Economy

Remaking “Made In China” (Especially For Chinese)

After all these years, are people still suspicious of the quality of products Made in China? Shi Jihongof the Xinxiu group luggage makers says the answer is a resounding 'Yes'.

Handbag shop in Beijing (LeoAlmighty)
Handbag shop in Beijing (LeoAlmighty)
Wang Fang and Li Li

Sun Yafei, the CEO of 5lux.com, an e-commerce platform for luxury brands in China, is routinely embarrassed at the point of sale. Customers continue to ask regularly whether or not the goods come from the advertized country of origin. For instance, the country of origin of Swarovski is Austria, though products manufactured in Austria are rare. Indeed, they are mostly made in Asia, including China. And this is a problem for many, but mostly Chinese.

Miuccia Prada, the owner and lead designer of Prada, adores the shoes made by the Chinese, and not just to excuse all of Prada's China-made products. In the mid-1980s, many internationally known brands started outsourcing to the coastal areas of China. Today, there are well established manufacturing systems in provinces like Zhejiang, Jiangsu and Canton. What puzzles Sun is the fact that Prada, a brand particularly demanding in its hand-made standard, approves the quality of goods made in China ... so why don't the Chinese ?

In order to create his own brand, Sun Yafei spent a lot of time looking for suitable Chinese manufacturers. His requirements were their experience as international suppliers, their overall regulation, the advanced degree of their equipment, their delivery capability, and above all, the price.

In Xiamen, Fujian Province, he visited a factory with only a hundred or so workers, but which manufactures for more than 20 famous brands, including Armani. In their leather room, every worker wears gloves and masks, according to the dust management requirement.

From the design, the cutting center, the molding and up until the end product, there's are control stations in all procedures. Not to mention that these brands also send their own quality control team and inspectors to ensure standards.

Some factories also design their own products. In Sun's view, they are absolutely qualified for the international competition. To understand the "authentic Italian craftsmanship that claims to be the result of human wisdom," Sun also visited numerous Italian manufacturers.

What impresses him most is the small number of workers. Three to five people could make up a workshop, producing in a "slash and burn" way, including top brands like Gucci. Secondly, unlike what's often imagined, a lot of Italian workshops don't do one hundred percent hand sewing. Machines are very commonly used to guarantee the stitches are regular.

Yang Yelin, the vice-chairman of Canton's Shoes and Leather Industry Cooperative also visits a lot of Asian and European supplier factories. In his view, a lot of Canton's manufacturers are capable of reaching the so-called purely hand-made quality, or even better.

For the American luggage and handbag brand Coach, 85% of its goods are made in China. Victor Luis, president of the international department of retail business, says that handbags are different from other goods and require certain procedures to be done by hand. It is the same way of making things in Italy or France as well as in China. So a Coach bag always carries a tab saying "This bag was made in China by our best craftsmen."

Sun Yafei says Italy's factories remind him of Chinese ones in the 1950s. As a matter of fact, because Italy is not on the anti-dumping list of America and European countries, a lot of Chinese enterprises from Wenzhou, Zhejiang Province have set up factories there and brought in masses of low-cost Chinese workers. A lot of Italian factories simply outsource their orders, including to the Chinese factories located in Italy. Their products counts as "Made in Italy," though more precisely they should be called: "Made in Italy by Chinese."

Europe's "soft power" edge

Yang Yelin thinks the difference between a Chinese brand and an internationally known brand lies mainly in cultural and historical connotations. Chinese brands are usually very young whereas famous ones are often more than 100 years old, and carry a cultural and historical heritage. Apart from their soft power advantages, there isn't any quality difference between Chinese and international bands, he says.

Shi Jihong estimates that 95% of the world's brand luggage is currently produced in China. Yet in a mainstream view, China's luggage manufacturing is still at the lowest end of the smile curve.

But the trend is changing. Currently, Xinxiu's R&D department makes up 10% of its total of employees. This was unimaginable before.

Back in 2001 when Xinxiu first started working for Samsonite, the American luggage brand, Shi had 30 sewing machines and had to adjust his management continuously to match Samsonite's requirements. But the experience in satisfying the demands of international brands helped Xinxiu to grow. For instance, in order to produce a plastic handle that is hard to break for a German brand, it went into the research of handle molding, and eventually even set up its own factory.

Paul Melkebeke, vice-president of Samsonite's Asian market says that "the Chinese providers react very fast to markets. They can deliver within weeks; that's impossible in other countries." He also points out that "We can find all the know-how and links here."

After cooperating with Samsonite as an OEM partner, the Xinxiu group has become, to a certain extent, a rival.

In comparison to other rising markets like Vietnam, India and Brazil, Yang Yelin believes that China's industrial chain will continue to prevail, no matter whether we consider the materials, the R&D, the design, the know-how, or the distribution logistics. In his view, Vietnam's technological level is inferior, Brazil is badly situated geographically, while in India religions and culture create weak points.

Besides, China has a huge domestic market that can support its world leading manufacturing position, Yang added.

Nonetheless, Shi Jihong thinks China depends too much on foreign markets. "When the international market sneezes, we'll catch a cold... We are forever worrying where our next bowl of rice is." In addition, export-oriented business in general has a lower profit margin. Some enterprises' net profit is only around 3-5%, he says.

So his ideal, as the chairman of the Pinghu Bags Association, is to promote the sector's industrial chain, integrating all upstream and downstream businesses, and thus finally come up with China's own brands that can rival Prada. He is confident that in the near future, China will own its own top luxury brands. But China has to face its international rivals with a different attitude. If China is to change the reputation of China made goods, it first needs its own people to reverse their mentality. Easier said than done.

Read the original article in Chinese

Photo - LeoAlmighty

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