China, India, workforce, robots

Designed in…manufactured in…

Being just a manufacturing site for international brands as a country strategy is something that will not work. It has been proven a failing strategy numerous times. It has been an inadequate strategy for post-communist countries. China had this strategy until probably 10 years ago when they started creating their own brands and marketing them as such: Huawei and Xiaomi are now international brands with well-established market positions. But with China moving from a developing economy to a developped economy, this strategy cannot continue. I remember an analysis from some time ago, probably 12 years, measuring China’s economy advancement, approximate quote: with every Starbucks opening at a corner, China is becoming less of a manufacturing site for developed economies. You can always see the difference between: (proudly) designed X country in and manufactured in Y country.

Companies, the changemakers

Companies will always look at a mix of indicators in order to establish the next destination for their factories. Companies are policymakers and changemakers. Furthermore, companies are always more profitable than countries and will always be, but this a tricky matter: the quality of life of citizen in a country is not and should not be measured by profit. For a factory there will be cost of transportation, cost of utilities, cost of workforce and of course tax reductions offered by the state as costs to analyze and of course economic stability and predictibility when deciding to open a new facility or relocate one. China is not only moving towards becoming a developed economy, with workforce costs rising but also becoming politically (and economically) unpredictable.

India, world’s largest country

The time when China made its most significant progress coincided with the time when China was the world’s largest population. You might have missed the news, because it didn’t make the headlines with so much going on in the world right now, but now India has the world’s biggest population. Always an opportunity and always a problem: population growth also translates into number of buyers growth, number of workforce available but also in costs and in challenges to ensure workplaces for the population. This is will probably mean the government will be more available to companies and will lobby companies looking for new countries to expand into. And the news about India having the world’s biggest population almost coincided with the news that Tesla is opening its first factory in India. Tesla wants India’s market and India needs employment for its population. As a paranthesis, this thought keeps coming back to me: The British Empire is the only empire whose vassals surpassed its conquerers and are now well developped countries, also constant economic growth, surpassing the economy of UK in terms of size, not in terms of GDP per capita.

The pattern, simplified

For the last 100 years of history, there is an economic pattern. First, you start off as a poor country, with an unstable political situation, maybe some civil conflict. The civil unrest will eventually cease. Then the political situation stabilizes, you build some infrastructure, you educate some workforce, some international companies become interested in your workforce capabilities. Their expat managers are considered to be working in high risk environments. Later they bring some friends, the national economy is now developing. Your workforce acquires know how, you start marketing your own goods and building a brand for your country.

Workforce, the robots

This has been the model for growth until now> companies were looking for infrastructure, workforce, and tax reductions. What happens when the workforce=robots ran by AI? It is still the case that some human workforce is cheaper than developing and investing in robots. What happens when robots become cheaper than human workforce? Countries will be competing for companies with infrastructure and tax reductions and other expenditures? Will countries still need companies to employ their workforce if most of the work is done by robots and AI?

Quiet luxury, a trend made in China

Luxury, made for China

9 years ago I noticed luxury and high end brands started to build products for the Chinese market. For some of the products it was obvious they were dedicated to the Asian market: luxury watch makers were dedicating limited edition products to the new Chinese year or zodiac, car makers were offering extra options for the Chinese market, high end hifi manufacturers have some lines of products that scream Asian culture. Here’s Breguet Reine de Naples 8958 Cammea Chinese Zodiac. Not quite the usual Breguet is it?

Quiet luxury, who knows, knows

Fast forward to our present time: a report from Wunderman Thompson is discussing quiet luxury as a trend. Of course, this year quiet luxury has often been brought to our attention. However, what caught my eye is the geographical and cultural region for quiet luxury: China. In the past 10 years the Chinese market has been one of classical consumerism: we need brands, we eat brands, we wear brands because they scream and yell brands and that is why choose them which has been equally valid even for more established western consumerist societies. And yet, Jing Daily mentions that chinese customers are probably the most demanding and informed in the culture and they are willing to pay $6.700 for a Brunello Cucinelli cashmere carding. Now, fans of the Assisi based brand will definetely recognise its iconic cashmere pullovers. Also the wearers of these brands will know.

Quiet luxury, postconsumerism?

Postconsumerism is a societal trend that has been long awaited by theoreticians, however never became as big as their forecast. Postconsumerism, as the name says, was supposed to be that type of society that is fed up with consumerism, with consuming to be seen and in public and is shifting its attention to consuming not necessarily to be seen or noticing and not necessarily as a status indicator. Sure, high end brands, even not so obvious, will still be recognized by those who know them, which is the foundation for quiet luxury: if you know, you know and you recognize my status and the amount of money I spent on my wardrobe, if you don’t, I do not need to show you, because we do not belong to the same social cathegory. Even so, might this be a first step to postconsumerism, even in a society not so deeply rooted in consumerism?

China, India and the fabulos future to come

10 years ago China was starting to make timid steps into marketing its own products. China was no longer just a manufacturing site for western products. And I was reading numerous articles about India following the steps of China, but somehow I felt unconvinced that the very traditionalist and conservative society in India is yet there. Back then, not yet. Today, yes, making steps.

This is the first Huawei commercial, I wrote about it 10 years ago:

Ten years have passed and Huawei is now a well-established brand. Ten years ago China was the world’s fastest-growing economy. 10 years ago I was saying: China can, at any time start a PR war on the consumption of imported goods. Would still affirm that. Now China is the world’s leading economy. Which will be the next fastest growing economy? Today I can answer: India. Not because I have read tons of news announcing that, not because I have seen the figures, but because I have seen a headline in Foreign Policy> Modi’s Marketing Muscle. When a country makes makes marketing a priority, that is when a country is mature enough to become a source of more than just raw materials and that is the economic pattern which makes a difference.

Foreign Policy> “If you go almost anywhere in New Delhi, India’s capital, you won’t be far from a giant poster advertising its presidency of the G-20—a group of 19 large economies plus the European Union—alongside a portrait of Prime Minister Narendra Modi.” I say this is a first sign India is learning something about the importance of marketing. Because with marketing you also begin to export culture, not the stiff opera concert type of culture, movie culture, the coffin nails and sneaker kind of culture and this is what makes a country have a say in the world.