Made in China: authorities must do more to bring back trust in label
A few years ago food safety and product quality were toxic global issues for the made-in-China label. Mainland authorities responded by cracking down on slack quality control and export inspection. It mostly seems water under the bridge now, but not all mainlanders are convinced - far from it. If there is lingering distrust of made-in-China, it is to be found among Chinese consumers. And that is a troubling irony for the global economy. Years after the global financial crisis, the world still pins hopes for full recovery on China. But the mainland's economic growth itself is now slowing because it relies heavily on exports, which have been hit by weaker demand in the West, and government spending, hit by infrastructure over-capacity, rather than on domestic consumption. So it is to the potential of its increasingly affluent consumer that China looks to growth. After all, consumer spending accounts for less than half of GDP, compared with almost 70 per cent in the United States.
The conventional wisdom is that mainlanders prefer to save because of the lack of social security, and due to education and health costs. But that is confounded by spending by Chinese tourists during the National Day "golden week" holiday. Yet again many flocked to Japan, despite troubled bilateral relations and anti-Japanese sentiment. And they spent on everything from electrical goods to medicines to everyday necessities. The point is, most of it is made - and on sale - in China.
Why are they spending in Japan, and to a lesser extent in Hong Kong? Goods are cheaper in Japan and Hong Kong, and there remains the trust issue over food and product safety. Even where the same product at home and abroad may be made by the same foreign company, they often prefer to buy it overseas.
How do officials address these two issues to persuade people to spend more at home and mobilise the power of the Chinese consumer? The first can be addressed by coordinated policy and administrative action, rather than piecemeal measures. Making mainland goods competitive calls for tax cuts across the board, including consumption and import taxes, and improving logistics, including cuts in fees such as tolls.
However, if "sold in China" is to reflect the ubiquitous "made in China" label, the authorities have to do more to address negative consumer perceptions of value and quality for money. They must mount a credible effort, from factory floor to image management, to restore confidence in food and product safety and trust in the label.