Chris:

The latest Leica camera uses a Kodak sensor. My friends Volvo has a Ford platform, and an engine made near Liverpool. The Boeing 737's that i and the other "last of the summer wine" Chris bang around in hardly have anything made by Boeing in them, apart from the shell. Still a Boeing.

China has stealth fighters and a space programme, we don't. 

Chris,

 

The very first Leica had FILM made in the UK, Japan or perhaps somewhere else, maybe even Germany

Jonathan – Do you not care if your manufacturing industry dies off? If your country has a trade deficit? If millions of people are out of work because of it? For B&O Struer was and still is for many of its products the base of manufacture, it helps the local economy and employment of Struer. I never said the Chinese were incapable of producing high quality goods, but if they do then let them do it through their own companies and market their own genius, innovation, design, etc... as the Japanese did with their electronics and audio/video companies! Remember that the two countries developed differently, one through their own companies becoming internationally competitive and taking the market by storm and creating one of the most middle class societies in the world, and the other through the neoliberal ideals of outsourcing by making copies based on designs and specs for other companies, not creating their own to market international but instead creating the biggest separation between rich and poor in almost any country which is still growing thanks to the factory owners getting richer and the workers still at miniscule wages in comparison. In industrialized countries we have strong unions, and in Scandanavian countries especially they get excellent wages, in Norway for example the average manufacturing wage is $55 an hour, the people working in factories their have an excellent life. I understand that not all products can be made for this price as it's not viable, but most high end products should not and are not outsourced is my point because then the company is making way too much off a product that costs them almost nothing to produce. It's only good for the corporation, not for the consumer or the workers who got laid off, most companies do not lower prices when outsourcing their products, look at Dyson and most other consumer brands, those appliances were the same price before outsourcing if not cheaper. And again – if all luxury high end companies thought that it was possible to produce with the same quality and attention to detail in China why wouldn't all companies produce their super high end goods there? Most do not advertise where their products are made...

 

Bayerische – I agree in part with you on the issue of Vertu but must digress to the fact that many people buy B&O for the same reasons as Vertu – exclusivity, high quality of materials (metals instead of plastics), beautiful design. If they were only looking for sound quality they would be buying other manufacturers as many audiophiles do -McIntosh Amps, Dali speakers, etc... The difference between these two for me is that even a new Vertu phone with the latest technology will go out of date in a few years time, then what? Will you throw away that $5000-10,000 phone and throw away another 5-10k? What makes cheaper phones (in comparison) as the iPhone survive is the apps that people release for them and the convenience of using them. The difference is that some of us here still use 20-40 year old B&O equipment because the quality is so good that it didn't break, and that the designs were way ahead of its time and the sound is still excellent. B&O is much more of an investment than a Vertu (with the exception of these cheap new products such as BS8, etc...)

 

Puncher – I assume your Chinese colleagues are engineers and not the actual factory workers. My point is that there isn't the same kind of apprenticeship schemes and people don't do the work in China just because they are passionate about it, unfortunately they don't have that kind of opportunity. They do it because they need to survive. They also work under a much higher amount of pressure, hence why many commit suicide, for just enough to survive off of. I think that people who get descent wages and work in a much better environment (as they do in Struer, and all the developed countries factories I have visited in Japan, Norway, Sweden, Germany, UK, USA, etc...) will do a better job. It's not about the Chinese people whether they are good or not, I am sure they can be good given the proper training, work environment, and conditions. I am also sure that there are many many excellent Chinese engineers, I just hope that they get to showcase that in their own products with their own companies one day!

 

Folkdeejay – I wish I had the chance to visit their factory but I only saw the manufacturing process through videos. I am sure that the conditions are not the same. The Beocom and most of the B&O equipment is hand-assembled and very low production, the Macbook and iPhone is very mass produced. The working conditions are completely different. If you want to know why you SHOULD care where it is made have a look at this recent article in Time this is from the beloved Apple factory (foxconn) you talk about:

 

http://globalspin.blogs.time.com/2012/01/12/why-workers-in-china-are-threatening-mass-suicide/

 

Foxconn Factory (That produces Apple, Microsoft and other computer manufacturers products)” https://www.google.com/search?q=foxconn+factory&hl=en&prmd=imvnsu&tbm=isch&tbo=u&source=univ&sa=X&ei=kagQT6rKN6iyiQKrkdHiDA&sqi=2&ved=0CF4QsAQ&biw=1920&bih=1109

 

Bang and Olufsen Factory in Struer (sorry about it being in Russian, Skip to around ¼ or ½ as there is a boring intro): http://www.youtube.com/watch?v=5nLgpPcss9E

 

They look completely different and incomparable. The Foxconn factory looks like a sweatshop, look how close people are sitting next to each other, it's like something out of 1984 or Brazil, really rather scary. The B&O is not as much a production line as individual people assembling and testing things by hand in separate areas. I doubt you would be as impressed with the Foxconn factories judging from this.

 

As far as the environmental and labor laws issues go we learned from our mistakes and that's why the world is trying to teach China to not make those same ones. Also you have to remember that standards have always been different: England has had an Assay office since 1300 to prevent piracy of silver and gold-ware. Even as late as the 18^th century one could be sentenced to death for selling something that wasn't sterling as sterling and putting fake marks on. China lacks these piracy and copy controls. Labour Unions were already formed in the 19^th century, there was even an emerging middle class in the 18^th century. China has lacked all those things even up until now. My grandparents and parents worked in Factories in the Soviet Union, you would not believe how strong the unions and labor laws were there (with the exception of political prisoners who worked like slaves under Stalin). Working conditions were better there for them than they are for many Chinese now and they got a decent salary as well in comparison to today’s factory workers in China. China pretends to be communist but really it is the most grossly robber baron capitalist country in the world with the highest disparity between rich and poor.

 

TerryM – Completely agree with you but the lenses and cameras you mention are the exception to the rule. Contax didn't outsource to Japan either, it was a name (licensing) that was bought by Kyocera. I drool over the Contax N Digital, it has always been a dream for me as has the RTS III. I wouldn't trade my Leica M3 for one but I would my Hasselblad 501C! Both those Contax camera's are the height of Japanese manufacturing quality and I don't think they would be the same if they were made in China hence the reason they weren't...

 

Chris – China has a stealth fighters and a space programme because they were sponsored by the Soviet Union and because the government spends most of their expenditure on military. They have perhaps the largest military force in the world and neither of these is an indicator of manufacturing quality. Most of these things were probably copied from the Russians or made thanks to the Russians during the Soviet Union. Just because the Leica M9 uses a Kodak sensor (that I've been told is made in the USA) doesn't mean the camera is not hand assembled in Germany, I've seen them assemble it in the factory in Solms.

 

Linder – interesting point about Volvo being under Chinese ownership, yet the Chinese are not keen to outsource it to be made in China ;-) Think the manufacturing skill and expertise at Volvo in Sweden are more than enough to convince them that it's better than any car that they can make themselves...

 

Chris – I don't think premium car brands will be made in China. Lotus as an example has been running at a loss for probably the last 50 years. They've declared bankrupcy before and been bought out by many companies. Currently Proton, a Malaysian car manufacturer owns Lotus, yet they are keen NOT to have it manufactured in Malaysia even if they run at a loss. They keep pumping money into the company and the factory and hire more and more people for expansion. Funny how a Malaysian company is supporting UK labour more than UK businesses are....

 

When it comes to automobiles there are a lot of reasons why companies have factories on different continents. Mostly this is for tax incentives, to avoid import duties, to make a higher profit. Some places are more expensive to manufacture yet in the long run with all the incentives they make more money. An example is how Ford and GM manufacture many of their cars for the European market in Europe (many cars being made in the UK). VW makes many cars for the US market in Mexico because of NAFTA (North American Free Trade Agreement) there are no import duties to the US. Even a lot of BMW, Mercedes and other cars are manufactured in the US even though labor costs are not that much cheaper here than in Germany just because of tax incentives. Interesting to note that most cars for the Chinese Market and the Mexican Market are Manufactured in those countries! Many car makers have opened factories in those countries to manufacture for that local market! So already we are manufacturing cars there but only for them to use! (With the exception of handmade premium cars such as Lotus, Ferrari, Lamborghini, Bentley, Rolls Royce, etc...)

 

Nobody knows where the Beosound 2 and Earphones from 2006 I have were manufactured? When I bought them I was told Denmark but now I am being skeptical...  

bayerische:

Chris:

The latest Leica camera uses a Kodak sensor.

The very first Leica had FILM made in the UK, Japan or perhaps somewhere else, maybe even Germany

Yes, the latest M Leica has a Kodak sensor, but anyone following photography (or news in general) knows that may not be for long!

On the film front, I have stock from USA, UK, Japan, and Croatia.

And, to be on topic... I don't particularly care where something is manufactured so long as the product matches what is advertised -camera, car, AV, or plain old widget.

Edited out

I agree with a lot of what you say Dkatz.

 

There's definitely the danger in the western world that we are given away our industrial economy "for free" to the Chinese, Brazilians etc. Time will tell. 

 

However, a fundamental problem in the Western world, especially in Europe and even more so in Scandinavia is the price of the work force. Your example of 55 euros/hour for a factory worker is probably correct, but at the same time it's absolutely mad!

We ourselves are to blame for this. 

 

As someone put it, the reason for outsourcing is MONEY, and that is true. As we never see cheaper products as a result of moving the production to china, even if the production costs are a percentage of what they would be in Europe. I guess you can always blame the high shipping costs.

I agree with a lot of what you say Dkatz.

 

There's definitely the danger in the western world that we are given away our industrial economy "for free" to the Chinese, Brazilians etc. Time will tell. 

 

However, a fundamental problem in the Western world, especially in Europe and even more so in Scandinavia is the price of the work force. Your example of 55 euros/hour for a factory worker is probably correct, but at the same time it's absolutely mad!

We ourselves are to blame for this. 

 

As someone put it, the reason for outsourcing is MONEY, and that is true. As we never see cheaper products as a result of moving the production to china, even if the production costs are a percentage of what they would be in Europe. I guess you can always blame the high shipping costs.

Dkatz:

Jonathan – Do you not care if your manufacturing industry dies off? If your country has a trade deficit? If millions of people are out of work because of it?

Looking at my own country: The manufacturing industry contributes for less than 20% of our gross domestic product and still we have a substantial trade surplus. The real worry in the long run is not the loss of the manufacturing industry, which is inevitable for most products, but the fact that the research and development of products will move away from the Western world... Think about how much engineers are trained in China and India and compare that to Europe and the United States and you know what I mean.

Dkatz:

Chris – I don't think premium car brands will be made in China. Lotus as an example has been running at a loss for probably the last 50 years. They've declared bankrupcy before and been bought out by many companies. Currently Proton, a Malaysian car manufacturer owns Lotus, yet they are keen NOT to have it manufactured in Malaysia even if they run at a loss. They keep pumping money into the company and the factory and hire more and more people for expansion. Funny how a Malaysian company is supporting UK labour more than UK businesses are....

Actually there are strong rumors that Lotus is up for sale (Bloomberg december 30th 2011). Proton has shown a drop in profit of 76% third quarter of 2011. The idea for Proton was not so much to make a profit with Lotus but to use their engineering for their own benefit and earn some kudos for Proton at the same time. Now that has not really worked, has it? It looks like they have to sell their love baby... 

The moral of the story is that luxury brands should ideally make a profit and keep matters in their own hands. The best way of doing this is to make great products, sell them at good prices and using good marketing.

Another thing that facinates me as a business owner myself is how increadible blunt and inefficient these large corporations are run. Nokia is a prime example. Departments upon departments, layers upon layers of different executives.

 

If I did the same with my employees, that they would go home from work, and someone asks them "what did you do today at work?" and they would mostly reply, "I hung out on the internet on Beoworld", or "not much". I would be bankrupt. Or I couldn't use as far as possible local finnish goods, and raw materials, prepared from start to finish by a Finnish worker. 

 

I see this all the time with 90% of my friends who work in banking, financing, marketing, sales, realestate, research etc... Wouldn't this mean that these big companies employ too much people and the structure is wrong? All these people who come home saying they did not do much, have salaries of 4000-10.000+ euros a month and are not very high up in the hierarcy structure of the respective companies. 

I can very well understand if the a company is "over populated" and pressured by investors to bigger dividends, and also bigger bonuses for the top execs that production needs to be outsourced. 

 

 

 

Beautifully written piece by Dkatz.

B&O should stick to their heritage which when we think of beautifully crafted in Denmark goes a long way to justify their huge price tag. 

I think we should be able to choose were a product is manufactured. OK, the mainstream may be made in China but not this heritage brand.  I for one do not want to rely on a Communist country who Human Rights record is one of the very worst in the World.

Horses for courses but B&O Made in China?  Do you really think that is moving forward? No.   For me, quality is the key in my book and anything Made in China is poor, lacks style. I think it is a terrible world wide decision to rely on one country for manufacturing, simply terrible and Im sure the World will be at the mercy of this Communist country one day!

So what has gone wrong for B&O?  In the 1980s & 90's everything was made in Denmark and a good B&O system cost 50% more than a really good say Technics system so the argument for making else where doesn't really count!

Tod Daniel:

  For me, quality is the key in my book and anything Made in China is poor, lacks style.

Not really accurate.

Nothing wrong with the style,or quality,of my B & W Zeppelin.

Then,in various price ranges we have the Shanling Hi-Fi products.

bayerische:

There's definitely the danger in the western world that we are given away our industrial economy "for free" to the Chinese, Brazilians etc. Time will tell. 

Completely correct. I'd like everything to be made in Denmark, England and so on. It wasn't that many years ago when pretty much the majority of Marks & Spencer's clothes were produced in the UK. Same with TM Lewin producing shirts in Southend. I remember calling the Southend factory and speaking about their shirts in the 90s. Not now. They are all made abroad. Why? As they want to drive down costs. Why? As consumers want cheaper products.

This is the fundamental problem. Not whether China is poor at manufacturing. That's almost a moot issue. The problem is now that brands want to keep the same products but reduce their costs. It means customers buy more product, which keeps them in business. Retail is all about the numbers game - quantity rather than quality.

Here in Bath - where there's more money than most UK towns - this theory still applies to retail. A friend of mine opened a superb store a couple of years ago stocking high value products, specialist candles and so on. Footfall is high, as you would expect in a town such as Bath. Problem is, people want everything to be £25 or less. They want to come in each week and buy a product or two, then return the following week - they don't want to buy an expensive product, clear their bank balance and not be able to shop the following week.

It's rampant consumerism. Shopping is the new religion. People want brands at bargain prices. This is why people have turned to cheaper manufacturing - when Chinese manufacturing becomes more expensive, brands will move to Vietnam and other locations.

What I find ironic about the arguments on this board is that people just do not seem to get the wider picture. Although we'd all love B&O to keep their heritage and probably half of the board are prepared to pay premium prices for this, the number of new consumers coming in below is dropping off, which is why B&O have been struggling for the last 2-3 years.

People <35 simply cannot afford to buy Danish, don't want to pay £1500 for a Danish-produced BS8, aren't fussed about products that last and so on. We've had many arguments about this on this very board.

B&O have recognised this and have shifted manufacturing to China so they can appeal to this forthcoming market. Their existing userbase of 45+, financially savvy customer base is (frankly) getting old, dropping off and being replaced by the most cash-strapped <35 year olds who are much more flippant with their demand. They are quite happy to spend £700 on a TV and swap it out every couple of years.

On a local football forum today, I saw a person asking what was the best 50" plasma he could buy for....£500! He couldn't even buy a Chinese-manufactured Beolit 12 for that price!

It's this consumerism that's driving supply. Brands are driving down their prices to meet the demand. This is also the reason why products manufactured in China appear sub-standard. It's not the manufacturing process, it's the quality of the materials that have been specified to meet a certain price point.

Don't blame B&O. They might lose some of their ageing customer base as a result of moving manufacturing to China (see above about their heritage), but they know they need to do something about the very price-savvy consumers out there and they only way they can keep reasonable build quality, plus decent audio, is to shift manufacturing.

If you want B&O to make a profit, have a future and meet a wider customer base, you may need to bite the bullet and realise that this rampant consumerism doesn't allow them to a) make a BS8 in Denmark, b) charge a premium price and c) compete in the current and forthcoming climate.

TerryM:

Nothing wrong with the style,or quality,of my B & W Zeppelin.

Nor the BS8!

As I've said before though, it's not the manufacturing to blame, it's brands choosing poorer quality plastics and other components (for their TVs etc) to drive down their costs and, as a result, their retail price. The problem is only a small number of people have the income to pay for Danish-produced premium products and it's a diminishing consumer base. One minute we're arguing about the cost of B&O products - multi-page discussions on the subject - but on the other hand we're saying we want Danish-produced premium products *plus* cheaper prices? And we wonder why B&O have struggled to make a profit recently?

The argument doesn't stack up.

Tod Daniel:

For me, quality is the key in my book and anything Made in China is poor, lacks style

Since when are the Chinese designing Apple, B&W and B&O products? You're saying the manufacturing process now dictates the design? I knew that's where Apple were going wrong. Poor Jonny Ive v Communist (as you call them) manufacturers. He really has his work cut out :)

Dkatz:

The working conditions are completely different. If you want to know why you SHOULD care where it is made

 

I didn't say I don't care.... I said I don't mind...which is not quite the same.  The reality is that the retail prices the market will stand are beyond the supply chain logistics for many E.U manufacturing companies to compete - for a multitude of reasons.

It is a far wider debate than that of B&O outsourcing few "entry level" items - but the West cannot simply take the moral high gound having benefitted from around 300 years of industrial dominance, and expect emerging markets to pay £55 per hour to its shop floor staff or suddenly adopt the "best practise" it took us many decades to even try and implement - that is just so out of the question as to be almost funny. 

This short video sums up what the root causes of all this are - albeit answers as to how we resolve the current woprldwide problem are harder to come by.

http://www.youtube.com/watch?v=qOP2V_np2c0

 

 

 

((((ps - for the record, I would not use anything Bose make unless I need a new "generic" doorstop at some point - but thanks for the suggestion ))) LOVE THAT COMMENT FOLKDEEJAY

on a more seroius note, the reason I dont like B&O outsourcing to China is that the reason companies can produce and sell prodects cheaply when produced there is due to the appalling working conditions of their factories. Look at recent days reports on the factory making the iphone and ipad in China....The workers took to the roof and 300 threathen to commit suicide.....this same factory had a spate of suicides last year and 2009 and apple promised to address the workers concerns. Clearly insufficiently!!!

Also, China uses its almost 5 million prisioners in the unpaid production of toys and other products - there was a recent excellent report on CNN under their Modern Slavery series of reports.

So if this is a route that B&O choose to take, and I hope it isn't, then ill be looking online for vintage Danish products and foregoing their new ones.

Having ranted, I realise I am typing this on a notebook make in China...now there is irony. Probably my sofa too and the cup im drinking from......

but its just another angle to consider...the moral dimension of modern globalization.

 

PS FOLKDEEJAY....i have a Bose Ipod thingy in my small summerhouse (Shed) so at least i have banished it as far from my actual home as i can :):):)

 

Paul

Bayerische – You have to remember that Norway is perhaps the most expensive country in the world and because the living costs are so high, so is the minimum wage. I have a friend who just works at a bar and he gets something like 20 euros an hour... It's not just manufacturing wage, but wages in general that are higher there exactly because cost of living is higher. Although you do get more social benefits such as free medical, paid university, etc... The same goes for Denmark, things you don't get in America and other countries.

 

Perhaps this is another reasons that some B&O products in the past such as the Form 2, Beosystem 10, etc... have been made in Japan. The labour rate there is $27.80 compared to $1.68 average in places like China and Philippines (this is the latest data from the US Bureau of Labour Statistics). This is another reason why so many things are made in China now versus even Taiwan where the labour rates are $8.68 and hour. However, many in Europe a way around this, even B&O by opening factories in the Czech republic. Louis Vuitton opened one in Spain and some fashion brands have outsourced to Portugal. Interesting to note that US Labour rates are nearly half those of Norway and Japan is half that of Denmark... The so called growth rate of Chinese hourly rates is very miniscule, calculated in pennies per year compared to the many dollars a year in developed countries. The US and Japan actually had a decrease in Labour unit costs. Look at the statistics here: http://www.ventureoutsource.com/contract-manufacturing/trends-observations/2010-report-global-manufacturing-labor-rates-trends-and-competitiveness

 

Yes it would be better to lower the manufacturing rates but even if we halved them, people would STILL OUTSOURCE. Think about it: would a company rather pay a worker $1.68 an hour or $25 an hour? Even if it was $10 an hour which most people couldn't live off of in the developed world, it still would be too much compared to third world labour costs, even calculating in shipping and import duties. On top of that China has factories that are ready to manufacture, you don't need to go there and build a factory or invest a lot into it, you place an order with specs and get it made. Yes you lose a lot of control and can't oversee the manufacture yourself or be as stringent, but most companies are willing to take that risk and they don't care about the race to the bottom or what will happen to employees, they just care about making big money in the present. A lot of companies still make a profit making their products in developed countries, both in audio equipment and other goods, they just don't make as much as the companies that outsource... It's all about greed in my opinion. It's not enough for a CEO to make 500,000 a year or 1,000,000 a year and he answers to his shareholders not to his workforce or consumers... I haven't even begun to talk about the difference in health and safety standards, the lead content and other such things found in consumer toys, etc... Corporate social responsibility is nearly non existent these days.

 

Beocool – Yes but outsourcing is the start of this move. First its manufacturing then it will be engineering and design that will be moving away. This is many peoples fears is that once they know how to manufacture our goods, they will create their own designs, sell them for cheaper and bankrupt all the western companies. Or better yet the big Chinese corporations and Chinese government can just buy out all the western companies as they have been doing...

 

Regarding Lotus, they have changed their marketing strategy by selling T-shirts and hats and things as Dany Bahar did with Ferrari turning it into a commercial brand before he joined Lotus. They are making some money off that, and most off consulting work. They've rejoined F1 and are making a name for themselves. Lotus has been owned by many companies, my car was built when Lotus was owned by GM, then Bugatti bought them before selling them to Proton. This is how it is these days with cars. I got to sit in one of your cars from the Netherlands – a Spyker once, an amazing car! Nothing like its interior, like being in an old aircraft with comfy crosstitched leather. Yummy!

 

Bayerische – I completely agree with you on the point that these consultants and people who do nothing get paid higher wages than the manufacturing average. They have so many board-members and executives that do nothing yet get paid hundreds of thousands-millions in a way to justify outsourcing. That money, even less could have been saved to manufacture in their own country. Great point about the big corporations!

 

Tod Daniel – Thank you. I have to agree with you on the scariness of the future. It troubles me a lot to think that all manufacture will move to China. Especially so since a non-mainstream company like B&O is suddenly manufacturing their as well. I guess they are becoming one of the mainstream as well...

 

Moxxey – I am not one of the B&O users that argues about price. In fact I think that B&O is EXTREMELY fairly priced for being made in Denmark. Look at some other Danish manufacturers such as Dali and you will see that their prices are often higher! It's not just about the plastics, have a look at the manufacturing process between manufacturing at Foxconn and doing so at the B&O factory and you will see the difference, a lot of human skilled labour goes into the manufacturing at Struer. The whole point of outsourcing to developing countries is because it is cheap unskilled labour. I believe skilled labour will produce a better product, plus they can test it, and have extremely stringent quality control in house. B&O even manufactures their own plastics and metals such as alluminum in house because they strive for quality in their Struer made products, they obviously believe their Danish made plastics and alluminiums are better than importing cheaper Chinese ones!

 

Folkdeejay – Thank you for the interesting video. I think it is however more than just the fact that financiers are getting richer whilst manufacturing is getting poorer. The owners/CEOs of the companies who chose to outsource are not financiers, they are like general managers of the companies. There is a huge difference. To top it off I think the neoliberal governments of Thatcher/Reagan are to blame more than anyone for liberalizing trade. Yes, this is what the financiers wanted but companies did this in order to increase profits for themselves. China is not a communist country as Tod Daniel said, in fact it is the most capitalist of all countries in many ways!

 

In regards to paying 55 pounds an hour to shop-floor staff that is ridiculous. Manufacturing wages are around 20 GBP per hour in the UK and when I worked on a shop floor in London I got minimum wage which was 5.15 an hour a few years ago. I don't think we should pay higher wages to developing countries, that won't solve their problems, and in fact companies will just go elsewhere. The companies don't dictate the wages, the factory owners higher people at a certain wage whilst reaping the profits themselves. It's the worst kind of capitalism and it is exactly European, especially Scandinavian countries that have the best kind of democracies in my opinion – social democracies where they care about their own peoples well being whilst still having a free economy. We should support our own manufacturing industries and let them support theirs and develop on their own in developing countries.

 

Paul – Completely agree with you and I didn't even hear about the millions of prisoners manufacturing toys. That's quite scary, reminds me of the Stalinist times in the Soviet Unions when they had political prisoners building the metro systems and various buildings, etc... Hopefully B&O will stick to outsourcing only these small products to China and keep the rest in Europe (preferably Struer). On a side note we all have a choice, the sofa I am sitting on is made in the USA, and the computer is made in Germany )

moxxey:

bayerische:

There's definitely the danger in the western world that we are given away our industrial economy "for free" to the Chinese, Brazilians etc. Time will tell. 

Completely correct. I'd like everything to be made in Denmark, England and so on. It wasn't that many years ago when pretty much the majority of Marks & Spencer's clothes were produced in the UK. Same with TM Lewin producing shirts in Southend. I remember calling the Southend factory and speaking about their shirts in the 90s. Not now. They are all made abroad. Why? As they want to drive down costs. Why? As consumers want cheaper products.

This is the fundamental problem. Not whether China is poor at manufacturing. That's almost a moot issue. The problem is now that brands want to keep the same products but reduce their costs. It means customers buy more product, which keeps them in business. Retail is all about the numbers game - quantity rather than quality.

Here in Bath - where there's more money than most UK towns - this theory still applies to retail. A friend of mine opened a superb store a couple of years ago stocking high value products, specialist candles and so on. Footfall is high, as you would expect in a town such as Bath. Problem is, people want everything to be £25 or less. They want to come in each week and buy a product or two, then return the following week - they don't want to buy an expensive product, clear their bank balance and not be able to shop the following week.

It's rampant consumerism. Shopping is the new religion. People want brands at bargain prices. This is why people have turned to cheaper manufacturing - when Chinese manufacturing becomes more expensive, brands will move to Vietnam and other locations.

What I find ironic about the arguments on this board is that people just do not seem to get the wider picture. Although we'd all love B&O to keep their heritage and probably half of the board are prepared to pay premium prices for this, the number of new consumers coming in below is dropping off, which is why B&O have been struggling for the last 2-3 years.

People <35 simply cannot afford to buy Danish, don't want to pay £1500 for a Danish-produced BS8, aren't fussed about products that last and so on. We've had many arguments about this on this very board.

B&O have recognised this and have shifted manufacturing to China so they can appeal to this forthcoming market. Their existing userbase of 45+, financially savvy customer base is (frankly) getting old, dropping off and being replaced by the most cash-strapped <35 year olds who are much more flippant with their demand. They are quite happy to spend £700 on a TV and swap it out every couple of years.

On a local football forum today, I saw a person asking what was the best 50" plasma he could buy for....£500! He couldn't even buy a Chinese-manufactured Beolit 12 for that price!

It's this consumerism that's driving supply. Brands are driving down their prices to meet the demand. This is also the reason why products manufactured in China appear sub-standard. It's not the manufacturing process, it's the quality of the materials that have been specified to meet a certain price point.

Don't blame B&O. They might lose some of their ageing customer base as a result of moving manufacturing to China (see above about their heritage), but they know they need to do something about the very price-savvy consumers out there and they only way they can keep reasonable build quality, plus decent audio, is to shift manufacturing.

If you want B&O to make a profit, have a future and meet a wider customer base, you may need to bite the bullet and realise that this rampant consumerism doesn't allow them to a) make a BS8 in Denmark, b) charge a premium price and c) compete in the current and forthcoming climate.

Partly agree with you on this but remember that there are a lot of rich young people today. More than there ever were. It used to be people worked up in companies and became rich in their 50s but now with so many stars, young execs, startups, bankers, etc... in their 20s and 30s they can easily afford to buy B&O.

Maybe if companies didn't pay their execs so much and have millions funneled out: http://www.theepochtimes.com/n2/business/olympus-sues-executives-for-fraud-174941.html?utm_source=dlvr.it&utm_medium=twitter this money could be spent on manufacturing in their own countries rather than just outsourcing. Yes it's partly the consumers fault but as mentioned the price of products doesn't always go down, and if it does it's not enough to justify the huge profit they are making...

This is pure racism. Not every Chinese person works in a sweat shop! I find this post highly offensive. I doesn't matter what race you are or where you come from, you can still be intelligent, hard working with an eye for detail and a total commitment to quality.

B&O is a global company and like many global companies it wants to have infrastructure spread across the globe and around different economies. Key products are still made in Denmark but smaller products that demand higher volume manufacturing need to be made in high volume quality controlled assemblies - I don't think you would find any economist recommending anyone sets up a high volume factory in Denmark.

What's the problem anyway? Has anyone received a product that fell to bits when it arrived? I haven't seen any drop in quality at all.

I certainly would not call this racism! This is a debate about manufacturing and quality control. And yes, my MacBook is falling to pieces after 18 months even though it is the most well looked after machine around so yeah, control control on these mass produced expensive items is an issue here!!!

I have friends from prctically every single country in the world, however, after studying Law and Human Rights along with the Human Rights Act for 3 years at the University of Manchester, i'd definately say that China has one heck of a long way to go!

Anyway if you are happy to buy an inferior product that is made for £60 and being sold for £700, then go ahead, more the fool you! I on the other hand will be buying quality that lasts in the future!

Tod Daniel:

I certainly would not call this racism! This is a debate about manufacturing and quality control. And yes, my MacBook is falling to pieces after 18 months even though it is the most well looked after machine around so yeah, control control on these mass produced expensive items is an issue here!!!

 

I don't suppose you have considered that actually might be a Californian design problem?

 

sorry if you find a discussion about working conditions in china or elsewhere 'racist'....but that is certainly not the intention behind it. Rather it was to add another dimension to the debate, namely the moral one concerning how workers are treated. There is a reason why euro/US companies outsourse there - to decrease  the costs of labour.

you are perfectly right to say that many people do not work in sweat shops in china. Millions dont...but millions do. You are also perfectly right that Chinese people are highly skilled, intelligent and hard-working.

 I have been there often and know only too well the extraordinary wealth in cities like Shanghai , Beijing an nanjing. But racism aside,  there IS a real problem in china with poor working conditions in US/Euro multinationals based there. When Apple had to intervene in one of their own outsourced facilities after a spate of worker suicides, then clearly there was a problem. But at least they intervevned.

Also, I have many chinese friends who share my view on the working conditions in some parts of china. To ignore this element of outsourcing is simply to bury ones head in the sand.  Outsourcing is simply a part/fact of share-price driven capitalism where  the sole aim is  to maximize profits. Nothing wrong with that, provided (1) workers are treated justly and (2) the quality of goods  you pay for is not seroiusly compromised.

 When you can buy an entire childs  school uniform in Tesco for  £20 or £30, surely you have to ask how this can be done in a manner that treats the manufacturing staff in China, Malasia or Philippines fairly?  There is ample evidence that workers in these industries are poorly paid and work in conditions we would refuse to work in.   

 I have little doubt that  chinese workers are quite capable of making B&O to the same standard of Danish manufacturing. I recently travelled on a superspeed train from Shangai to Nanging that reached 317 KPH and was as smooth as a mercedes!!! So I no no concerns about their technological abilities.

 But I am less certain that these same  workers who do the manufacturing will be treated fairly.

I remain to be convinced that outsourcing to China is anything other than opportunistic.  I could be wrong - but if i am, id like to see photos of the B&O chinese  facility and interviews with the workers.

paul

Dkatz:

Bayerische – You have to remember that Norway is perhaps the most expensive country in the world and because the living costs are so high, so is the minimum wage. I have a friend who just works at a bar and he gets something like 20 euros an hour... It's not just manufacturing wage, but wages in general that are higher there exactly because cost of living is higher. Although you do get more social benefits such as free medical, paid university, etc... The same goes for Denmark, things you don't get in America and other countries.

 

Thanks for telling me, I didn't know this living in Scandinavia and all...

Sure Norway is expensive, so is Finland, all of Scandinavia. 

I pay my bartenders close to 20 euros an hour. 

 

 

I have to agree with Dkatz, you are spot on. I don't know what you studied, but you probably studied something similar to me, industrial design. I couldn't have said it better myself

Perhaps there is nothing wrong with the skill of the Chinese workers, but there's a point all of you have forgotten. Would you for example be assembling top notch products if you had to assemble 1000's of them in a day, just to meet your quota and avoid being verbally abused? Would you feel awake enough if you only had a few hours of sleep, much like these workers, working day in and day out? Assembling products in intense heat in dirty and unsafe conditions?

Terry Gou the owner of the Foxconn factory which manufactures for Apple did have a spate of suicides, said they 'all had personal issues'. Make of that what you will. 

I agree with you Dkatz about Miele, the company I would love to go to work for. Top quality products, designed to last and perform. 

 

Adam

MartinW – I never said that every Chinese person works in a sweatshop but just look at the facts. The human rights violations are appalling, the working conditions are far from decent and the wages are horrible. The factory owners make millions, along with the corporations that outsource to them, whilst the workers get paid pennies. It creates perhaps the biggest separation between rich and poor in the world both in the developing and developed world.

 

Many economists are actually saying exactly the things I mentioned. There are right wing economists and left wing economists so it really depends who you ask. The Neoliberal right wing ones that probably helped make suggestions to the likes of Thatcher and Reagan probably wouldn't suggest mass-producing in Denmark, but economists like Keynes, Marx, etc... would probably suggest the opposite. During America's post-war boom years nearly everything was made in the US, there were in many ways better social programs (thanks to Roosevelt after the depression), the federal minimum wage in around 1967 was the highest America had ever had, in todays money it would be twice what it is today. American products were made in the USA yet they cost ½ or ¼ what they cost in today's money (calculating inflation) with the products being made in China. Nowadays, the economy is stagnant, people are out of work, manufacturing has lost millions of people thanks to Reagan. Companies are making billions instead of millions as it wasn't enough for them, the consumers are getting ripped off, the employees laid off, and the only ones to benefit are the CEOs and a few people at the company. How is this Racism? I never said Chinese people were incapable of creating good products, just that they usually don't, especially when rushed working in those kind of conditions. It's exactly the same reason why East German/Soviet products were inferior to West German products in many ways. A lot of them had the same pre-war “spec sheets” and manufactured the same camera's and lenses but the West German ones were always of a better build quality...

 

Tod Daniel – Completely agree with you. My Fujitsu Siemens laptop that I am using now for this posting I've used everyday for the past 4 years when I bought it used, it was already 2 years old when I bought it. Made in Germany (including the motherboard) I haven't had any problems with the computer (except for the fan and battery, both of which need to be replaced every few years on any computer). It has been the most reliable computer I have ever owned. This is truly what I call reliability thanks to QC of their own in their own factory, not leaving the QC to someone else who might have different standards, etc... I am friends with a couple of economists working for the Ministry of Economy of Japan at Embassies... They both say that the most important thing for QC is the final QC checks and usually the most reliable and well built products are those where the FINAL QC even if many of the components inside the electronic device/computer, etc... were outsourced. They actually criticized many Japanese companies for outsourcing their manufacture.

 

I have another friend who sources parts for airplane manufacturers, he used to work for Japan Airlines. He would go to various factories like Recaro in Stuttgart, Germany to source seats for the first class cabins. Now he is in the aircraft part business, he has visited factories around the world and even lived in Vietnam for a couple of years. He still believes that products made in developed countries are superior, he was in charge of sourcing these parts and just couldn't find ones that were high enough quality from China so he sourced from other places where he could get the best quality.

 

Paul – I agree with most of what you said. The thing with Apple is they intervened only because they were getting unwanted media attention on this issue. The factory where Apple products are made is shared with other companies that outsource there as Foxconn is one of the biggest factories in China for electronics manufacture. So if Apple says “workers stop committing suicide, improve conditions” it is up to Foxconn to do this by reorganizing the work structure, perhaps increasing pay, this is not worth it to them, so they might make a show and it happens again. If we had a factory like that anywhere in the developed world it would have probably closed down by now.

 

On another note I think that the quality of B&O or any outsourced product will not be the same until: 1. Workers are treated well and given the same space and working environment and decent pay that they can live off of and totally focus on their work (this doesn't have to be as high as Danish wages but simply something closer to Taiwanese wages). 2. Apprenticeship schemes of learning the craft of manufacturing B&O products specifically (as in Struer) is initiated and after a few years of learning I believe that a Chinese person may be able to make a product on the same level as a Danish person given that level of training and knowledge. 3. Plastics and Metals are either imported from the factory in Struer into China or China starts producing those materials at the same quality level. Remember people – there is a reason why B&O manufactures their own Aluminum and Plastics, rather than importing, they believe them to be the best quality available which is why they opened those factories in the first place!!! 4. B&O opens their own factory there and controls everything from labour division, to quality control checks, etc... it might only take a couple of skilled workers from Struer to oversee this for a couple of years... Looking at costs though, it would not be worth it to go to China in the first place if all of these levels would be met, they might as well manufacture in Struer by that point...

 

People forget that humans are not robots, nor are they monkeys. Most of the millions of Chinese people who are hired to these factories are not hired for their exceptional attention to detail or their skilled labour. That is why it is known as unskilled labour, I am sure some of these people are great at their craft but overall it is not the same as having people train for years to be a specialist at manufacturing a certain product line as is often the case in developed countries!

 

Adamhornsby – I actually studied for a Masters in International Studies and Diplomacy. My modules were: International Economics, General Diplomatic Studies and Practice, and Japanese. I wrote my dissertation on the ills of outsourcing manufacturing to developing countries both in regards to the race to the bottom (growing separation between rich and poor in developed and developing world) including working conditions, etc... and the loss of quality which has been going on for many years now thanks to this.

 

I completely agree with you Adam and right on the spot about your point about working conditions and how many must be assembled in a day, etc... That is not what B&O were about, they always wanted to manufacture as much as possible but keeping with quality. If you start to manufacture the way China does you start to lose quality, especially so on an industrial scale like that of China combined with those working conditions, hours, pay, etc....

adamhornsby:

I agree with you Dkatz about Miele, the company I would love to go to work for. Top quality products, designed to last and perform. 

Adam

Miele may still be the best for quality 'white goods',but I have just replaced an 18 year old Miele washing machine with a new Miele,the external build quality of which is noticeably inferior to that of the old machine.