufacturing industry superpower were successful, it would help China to maintain its economic growth at a remarkably high level and pave the way to overcome the current economic slump step by step.

In the end, it remains to be seen how fast China can transpose the strategy and tasks, but “Made in China 2025” has to be taken seriously, especially for countries like Japan or Germany, that have been resting on their industrial and engineering achievements of the past, picturing their technologies as unique-worldwide.

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DATE May 18, 2016
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