Has globalization killed the made-in effect

Introduction

In the pre-globalization age, consumers could easily tell the origin of most products simply by checking the ‘Made-in” label on it. However, the ‘made-in effect’ has become almost obsolete in this era of globalization due to increased outsourcing of manufacturing functions to overseas. Pioneered by Ford and General Motors in the 1960s, manufacturing companies gradually abandoned the traditional practice of making everything themselves and outsourced some functions to specialized firms in other countries. Made-in is not a term that be convincingly applied on product on the international market, rather a reflection of a percentage of product content.

Made-In Effect

For a long time, consumers around the world have identified products from labels indicating the country of origin or where they have manufactured. Historically, the concept of the ‘made-in’ country was perceived as a substitute of country of origin or assembly – with the country name appearing on the ‘made-in’ label (Rao, 2001). As a result of the globalization phenomena, however, an increasing number of material goods used on a daily basis are manufactured abroad. Many firms in different parts of the world are contributing to the making of a single product, which makes branding it as ‘Made-in’ particularly problematic. The growing globalization effect has inspired many manufacturing firms to move their entire or part of their production to foreign countries which offer low-products costs and maximum efficiency (Torelli, 2013).
The American Automotive Labeling Act (AALA) of 1994 demands that vehicle manufactures must attach labels indicating the what percentage of their vehicle parts are American or Canadian, as well other countries that contributed at least 15% of the vehicle (Yusuf, 2000). In addition, the label must contain a list of all country of assembly and place of engine and transmission manufacture. However, the AALA data are highly vulnerable to manipulation and thus unreliable about information on vehicles’ country of origin. The main problem relates to the fact that automakers issue their own data which is not subject to independent external auditor or third-part verification (Ramrattan & Szenberg, 2007). The manufactures thus manipulate their reports on country of origin in different number of ways. The AALA reports fail to make a distinction between Canadian and US parts due to close proximity of the manufacturing firms, which has inspired many American domestic manufacturers to establish plants in Canada. The continued survival of the ‘Made-in’ effect exhibits itself well in such small industries as furniture, apparel and foodstuff in which country classification is relatively simple (Diigo).
Globalization has indeed killed the made-in effect in view of the present reality that even the traditional homegrown manufacturing companies have now become multinationals. For instance, 11 of Ford company’s 56 research are located outside the United States. While BMW runs one of the largest vehicle manufacturing plants in the United States, the bulk of parts and technology for vehicle assembly are sourced from overseas countries (Singh & Verma, 2010).
In the increasingly globalized market, relying on the Made-in effect is not the best strategy for manufacturing and retail companies targeting consumers overseas. For instance, American companies may find it difficult to push their branded products in countries where consumers have strong anti-American views. Marketers would find it exceptionally difficult to create positive views of their products where anti-American feeling are deeply entrenched (Tumblr ). A number of empirical studies have established that consumers’ positive or negative feeling toward a certain country of product origin affects their willingness to purchase its products.
The ever-expanding presence of multinationals continue to blur the lines of what is purely a particular country’s product and what has assumed a life of its own in the international market. The effects of globalization have increased offshore manufacturing, where firms seek to exploit economies of scale and costs (WordPress). This has resulted in hybrid products comprised of several components originating from more than one country and assemble in a single country. Made-in effect in the present globalized environment can therefore be perceived as a multidimensional construct comprising a hybrid of elements that render making the distinction between the country of origin or assembly on the one hand, and the country of the firm’s home almost impossible. This explains why there is an expansion of the ‘Made-in’ concept to include ‘assembled in’, ‘designed in’, ‘parts supplied by’, and ‘engineered in’ (Torelli, 2013).

Conclusion

Increased globalization has resulted in the death of the country of origin or ‘made-in’ effect due to elimination of national borders, greater openness to diverse cultures. Many manufacturing firms are seeking to capitalize on the positives of cost saving, specialization and efficiency of firms in foreign countries in the production of their products. The vast majority of material goods reaching the international market today are products of concerted contribution of various specialized manufacturers in different parts of the world, making it difficult to attach the made-in country label to the finished product.

References:

Ramrattan, L., & Szenberg, M. (2007). Distressed US industries in the era of globalization. Aldershot [u.a.: Ashgate.
Rao, C. P. (2001). Globalization and its managerial implications. Westport, Conn. [u.a.: Quorum Books.
Singh, P., & Verma, S. (2010). Organizing and managing in the era of globalization. New Delhi, India: Response Books.
Torelli, C. J. (2013). Globalization, culture and branding: How to leverage cultural equity for building iconic brands in the era of globalization. NY : Palgrave Macmillan.
Yusuf, S. (2000). Local dynamics in an era of globalization: 21st century catalysts for development. New York, NY: Oxford Univ. Press.