Country

A Deeper Look at Some Famous Brands and their “Country of Origin”
What Does It Mean?

What do you think of when you see the names G.M., Volkswagon, Vespa, Benelli, Sony and Nike?

Normally, we associate a brand name with a country. Ex. Vespa = Italy, G.M = U.S.A, Sony = Japan, etc.

What would surprise many people today is that the above association is no longer clear or useful. We have been in assembly plants where products bearing all of the brand names above were being produced, packaged and shipped all over the world. Where were those plants? CHINA!

What is usually happening is that these companies contract with Chinese businessmen and their companies to assemble the G.M. or Vespa or Sony products, in the Chinese plant. The difference between these branded products assembled in China, and standard, off-the-shelf Chinese products made for sale inside China, is that the name brand product is built under strict quality and specification controls of the non-Chinese company.

For example, many Sony CD and DVD players are made in China and sold in the U.S, Europe and around the world using the design, components and QC procedures developed and controlled from the Sony Corporation headquarters in Japan.

These “Contract Manufacturers/Assemblers” operate very efficiently and at low cost because they only need to charge enough to cover the direct cost of labor and materials. Those costs are very low in China. They have no R & D, advertising, promotion, legal or marketing costs because they are manufacturing directly under contract for a specific number of items and they are guaranteed payment before they ever start production. No storage costs, little or no “overhead” costs, and very little risk. Usually what overhead costs they do have are covered by their domestic Chinese sales of other products.

This method is commonly used today by the vast majority of companies selling durable goods of any type. They cannot afford to do otherwise or their competitors will take their market. The key is that the quality and specifications must be controlled by the brand name company, be it G.M., Sony, TN'G, Benelli, Vespa or Nike.