The Importance of Branding
Branding is the reason why America continues to grow richer even in the face of decreasing manufacturing activity in the US.
Because of the power of the brand, the margin American companies can make on selling branded products for obscene prices far outweighs any contribution that manufacturing can make on the nation. For example, a pair of Nike shoes probably costs $15-20 to make in Thailand (including material and labor). This is then sold for about $85 to shoe stores, for a gross profit of about $70 - And this $70 pays for millions of American jobs - Advertisers, IT personnel, designers, executives, HR professionals and so on ... So you lose a few poor paying manufacturing jobs, but with the money you save, you can hire more and more talented people.
This sucks for the people who have little formal education in the US, because rapidly they will find there are fewer and fewer jobs available.
The genius of American branding is in that "They can get a pair of shoes made in a Shenzhen, China for $15 and then turn around and sell it to a hip Chinese teenager in Shanghai for $100 !"
And in my mind this is a weakness that the Chinese have ... They have no huge brands. They might make the product that is re-branded by the Americans, but in the absence of an established brand, the Chinese are going to get stuck as a low cost provider.
For example, take the case of cars. The Chinese are now capable of producing a $10,000 SUV. Would you buy this car ? Many people wouldnt. However, if the exact same car had a Ford emblem, people would pay $25,000. And that $15,000 is all because of the American brand !
However, this just struck me, the Chinese now have a huge brand - IBM through the purchase of IBM's personal computer division bu Lenovo.
India has some good brands - Wipro, Infy and TCS are recognized to a large extent by IT departments in the US.
However, the country that has done the best job of branding is - South Korea ! Look at the number of billion dollar brands they have developed ...
Hyundai
Daewoo
Kia
LG - Lucky Goldstar
Samsung
China is going to be a big challenge to the rest of the world for sure, but I think South Korea has the right idea - Branding !
Because of the power of the brand, the margin American companies can make on selling branded products for obscene prices far outweighs any contribution that manufacturing can make on the nation. For example, a pair of Nike shoes probably costs $15-20 to make in Thailand (including material and labor). This is then sold for about $85 to shoe stores, for a gross profit of about $70 - And this $70 pays for millions of American jobs - Advertisers, IT personnel, designers, executives, HR professionals and so on ... So you lose a few poor paying manufacturing jobs, but with the money you save, you can hire more and more talented people.
This sucks for the people who have little formal education in the US, because rapidly they will find there are fewer and fewer jobs available.
The genius of American branding is in that "They can get a pair of shoes made in a Shenzhen, China for $15 and then turn around and sell it to a hip Chinese teenager in Shanghai for $100 !"
And in my mind this is a weakness that the Chinese have ... They have no huge brands. They might make the product that is re-branded by the Americans, but in the absence of an established brand, the Chinese are going to get stuck as a low cost provider.
For example, take the case of cars. The Chinese are now capable of producing a $10,000 SUV. Would you buy this car ? Many people wouldnt. However, if the exact same car had a Ford emblem, people would pay $25,000. And that $15,000 is all because of the American brand !
However, this just struck me, the Chinese now have a huge brand - IBM through the purchase of IBM's personal computer division bu Lenovo.
India has some good brands - Wipro, Infy and TCS are recognized to a large extent by IT departments in the US.
However, the country that has done the best job of branding is - South Korea ! Look at the number of billion dollar brands they have developed ...
Hyundai
Daewoo
Kia
LG - Lucky Goldstar
Samsung
China is going to be a big challenge to the rest of the world for sure, but I think South Korea has the right idea - Branding !
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