UK: BETTER MADE IN BRITAIN.

UK: BETTER MADE IN BRITAIN. - Only 27% of UK consumers equate the Made in Britain label with quality though its image abroad is improving. Is this just British understatement or is the home-grown scepticism justified?

by David Smith.
Last Updated: 31 Aug 2010

Only 27% of UK consumers equate the Made in Britain label with quality though its image abroad is improving. Is this just British understatement or is the home-grown scepticism justified?

Most of us can look back on, or conjure up in our imaginations, a childhood in which British was not only best, but decisively so. Made in Hong Kong meant cheap and nasty shirts, or poor-quality plastic toys.

Japan, until it came on the scene with funny little cars that rusted, was not even on the product map. American goods were too big and brash for the likes of us, French things fell apart and there was a certain stigma attached to all things German.

Made in Britain, by comparison, combined assured quality with what we naively imagined was the latest practicable technology. British was best, and we did not know all that much about the alternatives. This was the label that we looked for and so, we thought, did the rest of the world.

In fact, as any economic historian will tell you, the Made in Britain 'brand' was in decline long before most of our childhoods. Concerns were being expressed that British products were no longer superior as long ago as the Great Exhibition of 1851. By the end of the Victorian era, Britain was already inferior to America and Germany across a wide range of industrial products. By the 1950s and 1960s, when Britain's share of world trade was plunging, Made in Britain was no longer a significant selling advantage in most overseas markets. And by the 1970s, when Britain was seen as close to economic collapse, and a hotbed of industrial anarchy, the label was usually a disadvantage, associated with poor quality, late delivery and appalling after-sales service.

The astonishing thing, given all this, was not the modern decline of the Made in Britain brand but the fact that it survived for so long. Michael Porter, author of The Competitive Advantage of Nations, puts this down to the role of Empire and Commonwealth. 'British tastes and culture were exported throughout the Empire and this reinforced the tendency towards luxury goods,' he writes. 'Expatriates served as the elite administrators of British colonies and defined the tastes of those abroad with the wealth to buy imported goods.'

Thus, Made in Britain, having initially been associated with quality design and manufacture across the full range of industrial products - since our small island had of course once been the workshop of the world - latterly became associated with a relatively small number of luxury products: Wedgwood china, Scotch whisky, Rolls-Royce cars, Pringle clothing, and so on. Quaint, and important in their own right, but hardly the springboard for broad-based industrial success. Any brand identity is welcome, but the key question, at a time when issues concerning the value of corporate brands provide a good living for countless analysts, consultants and accountants, is whether the national brand, the Made in Britain label, is making a comeback on a more widely-defined basis?

Marks & Spencer, perhaps more than any other British company, has emphasised the Britishness of its goods. M&S used to be able to say that well over 90% of its products were manufactured in the UK. Now the figure, covering both food and non-food products, is 77%, and would be lower than that if the source of materials used for the manufacture of garments, for example, was taken into account. M&S does not mainly source in Britain out of blind loyalty, however. Recently the company found that it was losing market share in children's clothing to lower-priced competitors. M&S's suppliers said they could match the competition on price, but only by manufacturing outside the UK. They did, were as good as their word, and the firm won back market share. The loss of the Made in Britain label had no impact on customers.

Sometimes, Made in Britain can be a positive handicap. When Dixons launched its own-brand televisions and music systems in the 1980s, the company chose a Japanese-sounding name, Matsui, precisely because its own research showed that consumers associated Japan with quality electronic products.

The name survives, even though many of the products now originate in Britain or eastern Europe rather than in Asia. Sir Stanley Kalms, Dixons' chairman, believes that Made in Britain has improved to the extent that retailers no longer need to reassure consumers with labels which indicate the German or Japanese origin of products, although he feels that country of origin is no longer the significant force it once was.

'The Made in Britain brand has massively improved, but "made in" isn't that important any more,' says Kalms. 'Made in Britain is very comfortable for us because the majority of our products are assembled here. But I don't think it has much significance in marketing terms. The old labels - Japan good, Hong Kong bad, Korea worthless, don't mean anything anymore.

It is the brand, not where the brand is made, that is important.'

Rather less insouciant about the importance of the national brand, Bozell, an international marketing company, and the Gallup polling and market research organisation, have begun to conduct annual worldwide quality polls among consumers in 17 countries. The results of the latest published survey (the second) show that British consumers have low levels of national pride when it comes to assessing the quality of their country's products. Only 27% of UK consumers said British products were excellent or very good, while 38% thought this of German goods, and 43% of Japanese products. Contrast this with Japan, where 75% of consumers thought home-produced goods were excellent or very good, or even France, where the figure was 45%, or China, where it was 39%.

British products, in fact, had a better rating among nationals of several other countries than they did at home. The Hungarians valued the Made in Britain label, with 62% saying it denoted excellent or very good products, as did Indian consumers (38%), Thais (32%) and, perhaps most encouragingly, the Japanese (again 32%).

Business people who make the decisions about location and company purchasing, are also unsure about the value of the Made in Britain label. A survey among 200 of the Fortune 500 companies, Made in UK, carried out for image consultants Wolff Olins by Financial Times Business Research, showed that, as with consumers, the British brand is not highly valued among British business people. Only 30% of home-grown respondents said they would be positively influenced in purchasing decisions by a Made in Britain label.

Overall, the survey showed that 72% of the 200 companies in the sample regarded national image or reputation as important in influencing their purchasing decisions. But, in the case of Britain, this national identification was weak. Just 36% said they would be positively influenced by a Made in Britain label, 7% would be put off by British origin while the majority, 57%, were 'indifferent or immune' to it.

According to the Wolff Olins report, 'A concern for UK businesses is the fact that almost six out of ten companies state they are not influenced by a "Made in UK" label. Given that national badges are a major influence on purchasing by businesses, "UK plc" needs to act to over-come this neutrality. Despite world leadership by UK companies in a number of sectors, UK industry is failing to communicate its successes to the global audience.'

Now for the good news. The Wolff Olins survey does not, on the face of it, give much cause for celebration, but it does show that things are getting better. Nearly six in every 10 companies in the sample believe the image of British industry has improved in recent years. So the brand isn't as strong as it could be but it is improving.

For those hoping to use this as a springboard for export success, there is then good news, but it is far from unqualified. 'Most certainly the image of the British brand is improving in this market,' says Jeff Colban of Rolls-Royce Motors Inc in America, about to fly off to a department store promotion in Cincinnati, specifically pushing British products.

'Part of it is that the quality of British goods has improved but it is also that we now go about things in a much more systematic way. British companies perhaps used to be a bit complacent. We're lucky that the Americans like the British and British products. There is that affinity. They may have been disappointed in the past but now British goods are sought after.'

Tony Matthews, who runs Food From Britain in America, agrees. 'The reputation of British food products has improved enormously,' he says. 'Five years ago it was a bit of a joke but gradually things have changed, and it's not all upmarket names like Fortnum & Mason and Harrods, we are starting to do well across the board.' He ascribes this, not just to better focused marketing efforts by British firms, but to a change in perceptions about Britain.

Food Arts, an American magazine for foodies, recently devoted several pages to a feature on London as the 'culinary capital of the world'.

There are, however, limits. Britain has not suddenly been transformed in the eyes of American consumers from industrial dinosaur to cutting-edge manufacturer.

'It depends very much on category,' says Morag Hann, chief executive of the British-American Chamber of Commerce in New York. 'There is a British cachet about certain products but you wouldn't yet, for example, emphasise British technology as a selling point over here in the same way that you might choose to emphasise Japanese or German technology.'

Britain's poor brand image in the past was not necessarily a problem of product quality, however. 'The reputation of British goods is going up,' explains Peter Bishop, director of international trade at the London Chamber of Commerce. 'The word of mouth is getting better. It isn't just the quality of the products. The thing that used to come up again and again was delivery dates. People used to say that they would buy from the Germans rather than us because we simply couldn't deliver on time. That doesn't happen much any more.'

Tony Pittman, UK representative of KolnMesse, the Cologne international exhibition centre, agrees with Bishop's general drift but is less convinced that the delivery problem has been solved. 'British goods have always been regarded in Germany as being of sound quality,' he says. 'Where the British sometimes come unstuck, still, is late deliveries and in taking on orders they cannot fulfil in the time. But it is definitely getting better.'

Research commissioned by the Treasury confirms that something at least is going right. Between the mid-1960s and the late 1970s, Britain's share of world trade in manufactures virtually halved, from 11% to under 6%. Had it continued to decline at that rate, Britain's world market presence would have been virtually wiped out by now. In fact, at a time when there has been growing competition from Asia's newly industrialised economies, Britain's share has stabilised at around 5%.

So the Treasury asked two teams of economists, at the National Institute for Economic and Social Research and Birmingham University, to investigate why. There were three broad conclusions. The first was that changes in price competitiveness, including the rise and fall (mostly fall) in the pound, had had little overall effect on trade performance since 1983.

The second was that the industrial shake-out of the early 1980s, while temporarily depressing Britain's world trade share, had had the effect of leaving a leaner, fitter industrial sector, which was able to improve its export performance. Most encouraging, however, was the third conclusion, which was that improved quality was responsible for arresting Britain's declining share in world trade.

Improved quality, while welcome, is a rather nebulous concept. Looked at a little more deeply, the research shows up that the industries in which Britain's export performance has improved most are relatively few: chemicals, iron and steel, the manufacture of radio, TV and communications equipment, motor vehicles and aircraft. Why has the Made in Britain brand improved in these areas and not others? Some of it is explained by the fact that, after rationalisation, and in some cases privatisation, domestic companies became hugely more efficient than before. Think of British Steel or the demerged ICI. Privatisation and deregulation appear to have provided the spur for a step increase in competition and quality in telecommunications equipment, a sector where more than 150 companies now operate in the UK.

Inevitably, too, inward investment has been responsible for raising the quality of British products, and improving the brand name. By the early 1980s, Britain's name was about as tarnished as it could be in the international motor vehicles market, apart from luxury and specialist products. Inward investment has been responsible for changing that, as it has for consumer electronic products such as television sets, hi-fi and video-players, and as it has in computer equipment and components. The turn-around in one sector is so complete that in November, management consultants McKinsey published an admittedly controversial report claiming that British-made car parts are the best in Europe. The report's authors laid the praise for this development firmly at the door of the car plants set up in the UK by Japanese groups.

Inward investment, according to research funded by the Economic and Social Research Council, has three definable quality effects. The first is the transplanting of higher quality foreign products to British production.

The second is the impact of the introduction of new, state-of-the-art investment, and management techniques. The third is the raising of the quality of the workforce through better training. Nor are these effects confined to the foreign-owned companies setting up or making acquisitions in Britain. The research evidence suggests that improved quality, in all three areas, spreads to indigenous competitors, who realise that they have to match the newcomers or die, and to component suppliers.

Those foreign companies which operate in Britain certainly appear to be convinced. The comment of Bernd Pischetsrieder, the chairman of BMW, that 'Britain is currently the most attractive country among European locations for producing cars', has become a regular fixture in ministerial speeches. Such an observation would have been highly unlikely even five years ago, unthinkable a decade ago, and unadulterated fantasy in the 1970s.

There are others in a similar vein. Jurgen Gehrels, the chief executive of Siemens, on announcing his firm's new semiconductor plant in the North East, said it was 'a recognition of the pro-business environment which exists and the skill and commitment of the British workforce'. For him, the perception and reality were vastly different. 'When I came from Germany, I had certain pre-conceived ideas about the English malaise and strikes,' he said recently. 'I thought of Britain as being in a time warp. But over the past 10 years, Britain has become something dynamic. Deregulation and privatisation have done the trick.'

This is what an improving Made in Britain brand is really all about.

It is that footloose companies, faced with a choice of operating locations, pick Britain, and compare it favourably with other countries in which they operate. Where a product originates may be less important to consumers than the brand name it carries, but if enough international companies choose the UK as a location, this speaks volumes about the quality of the Made in Britain halo.

It suggests, also, that the improving quality of the country of origin label goes well beyond the traditional luxury products such as malt whisky, expensive limousines or fine china, and even beyond the areas identified in the Treasury's research as improving their export performance in recent years.

Seven sectors, in particular, stand out as exciting in this regard, where Britain can claim, if not world leadership, at least the honour of being up there with the best. They include the obvious: financial services, with London easily the dominant financial centre in Europe, and set to maintain that dominance even in the context of European monetary union with a Frankfurt-based European central bank.

London, which has attracted 500 international banks, dominates world foreign exchange trading, and has more people employed in financial services - 800,000 - than the entire population of Frankfurt. The electronics and automotive components sectors are also up there, while for communications industries, a beneficiary of telecommunications deregulation, Britain not only has a large number of competing manufacturers of equipment but also has more than 2,500 international call centres, easily outstripping any other European country. Finally, three sectors of traditional strength for Britain, pharmaceuticals (and more recently biotechnology), medical equipment and food and drink, appear to have increased their competitive advantage in recent years.

So how worried should we be that those who are least impressed by a Made in Britain label are the people who themselves live here? A loyal home market can be an important spur for export success. The loyalty of Japanese consumers to home-produced goods provided the springboard for the Japanese economic miracle. French consumers, too, are notoriously chauvinistic, as a glance around the car park of any hypermarket there will confirm.

Loyalty can, however, go too far. There is no doubt that British industry grew soft on the easy home market and blind loyalty to the national brand.

When the competition arrived, in the form of foreign motorcycles or consumer electrical and electronic products, Britain was not ready for it and unable to respond adequately. Blind loyalty to the national brand is a kind of protectionism. When it breaks down, an inefficient and uncompetitive industry is often revealed behind the protectionist wall, a fate that may well be awaiting France. For Britain, the prognosis is better. The Made in Britain brand is improving in a competitive environment. Word gets around, even to sceptical British consumers.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today