Made in America Has a New Ring: Chinese Consumers Willing to Pay Premium for US Products

This whole global supply chain thing can be very confusing. What does it even mean to be made somewhere when many of the components come from somewhere other than where they are finally assembled, the designs originated in a place far from there, sales are to almost anywhere, the ownership is a tax haven and the profits are diverted so covertly that it is never clear where they end up.

Former US Labor Secretary Robert Reich even said (with tongue firmly planted in cheek)after having a hip replacement that he wasnt sure he still qualified for the domestic content requirements demanded of cabinet secretaries.

But, as the following article explains, certain brands or reputations retain value. Chinese consumers report in surveys that they are willing to pay a premium for products Made in America, due primarily to quality and brand value.

Which is good news for any business that slaps that label on its stuff even if they cant be exactly sure what it means. JL

TJ McCue reports in Forbes:

It is no surprise that 80 percent of U.S. consumers vote for American-made. But over 60 percent of Chinese consumers also say that they are willing to pay more for products labeled “Made in USA” than for those labeled “Made in China,” according to new research released by The Boston Consulting Group (BCG).

In surveying Chinese consumers, BCG found a willingness to pay more for U.S.-made goods. The results showed the following:

• More than 60 percent of Chinese consumers are willing to pay more for Made in USA goods.

• Nearly 50 percent of Chinese consumers prefer a product made in the U.S. to a China-made product of equivalent price and quality.

• The premium that Chinese consumers are willing to pay ranges from about 10 percent to almost 80 percent in the categories tested.

• More than half had chosen U.S.-made products over less expensive Chinese goods at least once in the month before the survey.

The data shows that Made in the USA resonates even stronger for U.S. consumers, of course.

Naturally, this presents a great opportunity for the many small businesses and manufacturers to tap into a new market like China with over a billion people. Many have tried to tap overseas markets only to fail because of the cultural differences, government red tape (on both sides), and shipping logistics, just to name a few of the challenges. The good news is there are many international trade resources for navigating this complex arena.

If you are looking to understand what your competitors are shipping, you can check out a company like Manifest Journals where a business connection of mine, Michael Heffernan, helps companies make sense of U.S. Customs Import Trade Data. Or head to the International Trade Administration to start your exporting journey. The USA.gov site on international trade is also a powerful resource.

The findings—part of BCG’s ongoing study of the changing global economics of manufacturing and its Made in America, Again research series—support previous BCG analysis showing that the U.S. is becoming increasingly attractive as a location for making certain products for the U.S. market and as a base for global exports.

The U.S. has improved its cost competitiveness compared with China and the advanced economies of Western Europe and Japan, leading BCG to estimate that higher U.S. exports—combined with production “reshored” from China—could create 2.5 million to 5 million new U.S. jobs in manufacturing and related services by the end of the decade (which I’ve reported on earlier this year).

In both the U.S. and China, respondents of all age groups and income levels expressed a concern for quality, a key driver of the consumer preference for U.S.-made products. Eighty-five percent of U.S. consumers and 82 percent of Chinese said they “agree” or “strongly agree” that they feel better about Made in USA quality. Patriotism is another strong consideration among U.S. consumers: 93 percent said that they would pay more for U.S.-made goods in order to keep jobs in the U.S., and 80 percent said that buying U.S. products demonstrates patriotism.

In contrast to U.S. and Chinese consumers, European consumers strongly prefer products made in their own countries. More than 65 percent of consumers in both Germany and France said that they would be willing to pay more for products made in their home country than for those made in the U.S.