Sunday, June 01, 2008

19 Why Rapha is 'Made in China'



Attention : This maybe a spoiler for some but there are reasons to change the mindset.

UK based Rapha is made in China. Now its easy to get all offensive about that. China, while competitive, has also shown in the past how to make poor quality products, sometimes even dangerous to health.

Well, if you're thinking just in terms of manufacturing costs, yes, products should be cheap.

But there's more to the story. Think about it. There are many luxury brands out there that are made in China but they get back home here or elsewhere and are slapped with the most insane prices one'll ever see. I hear one of them is Banana Republic. They're so expensive for the common man that one can sell his house and sit on the street with a new BR Tuxedo.

One side of the truth is how you market yourself, who your customer base is, what your product is and what materials it uses, and knowing that someone will pay that much for it.

Seriously, Rapha seems very much for the upper high class cycling enthusiast. You don't see many Raphas around nor the Space Trooper-like Assos for that matter. So if you don't like it, don't buy it. If you have fashion sense and don't mind putting down the extra dollars, get one for the thrills.

Clearly only you must know whether something is for you or not. Not everything out there will fit you, your face, your body type. Face it, its harsh reality.

The other side of the truth is that operating in China has many advantages, far outside simply manufacturing costs. Its actually a combination of many factors. One huge advantage is having access to internal markets and having a good logistics and IT infrastructure already in place.

You must have a solid reason to go to China, instead of just wanting to take advantage of low labor costs.

Anyway, I also can't imagine why people think just because manufacturing was cheap in China ten years ago, its the same today.

Energy prices are increasing and so are costs. Its a dynamic situation here. Today, you can't see China as the same source of cheap manufacturing that it was a decade ago. Simply said, China's manufacturing competitiveness is coming under fire. Now I'm not going to sit here and explain all the facts, but to get a some clue, you must read "China's Shifting Competitive Equation" (pdf file) by the American Chamber of Commerce in China and Booz, Allen & Hamilton.

I hope you get an idea of where I'm going here. Chinese made products can have quality too, thats one side. And low manufacturing cost is not the only advantage in China, and even those things are changing fast now, thats another side. Still, inspite of these setbacks, the location that is China is pretty darn competitive.

So anyway, quickly, why is Rapha made in China? Simple no-brainer - Its not profitable for them to produce in the UK.


Read this email to the company by a customer. A short, to the point reply from Rapha follows.


Hello,

I am an avid cyclist and a customer of yours, I purchased the tricolor jersey and the merino classic jersey a while back. I was surprised after washing my garment for the first time, to see a tag of which materials were used, and the production land. I was amazed that it said Made in China, I paid top money to purchase your items as I understood they were hand made in the UK. I am also a bit puzzled about the price, how can a jersey be worth 120 UK pounds, when the labor cost in China is about 1 percent of that. Is the mark up just a marketing scheme. I am sorry to say that I will not be shopping from you guys again.

Kind regards,
Raffaele G.




The Reply from Rapha :


- Forwarded message ----------
From: Simon Mottram
Date: 17-Jun-2007 23:43
Subject: Re: Great products but...
To: Raffaele G.
Cc: Enquiries


Hello Raffaele

Thanks for getting in touch and for buying our products.

We manufacture some garments in China because the quality the factories offer there is first rate and they are very reliable producers. The cost price advantage is a secondary issue.

If you've ever tried to have products made in the UK, you'd apreciate how hard it is to get craftsmanship and reliable delivery. I wish it was otherwise.

Our high prices come from the expensive fabrics and trims we use, not from a 'marketing scheme'. We have yet to make a profit (but are working hard at changing that).

Thanks again for getting in touch. If you have a problem with Chinese manufacture I don't suppose I will have changed your mind. But I hope I have clarified why and how we use factories there.

Kind regards

Simon

Simon Mottram
Managing Director

R A P H A
Performance Roadwear
. . . . . . . . . . . . . . . . . . . . . .

http://www.rapha.cc/
simon@rapha.cc
Office: +44 (0) 20 7485 5000
Mobile: +44 (0) 7979 597 807

Rapha Racing Ltd.
Imperial Works
Perren Street
London
NW5 3ED


Courtesy : London Fixed Gear and Single Speed

19 comments:

  1. Buy Ibex. Made in USA of merino from New Zeland, and not insanely overpriced.

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  2. Ah cmon Ron. China is good. Taiwan is even better. Why complain about products that was made in China? You've paid for a Brand that you like.
    I did a little research few month ago, and found that the same top frame from Carbotec with different logo (ez. Storck, Schmolke, HaiBike etc.) can cost from 1500 -3000 euro. Carbotec original frame costs aprx. 800 euro.
    It's looks like the LOGO is everything now. Consumers would by anything from a favorite brand and price doesn't matter.

    YOur Till Ulenspiegel

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  3. Tilbert,

    I did not complain unnecessarily about Chinese manufacturing. If you read the post clearly, I was trying to address people's common misconception about cost,quality etc etc. That said, there is a fair share of crap that has come out of the country, and I pray bicycles aren't one.

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  4. Matt in Denver10:15 PM

    I have a bunch of Assos shorts that I bought on good advice, but I'll admit I had avoided the brand precisely because I just figured it was a cheesy European fashion brand, and not necessarily functional. I tend think of European clothing as flimsy material lazily assembled by coddled workers daydreaming about their next 8 week vacation while they sew seams together wrong.

    I could care less where something is made as long as it stands out on quality and function. Don't know about Rapha, but Assos shorts sure do, they're outstanding.

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  5. The business of operating in China used to be profitable for everyone, but that trend is shifting. Materials and manufacturing being in one place and distributed to 80% of the market can only end up bad. The BAH article you referenced is by the U.S. Chamber of Commerce in China and authored by the Chinese Operations team of Booz, Allen and Hamilton. Background on the late Christoph Bliss is here . That's a lot of Kool Aid to swallow given the interests of the authors and the fact the study was an online survey of 66 companies already doing business in China. China's governement and relatively new introduction into the capitalist market economy makes for a very volatile mix. The latest spikes in petroleum can only add to the overall cost of the product by the time it hits the doorstep or shelf of the world consumer. The best reply to this whole issue seems to be in a Time magazine article about Brooks Brothers . How much is the cost of being dynamic and pride in your workmanship?

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  6. Spoke : Thanks for the nice Time link. I read it and have to say that it echoes what I'm trying to say - that if you're going to China just for the cheap labor, your move won't necessarily be profitable. You have to look at everything, a big part which includes what you're making and what you're trying to sell.

    Making stuff at home has advantages that allow flexibility and more control over quality and production but these things are debatable. Just because something is made in America doesnt have to mean its superior to something made in Europe or Japan.

    On the other hand, in China, the mindset for change is not very forthcoming. Sure, the government must have got on the wagon to rout out refective products but I read that such campaigns are not effective or either very short-lived.

    As long as they don't take suitable measures to change things around, the rest of the world will still use the cliche "made in china" to describe crappy products.

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  7. There is nothing wrong with manufacturing offshore as long as the marketing campaign doesn't lead one to believe they are receiving something different.

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  8. The Industry Week article I pointed echoes a paradox - badly designed products are sent to be made in China. When they break down with usage, we all blame China. Thats wrong.

    Good reputed companies who know what they're doing can get things produced with good Chinese manufacturer's who obviously are seeking better innovation and TQM standards.

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  9. Til - Brand name is everything, especially for women. :)

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  10. It would be interesting to see a study on how EVERYTHING out of China came to be considered below average in quality. When this occurred and who propagated it would be an interesting read.

    Ron, you discuss bikes, which is pertinent to many that read your blog (including me!), but to get me through university I sell mens suits and the perception is identical.

    What I tend to tell people is that companies with big reputations won't risk damage to that reputation (or their label/brand/image) by moving to China. There is a reason why reputation and branding etc is protected in jurisdictions worldwide (and sometimes cross-jurisdictionally as well).

    A companies reputation is like a promise to a consumer. Whether it is Assos, Rapha, Banana Republic or whoever. The company has a reputation and that reputation gives the consumer an idea of what sought of standard the products they purchase will be.

    The long and short of it is, and again it comes back to your central argument Ron, companies with a reputation and standard to live up to don't move to China unless they are going to receive what they need quality-wise (both in manufacturing and business dealings). Low cost or not.

    It doesn't take long for a well-respected company with good reputation to lose that reputation when their products no longer live up to their promise. One or two 'bad' seasons in terms of quality from Rapha and they could well find themselves not making profit - as per the email - for a lot longer.

    Sev.

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  11. About three or so years ago I worked for Callaway golf. During an all hands meeting with the then new, and I believe current CEO, the question of producing / assembling golf clubs in China vs. Carlsbad, California was brought forward. One employee brought up the quality issue and the end of the world senario if customers got "low" quality clubs from China.

    To his credit the CEO said in no uncertain terms to get the idea of China equals low quality out of our heads. It is simply not true.

    He of course was right. Today, the location where something is made is not important. The key to a company like Rapha is to work hard on all the supply chain issues that take in to account cost, delivery and quality.

    Good on Rapha for answering Raffaele's note.

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  12. ...good article, good comments w/ good links...

    ...that being said, something that was not addressed was concern over the human rights issues of the workers who produce those quality products...

    ...i can't speak from any present-day experience but not so many years ago, conditions could be considered deplorable compared to american & european standards...long hours, unsanitary work conditions, little pay (check the wages chart in the "taming the dragon" article, basically poor ethical standards in the factories...

    ...some manufacturing jobs require you to live in worker housing (& while that might seem like a fair idea in an evolving communist state, it comes w/ a caveat) that we would all certainly consider to be very sub-standard & there is the constant threat that if productivity quotas are not met, you not only lose your job but you are also then homeless...

    ...anyway, there is more to the story (& i'm certainly not right in every case) but getting those higher production values can often mean the trickle down "cost" is paid by the shop floor worker...especially in an evolving economy like china's...

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  13. krosm@hotmail.com1:30 PM

    I bought a Rapha jacket when it went on sale at Competitive Cyclist, I got screwed shipping the thing to Canada, but at the price I paid - especially the sale price - I'm very happy with the product. The attention to detail and the tailoring are fantastic. It's a well thought out and very well engineered garment, and that's worth something to me, no matter where it was produced. I'll likely use it years.

    This reminds me. I wore a Patagonia Capilene baselayer on my ride into work today - it was expensive, sure, but I've had it for 7 years and it still serves me very well.

    Some brands have it together.

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  14. This comment has been removed by the author.

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  15. Hi Nice Blog . I don't really know a lot about Human Anatomy study or art, but that's just my 2 cents. Really great job though, Krudman! Keep up the good work!

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  16. Rapha is just plain too expensive...ibex and patagonia both have some great stuff and are much cheaper...if they would product more cycling stuff I would be set...

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  17. Anonymous11:17 PM

    If it were a matter of just comparing cost of goods sold (materials + labor) then I would agree with some of the comments here in that Rapha is overpriced. That said, I am definitely not paying for that; for me, it boils down to three things: features, style, workmanship. I am a Rapha customer, having purchased several pieces from them. I have to think their marketing budget is large, but that is how I managed to hear about them. Each one of their garments has been great. The features are awesome - very well thought out pieces with lots of functionality. Workmanship is first rate, and the style is great (I'm not a fan of loud colors, or crazy patterns).
    At the end of the day, it really is a matter of what provides a manufacturer with the best mix of cost, reliability, and leverage. Many business in the UK and USA could produce garments at a much higher quality and lower price than China - had they invested in the appropriate technologies.

    I want to support the local economy as much as I can, but not at the expense of what I want. I believe there is much room for improvement for US/UK companies, where they can deliver value above and beyond what China can do, and companies like Rapha would listen.

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  18. Decades ago Moroccan leather was considered the very best for bookbinding, centuries ago Toledo Steel was the stuff to have a sword made from, millenia ago Crete was the place for pottery and at some point the USA and Europe will again be the destination for something that consumers want. The Chinese cannot get enough BMW's so that's already in place, I can't think what they need from the Americans at this point but you can be sure something is prising open the wallets of Chinese leaders - core technology I would guess.
    The money will always follow the best products and services if it is allowed to, without prejudice and it is right for emerging economies to supply artisan made products to those richer and more interested in style, luxury and esteem.
    the Chinese after all do have a long history of making fine luxury goods and supplied the European markets for 300 years. It all seems OK to me and I welcome great products from wherever.
    Kevin

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Thank you. I read every single comment.