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LAST WORD: When the Foreign Product Craze Goes Too Far
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When the Foreign Product Craze Goes Too Far

By Michael Dow

BT 201504 03 Last word Bentley Motors named as top employerGlobalisation has made it much easier for people to buy products and services from the opposite end of the globe. Big companies have adapted to this new age by gearing their operations towards a more global consumer base. China's rapidly expanding middle class has long been a golden goose for money-hungry foreign firms. Everyone from American tech companies and German car manufacturers and to Italian fashion houses and Japanese toilet seat manufacturers have been cashing in on the Chinese consumer's insatiable demand for foreign products. There are many factors driving this craze - some of them cultural, some of them related to general consumer preferences. Like everyone else, this country's citizens want to get the best value possible for their hard earned cash. Foreign brands generally are considered to be of a higher quality than their domestic counterparts. Those who can afford to buy Gucci bags and Bentley motors are deemed to be of a high social standing.

This has all been very well and good for multinational companies but it hasn't always been great for Chinese consumers. Imported food products are a good case in point. Concerns about the quality and safety of locally produced goods may well be warranted but anyone who wishes to avoid the health hazards that are involved in consuming certain locally-produced items have to pay a huge price for peace of mind. It is always astonishing to see how many boxes of baby formula are hauled on and off the 2 hour flights from Manila to Xiamen. Those savvy Chinese passengers must spend thousands upon thousands of yuan on flights, hotels and excess baggage charges to procure such vast amounts of foreign baby milk.

Then there are the scam artists who are constantly preying on the Chinese consumer market. In Guangdong province there are entire factories whose operations are solely based around knock offs. To the untrained eye it is hard to distinguish their products from the real thing. Some people don't particularly care whether they are buying the genuine article or not. Places like the Beijing Silk Market are extremely candid about their selling of 'Armani' shirts for 30 "kuai" each, as are the electronics vendors in Shenzhen who flood Guangdong Province and Hong Kong with shoddy fake iPhones. Although they are committing a crime, neither the authorities nor the consumers seem overly bothered by their dodgy dealings.

BT 201504 01 Last word HLHaving said that though, there are plenty of instances in which fraudsters are tapping into a vulnerable target market who are being scammed in the traditional sense of the word. The high demand for Japanese products has been especially beneficial to savvy swindlers. A recent news report told the story of a company called Tuhao who claimed to be selling imported Japanese rice. At one stage their sought after product was fetching up to 1500 RMB for a five kilogramme packet as more and more health conscious Chinese rice eaters went online to buy up this 'white gold'. Following an investigation by Chinese customs it came to light that this so called Japanese rice was actually being cultivating in Liaoning Province, just three hundred miles down the road from Tuhao's customers in Tianjin and Beijing. Apparently the going rate for that particular crop in Liaoning is around 6 RMB for 500 grams. That is quite some profit margin for the swindlers who needed nothing more than a trip to the local market and some fancy Japanese-looking packaging to make some serious money. This story is just the latest in a stream of scandals involving fake Japanese products. Last year it was reported that a shop in Shanghai had made millions of yuan by cashing in on the growing demand for fancy Japanese toilet seats. All of their range, except for the pieces that were used in the store for demonstrations, were manufactured in Chinese factories and were in no way approved by a Japanese specialist.

BT 201504 02 Last word japanese fried rice 2As the authorities clamp down on certain cons the ingenious perpetrators are finding innovative new ways to rip people off. One increasingly popular scheme involves registering a company in North America and Europe then setting up manufacturing operations and distribution networks in China. This is a more costly and time consuming way of tapping into the foreign product craze but it has certainly paid off for a number of people. A face mask producer in Beijing that was registered in Canada and claimed to be approved by the appropriate North American governing bodies made so much money that their owners became dollar millionaires within five months and became even richer when they sold their company to an American investment firm after being in business for less than half a year. Again it was simply a case of tapping into the Chinese consumers' distrust of local products. A bit of clever marketing and some nice looking packaging is all it takes to hit the jackpot.

Unfortunately while ever this adoration of foreign goods continues and Chinese competitors fail to convince the local market that home grown products are just as good the Chinese consumer will be trapped in a catch 22 position. It will require more innovation in the manufacturing side and some serious investment in marketing. This will no doubt happen over time but hopefully in the meantime the authorities here will take a tougher stance on dodgy rice distributors and fake iPhone dealers.


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