When luxury brands outsource, should they tell?

[Oceanklassik]

my company Thailand camry is 1 of the 1st batch de....doing well after 6 years....so far no issues at all and the car is really fuel saving....for a 6 years 2.0 car....1litre can average about 10km.....full tank can go til 620km.....so not much diff from the japan made camrys....have both versions in the company i work in...

I'm just citing an example and of course, not all products are inferior. Some good; some bad, but it is the mindset at play. Imagine this: What do you think will happen when one day, ROLEX announced it officially that they will be sending their watches to China; maybe Thailand, to be part-assembled there?

[Watcha]

my company Thailand camry is 1 of the 1st batch de....doing well after 6 years....so far no issues at all and the car is really fuel saving....for a 6 years 2.0 car....1litre can average about 10km.....full tank can go til 620km.....so not much diff from the japan made camrys....have both versions in the company i work in...

thats not bad mileage.

does your company gives free car?

envy of that one that gives free with all expenses paid by company...

[Watcha]

they should learn from american now. almost everything made in china.

high end or low end. from gadgets to clothing and they don't hide.
people still buy because there is quality control.

[feilong108]

my company Thailand camry is 1 of the 1st batch de....doing well after 6 years....so far no issues at all and the car is really fuel saving....for a 6 years 2.0 car....1litre can average about 10km.....full tank can go til 620km.....so not much diff from the japan made camrys....have both versions in the company i work in...

[Oceanklassik]

But most often than not, the quality is somehow compromised in a way or another. I came across few such cases. Citing one, a relative of mine used to drive a toyota camry (japan-direct) for many years. Just last two years ago, he traded his old camry for a brand new camry (thailand-assemble), and just weeks of driving, he started to complain about the quality and build of the car. He still felt that the "jap-camry" is much better and more comfortable than the "thai-camry".

[triton]

im ok as long as there is no compromise in quality. it does not matter which country it is made.

[Oceanklassik]

Read an interesting article, so like to share..

Italy's Parliament has passed a law that imposes, among other things, the requirement that Italian manufacturers be able to prove that their products were primarily made in Italy and, if any part of the work was carried out elsewhere, a traceable location must be shown.

The ruling, which takes effect next month, would make Italy arguably the first country to regulate the "Made in xxx" label. It could not have some sooner for some Italian clothing manufacturers who have complained that, for the last decade, they have been at the mercy of fellow designers buying cheaper fabric in China, Bulgaria and elsewhere and slapping on "Made in Italy" labels - even when those garments are merely sewn in Italy.

By definition, any behaviour within the marketing function that is illegal or morally unacceptable to the larger community is deemed unethical marketing behaviour. Such behaviour has been associated with publicly reported practices such as Dow Corning's release of potentially harmful silicon breast implants and Nike's reported use of sweat-shop labour.

With the proliferation of global outsourcing of global brands, another type of unethical behaviour appears to have emerged.

The potential cost savings and revenue advantages derived from outsourcing have enticed even the luxury fashion business into the act. The outsourcing of fabrics in the case of the Italian clothing designers is one such example. It has been reported that many luxury brand items are now made on assembly lines in developing nations, such as China, where labour is vastly cheaper.

These outsourced products, however, continue to be sold at very high prices because their "marketing executives played up the companies' heritage and claimed that the items were still made in Europe by hand", says fashion correspondent and author Dana Thomas in her best-selling book, Deluxe: How Luxury Lost Its Luster.

Such companies get away with it by hiding the "Made in China" label "in the bottom of an inside pocket or stamped black on black on the back side of a tiny logo flap", she adds. "Some bypass the 'provenance' laws requiring labels that tell where goods are made by having 90 per cent of the bag, garment or shoes made in China, and then attaching the final bits - the handle, the bottons - in Italy, thus earning a 'Made in Italy' label".

"Or some just replace the original label with one stating it was made in Western Europe."

Congruence Theory postulates that individuals tend to be more responsive to people and messages that are consistent with their own beliefs and attitudes.

In considering the outsourcing option, luxury brand marketers need to consider this: Do consumers consider as unethical the practice of outsourcing of luxury brands while marketing them at a premium as handmade by artisans? Is it worthwhile to engage in global outsourcing while keeping consumers in the dark about such a practice?

Research has found that if corporate actions are perceived as unethical, the company stands to lose favour with even its most committed customers. In the long run, ethical judgments can lead consumers to accept or reject a company's business activities entirely.

As outsourcing becomes a global phenomenon with unabated growth, it becomes imperative that luxury brand marketers confront these issues.

With the further influx of luxury brands making their way to major new shopping malls that have sprung up in Singapore over the past year, shouldn't consumers know whether they are getting the "Made in xxx" value that they are paying a premium for?

- The writer, Tan Soo Jiuan, is an associate professor at the Department of Marketing, NUS Business School.