Offsetting the 'Made in China' Label

Nothing sets off a debate like the "Made in China" label. My colleague Bolaji Ojo's blog, The Real Truth About 'Made in China', kicked off a stream of comments from both pro- and anti-China factions. China has been made a target for most of the world's ills, including the global debt crisis and the loss of US manufacturing jobs. Nowhere is the debate more evident than in the consumer electronics field.

In my daily browsing of high-tech coverage, I found evidence that consumers might be paying more attention than we think about what's inside the products they buy. According to a recent Underwriters Laboratories consumer study: "Consumers are aware of an increasingly complex, global supply chain and have a growing interest in the traceability of products and product parts. This may be why 69 percent of manufacturers agree consumers are becoming more aware and better educated about products in general."

This is good news for the supply chain. Although the vast majority of semiconductors and other components are consumed in the Far East, they are designed and manufactured elsewhere. Data from companies such as IHS iSuppli supports this. (See: Is Design Dominance Good Enough?.) The UL study stops short of suggesting that consumers are purchasing goods based on what's inside the end-product, but it raises some interesting possibilities. What if more chipmakers adopted an "Intel Inside"-type branding campaign? What if Foxconn's alleged abuses of workers' rights really cause a boycott? What if electronics goods carried content labels similar to food products? Would it make a difference?

It has in the past. US consumers shunned Japanese cars when the US auto industry faltered. For decades, the electronics distribution industry maintained an unspoken practice of not selling US and Japanese chips side-by-side. Reports of lead in paint caused a massive disruption of children's toys manufactured in China. Exxon lost share after its Alaska oil spill. The list goes on.

I'm not suggesting the buying public should lapse into xenophobia. There's an aspect to this that's unique to electronics. It's called the traceability issue. Electronics distributors and electronics OEMs already track the origin and consumption of electronics components for a number of reasons I won't go into here. Turning traceability into a competitive advantage would be huge in the electronics supply chain.

A New York Times article on the report acknowledges this would be very difficult:

The report doesn't really say how that information -- "traceability," U.L. calls it -- would actually affect consumer buying decisions. It could be complicated. Manufacturing companies on average, the report says, rely on more than 35 contract suppliers around the world to create a single product. That number would be higher for a smartphone or laptop. But maybe some sort of supply-chain labeling, like a tiny color-coded map of the world, showing where parts come from in a product?

Sillier things have happened. I also think the visibility of the earthquake/tsunami in Japan, human rights abuses, and measures like the Dodd-Frank Act have all heightened consumers' awareness of the supply chain. Maybe that can be put to work.

Or maybe we'll see labels that say "Assembled in China."