Is the "made in India" tag a liability for luxury goods?

DEBATE

Both luxury hotel chain Orient-Express and the US Jaguar dealers fear an Indian association will spoil their luxury image "" is this true, and for how long?

Shombit Sengupta
Founder,
Shining Emotional Surplus Pvt Ltd

Money power, low costs or good people management don't add value to luxury. Consumers don't feel Indian apparel brands are luxury and so they sell at discounts

India is clearly out of the luxury reckoning because no country outside Western Europe has created a luxury brand till now. The luxury product culture is so deeply rooted in Europe's 2,000-year Caucasian Judeo-Christian geography that even Caucasian Americans have been unable to create luxury brands. Ralph Lauren is not Dior, nor does Shiseido have the aura of Chanel. Luxury means connoisseur craftsmanship transmitted through generations. This knowledge, skill and deployment are highly protected. European monarchy initially patronised such finicky design excellence. They transmitted this appreciation for unique differentiation to the royalty in their colonies, such as the Indian maharajas. The 'made in India' brand is not established in sophisticated developed countries. The global business world attributes India with cost arbitrage in IT services and good people management. Handling mass-scale back-end services is very different to manufacturing luxury products.

To join the ultra-luxury league, why did Daimler AG revert a hundred years to bring back the Maybach? Because starting a new brand with a new name will give them no advantage at ground zero. Today's rich consumers may not know Maybach, but history will support its legacy. The Mercedes car still enjoys an edge over newcomers like Lexus. Directly entering a sophisticated price category with superior engineering performance, Lexus could not overtake the Mercedes heritage of having performed through two World Wars.

Money power, low operational costs, size or good people management cannot add value to luxury craftsmanship. A Japanese entrepreneur wanted to make a briefcase to carry two wine bottles with two glasses. He could have made it anywhere, but why did he choose to go to Hermes at 24, rue du Faubourg Saint-Honore in Paris? This fit-to-order briefcase will take three months and 10,000 euros to craft. Hermes majestically displayed on TV how different professionals minutely crafted every angle, from the stitch, adhesive, leather tanning, polishing to the interior architecture with wood and the locking system. Everything was designed for that unimaginable, ceremonial look and feel the recipient will experience. Consumers demand quality in premium brands whereas luxury brands command the consumer.

Luxury products were democratised in the 20th century and increased in number as the wealthy grew. The affluent in India take pleasure in luxury through foreign brands; even the sanitaryware in the top five-star hotels is imported. But the luxury caste pervades. Japanese Toto or American Standard is not French luxury brand Jacob Delafont. Consumers don't consider Indian and pseudo-foreign apparel brands as luxury, so these brands are sold at discounts.

The writer can be reached at shombit@shininguniverse.com

Simon Anholt
Government
Advisor

Nothing can be more natural than the association of India with luxury brands "" it is simply a matter of time, persistence, good management and good marketing

In 2001, I argued in my book, Brand New Justice, that since almost 30 per cent of global wealth was in the form of intangible assets such as brand value, no discussion of wealth and poverty could ignore this fundamental issue. Branding "" the art of adding appeal, meaning and value to products and services "" is truly one of the crown jewels of capitalism. It is the core skill of most global consumer firms today, which outsource manufacturing, design and distribution "" everything, in fact, except the brand, which gives them the bulk of their profits.

In Brand New Justice, I told the story of the "third-world entrepreneurs" "" including several Indian examples like Deepak Kanegaonkar's efforts to market his upscale perfume Eau d'Urvâshi in Paris "" and predicted that, thanks to the courage and energy of such people, the tide was beginning to turn, and that the great brands of tomorrow could come from literally anywhere. So, the news that Tatas' bids for Jaguar cars and the Orient Express had run into problems on the grounds that the corporation's Indian origins would undermine the luxury image of the brands, did not cause me much surprise or concern.

The notion of India as a global commercial power is still new and shocking to most Westerners, and the old idea of India's 'oriental mystery' has not yet transformed itself into an accepted international version of luxury: just ask Deepak Kanegaonkar, who knows a thing or two about the difficulty of equating "made in India" with luxury brands. And yet, nothing could be more natural than the association of India with luxury: it is simply a matter of time, persistence, good management and good marketing.

Perceptions of what sort of product should come from what sort of country can change and do change. Twenty years ago we would have laughed at the idea that millions of British and American consumers would one day pay a substantial premium for brands they had never even heard of simply because the name sounded Japanese; and yet today, that is exactly what they do.

In 2005 I launched the Anholt Nation Brands Index, a survey which polls 25,900 consumers in 35 countries, representing around 80 per cent of the world's population, on their perceptions of the products, people, culture, government, economy and tourism of various nations. Back then, the world's consumers ranked the appeal of "made in India" five places behind "made in China"; in 2007, India ranks five places ahead of China.

It's clear to me which way 'Brand India' is going. It isn't there yet, but it is heading in precisely the right direction.