The 2012/08/20 at 08:45
Debate flared in the German press in January this year. In the daily paper Die Welt, the President of the German Chambers, Hans-Dietrich Driftmann, protested against the European Commission proposal to define rules governing European imports in order to fight dumping. For example, a Korean-made product imported to Europe can be named “made in Korea” only if 45 % of the value is produced on Korean soil. German industrialists, fearing reciprocity, spoke out. Hans-Dietrich Driftmann considered that “made in Germany” was “in danger” if “the origin and value of intermediary products were to become decisive” in determining whether a label should be given.
Things have gone so far that the German Minister for the Economy, Philipp Rösler, wrote to European Commissioner for Taxation, Customs Union, Audit and Anti-Fraud, Algirdas Semeta to express his disapproval. Meanwhile, the Commission considers fears to be unfounded as draft regulations do not concern exports. So why such an uproar? Wouldn’t better transparency be a way to strengthen the “made in Germany” label? Debate shows just how sensitive this topic is. For vagueness surrounding the legal definition of the label (the “last substantial transformation”) is practical, allowing the structure of the value chain of many German goods to be glossed over, though they sometimes encompass up to 90 % of foreign products in their manufacturing.
In 2005, economist Hans-Werner Sinn named the German economy a “bazaar economy” because of the tendency of the country’s companies to integrate into their products goods made elsewhere, namely in countries to its immediate east where labour costs are lower. Even luxury products do not escape this trend: the well-known Porsche Cayenne is largely produced in Slovakia, in a plant in Bratislava also used by Volkswagen for assembling the Audi Q7. Playmobil toys, Steiff soft toys, Miele household appliances (emblematic as products “made in Germany”) have long relocated a more or less significant share of their production overseas.
A marketing instrument
While the label continues to work overseas, it no longer fools many in Germany. According to a recent survey, 57 % of Germans no longer consider it to be a gauge of origin and quality. This is obvious to Steffen Küssner, from the German consumer protection association: “It’s more a marketing instrument for industrialists. It’s not a label consumers can rely on to make their purchasing decisions.” The non-compulsory “made in Germany” label, which is not legally protected, seems to have become a mere brand that no longer truly indicates the place of manufacturing, but rather German savoir-faire in engineering and the supposed quality of the product.
“We hail any initiative that gives more details on the real origins of products and the sustainable nature of production methods,” continues Steffen Küssner. Yet this is not enough for certain companies. In the absence of a protected definition of “made in Germany”, these companies take recourse to private assessor to confirm their designation of origin. The well-known certification organism TÜV thus offers to monitor the value chain of certain SMEs in quest of transparency. The web sites verbraucherportal.de and ja-zu-deutschland.de, private initiatives linked to associations, list the SMEs whose products are at least 50 % produced in Germany.
These associations stand up for their members’ need for transparency, namely for the security of products aimed at children. In addition, explains Christian Wey, a specialist in competitiveness issues at the University of Düsseldorf, the mention of a product’s origin is still a strong sales argument for small little-known companies. “If you are at a trade fair in Chicago for example, and you are trying to sell your products by guaranteeing that they come from Germany, people will always have a very positive impression, which is decisive.” So is “made in Germany” a two-speed label? Judging from the current health of German exports, it seems that the label has lost none of its value in any case.