American and Chinese Consumers Prefer “Made in the U.S.A.”
December 6, 2012
More than ever, consumers in the U.S. and China are looking for the "Made in the U.S.A." label when purchasing consumer goods, and they’re willing to pay a premium for these products, according to new research.
In 1985, Ronald Reagan declared December to be “Made in America” month. Nearly 30 years later, products manufactured in the United States are in high demand and command premium pricing, both domestically and abroad.
Approximately 65 percent of U.S. consumers are willing to pay more for 10 key product categories, from baby food and appliances to electronics and apparel, as long as these goods were made in the U.S., according to a recent study from the Boston Consulting Group.
In every one of the 10 categories tracked by BCG, "at least 20 percent of U.S. consumers are willing to pay a premium of more than 10 percent. Nearly 60 percent of U.S. consumers had chosen ‘Made in U.S.A.’ products over less expensive Chinese goods at least once in the month before the survey."
The findings are part of an ongoing research project known as “Made in America, Again,” which shows that the U.S. is becoming increasingly attractive as a location for making certain products for the domestic market, as well as becoming a base for global exports.
More surprising is how eager Chinese consumers are to buy American manufactured products, even at a higher price. More than 60 percent of Chinese consumers are willing to pay more for U.S.-made goods, and nearly 50 percent prefer a product made in the U.S. to a Chinese product of equivalent price and quality.
More than half of the Chinese consumers surveyed by BCG chose U.S.-made products over less expensive Chinese goods at least once a month.
Buyers’ preferences may be indicative of a broader trend that is making the U.S. more competitive with China as Chinese manufacturing costs rise. In fact, BCG notes, it's possible that higher U.S. exports along 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.
“[A] combination of economic forces is fast eroding China’s cost advantage as an export platform for the North American market,” Harold L. Sirkin, BCG senior partner and one of the study's coauthors, explained. “Meanwhile, the U.S., with an increasingly flexible workforce and a resilient corporate sector, is becoming more attractive as a place to manufacture many goods consumed on this continent.”
The survey is based on data from 5,000 respondents in the U.S., China, France and Germany. Unsurprisingly, French and German respondents expressed strong support for homemade goods, with an estimated 65 percent voicing a preference for domestically produced items.
The main reason Chinese and American consumers say they'd pay anywhere from 10 to 60 percent more for U.S.-made goods is that American-made products are seen as being of superior quality. The study notes that 85 percent of consumers in the U.S. and 82 percent in China believe American-made products are of higher quality.
In fact, even when comparing U.S. and Chinese products of similar price and quality, the study found that 47 percent of Chinese consumers would still buy the American-made items.
“The higher brand value of U.S.-made goods is a further reason why companies should rethink their global manufacturing footprint and consider the U.S. as a manufacturing location," BCG Partner Michael Zinser said.
“Retailers may want to adjust their strategies to capitalize on the strong consumer interest," Sirkin advised. "The Chinese consumer is quietly concerned about what they're getting." There have been several recent high-profile scandals involving tainted milk and lead paint in toys manufactured in China.
There are also certain cultural factors affecting buyers’ preferences. Americans are generally willing to pay more to support U.S. companies out of patriotism, while in China there is a certain cachet associated with foreign goods, as is common in emerging affluent societies, where owning imported goods is seen as a status symbol.