w5bno123 wrote:

I am not sure how anyway can feel ripped off by purchasing one of the worlds best speaker docks? It sounds great and looks amazing. The fact that BeoSound 8 is B&Os most successful item ever speaks volumes. 70% of owners are actually NEW to the brand. I have never had anyone ask where the product is made and if we were making 1000% profit I would be really happy too, in fact the 'cash & carry' items in the B&O store hold the lowest GP, but they do make for a nice bit of cash flow bringing new blood into the brand!

Considering you can buy a Bose dock for about $180 that's made in Mexico for twice the labour cost of China (although import duties are non-existant due to NAFTA) and although it doesn't sound or look as good as the BS8 it's a much better value for money. It cost Bose twice as much in Labour cost to produce it and the thing costs 1/5 of what the B&O costs. Yes the B&O is the best iPod dock out there but since when is a high end luxury hifi manufacturer supposed to produce cheap plasticky iPod docks for $800-1000? I do feel ripped off because it cost them almost nothing to produce it in labour cost and in materials... Compare it to the materials and labour cost of the other B&O products and you see why they are so expensive. The profit margin for those higher end products, percentage wise is much lower than the mass produced cheap plasticky B&O. Think about it this way: If it was hand assembled in Struer from the type of plastics and metals that B&O produces themselves in Struer, I would say it was worth $1500 or even $2000 but $800 for a mass manufactured plastic chinese iPod dock that cost them almost nothing to produce is really a rip off.

Yes it's good money for the company. That's kind of obvious. People buy it because they think wow, it sounds great so why not? B&O, that's luxury, wow and only $800 for this cool thing, yeah man radical.... :-(To me however, I would rather invest a bit more and just buy a BL5 or BL4000 and have those speakers for decades to use which are much much better quality and better value for money, hand assembled, made from the highest quality materials, and made in Struer or Czech for much higher labour costs in B&Os own factory!

Somebody posted this article earlier about China. Quite interesting 

Dkatz wrote:

In regards to B&O, there are companies that have even bigger turnovers and more employees that don't outsource. I think the problem here is not the size of the company but the fact that it is a public one, and therefore they also care about their shareholders, boardmembers, execs, etc... that need to get paid out good sums! If it were not a publicly traded company it might not have to satisfy all these people.

Yes, it is a publically owned company. So why don't you go and take a look at their financial figures? B&O hasn't paid any dividends for years, and during five years or so the share value has dropped to less than one tenth. How can that be seen as satisfying to shareholders? Besides I don't believe B&O pays that much even to top level execs, compared to many other companies. I admit they possibly pay more than the non-outsourcing, hand made high-end garage ops that everybody keeps comparing to B&O do.

Dkatz wrote:

Just because a few hundred years ago we had such kind of labour in the west doesn't mean we should support it now. Does our own past justify supporting something like that in another country? In our present we do not have the same situation as we do in China. We are talking specifically about separation between rich and poor (however bad it is, there is much more of a middle class and it is much better than in China or other developing countries) and about something resembling the gulags in terms of labour hours and low pay (actually my great grandfather was sent to the Gulags during Stalin's rein, he died of consumption there). Something that just doesn't happen in the west where wages are much higher, working conditions are much better, and labour unions are much stronger. How can you say to look at how bad our society lives when it is a much lower percentage than theirs that live badly? China has some of the highest poverty rates in the world!

During the recent years of globalization and economic growth in China, more than 100 million Chinese have managed to climb out of absolute poverty (as defined by some UN body I forget). Ordinary people, not just the factory owners with their diamond encrusted pens and Rolls-Royces. With our "support" the way you wanted to have it, these people would go back to slave themselves to death in coal mines or starve in their home villages when ever a spell of bad weather took the crops. I don't think your demand of Western made exclusivity can be seen noble in that view. It's fine if you want it, but please don't try to make it seem somehow globally beneficial.

This increase in wealth is exactly what will lead to better living and working conditions. It will take a while but it will come. Japanese products were copies of Western stuff and generally laughed at just 50 years ago, rising to respectable status when we came to the 1980s. Not that they themselves would always appreciate it - every Japanese wants to own a Leica instead of a Nikon. Imported stuff is always considered better. It's universal, not limited to those Chinese who can afford superficial consumer products. Not all US automobile industry is junk, yet they rave on an on about "imports" and you probably need to go to some back woods to feel proud about owning a new Buick.

(I hate all car analogies as they seldom apply to anything, but here's a total aside I didn't post earlier: as Porsche was mentioned at least a couple of times, I suppose everybody knows that Boxters were built in Finland for years. Outsourced to the same plant that used to build most convertible Saabs)

Dkatz wrote:

Tournedos – That would be disgusting if B&O put Swarovski crystals on their products. I hope they don't sink that low. Do you really think that is how B&O is? Do you think they are overcharging for exclusivity? If so then why are you a B&O fan and on this forum? As I mentioned I never complained about the cost of the Struer/Czech produced products as being expensive! In fact I feel they are good value for money!

I certainly don't. But in this thread, some people seem to want that B&O should be somehow even more exclusive. I don't think that demand could be satisfied simply by the magical pixie dust only Danish assembly workers sprinkle about, but it would also mean more limited availability and higher prices. You may think some of the products are value for money, but outside this thread, everybody is crying out that the products are too expensive for what they are and what they do. All the while you can again go and take a look at the public financial figures. B&O is hardly making any profit at all. How on earth could they invest in product facilities, R&D, or more pay for the workers if they barely survive with the business model as it is/was? Closing up the Czech factory, moving it to Denmark and rising the price of say BL9's by 50% is not going to make the general public buy more of them, on the contrary.

That seems to aim to that B&O should shrink into one of those garage ops making a few hugely expensive products, aspired by those who like Swarowski crystals and golden dragons. Figuratively or not.

Dkatz wrote:

 I do feel ripped off because it cost them almost nothing to produce it in labour cost and in materials.......

 If it was hand assembled in Struer from the type of plastics and metals that B&O produces themselves in Struer, I would say it was worth $1500 or even $2000 but $800 for a mass manufactured plastic chinese iPod dock that cost them almost nothing to produce is really a rip off.

Perhaps you can enlighten us as to the labour and material cost breakdown of the BS8??

It is hand assembled .... in China! The type of plastic used will be specified by B&O, the actual polymer grade and the surface finish/texture etc of the finished moulding. If it were moulded and assembled in Struer in would look exactly the same!

According to a recent BBC Newsnight report,millions of chinese are being expoited,in factories,as migrant labour because of the government's lack of further reform of the 'Hukou',class residency permit system.

Because people are not living in the area specified on their residency permit,they,and their families,are not entitled to free education,and medical care.

As for the BS8,and Beolit 12,is it known for certain that components,such as the speakers,are not of european manufacture,and are being sent to China for final assembly?

Dkatz wrote:

I would like to start out by saying that I was disappointed to learn that some bang and olufsen products such as the Beolab 4 and Beosound 10 were being made in China. Now I'm beginning to wonder where my Beosound 2 and Headphones from 2006 were manufactured?

Dkatz, you certainly started an interesting debate.  I will try to answer your original question.  The Beolab 4 is made in Japan.  I have a Beosound 2 but can't find it.  I do remember Beosound 2 had a Wolfson processor made in the UK.  I don't like the headphones and therefore don't know where it they are made.  I never heard of a Beosound 10 unless you are referring to the Beosystem 10 which was made in Japan.

I have learned a lot from this discussion.  Mostly my conclusion is the Chinese can do high quality work.  The Airbus 320 is assembled in Toulouse France, Hamburg Germany, and recently started production in Tianjin China.  Do European workers build a better Airbus 320 than the Chinese workers.  I think not.  An aircraft is extremely complex to build.  The Chinese workers are doing high qualtity work.  I also learn about the Rolls Royce motor car company.  RR is a wholly owned subsidiary of BMW.  Rolls Royce motor car company as we know it today was established in 1998 by BMW.  The cars are handbuilt in Goodwood England from parts made in England.  However 20 percent of the parts are sourced from outside the UK.  BMW built a new factory to assemble the Roll Royce Motor cars.  BMW has the right to build Rolls Royce because they own the rights to the grill and marque.  They lease the name from Rolls Royce PLC which is known for aero engines.  Rolls Royce motor cars essentially has no link to the Rolls Royce that existed before 1998.  Not exactly an outsource but something else.  As tournedos pointed out, car analogies don't exactly work in this discussion.

As for Bose, I can tell you I don't care if it was made in Boston by highly paid skilled workers.  I wouldn't buy it.  In my opinion most of their products are badly designed, engineered and are just plain ugly crap.  I like my Beolit 12.  The plastic is not cheap and it is well made.  I like it so much, I intend to buy another one for my wife.

As for the plight of Chinese workers, I am very sympathetic to their problems.  Not buying Chinese products is not going to solve the problems.  If you look over the last 30 years, they have made significant progress which will continue.  We certainly don't want China to be like it was before 1980.  It was a very belligerent country with unfathomable poverty.

In the US, a person shopping at Walmart cannot avoid Chinese made products.  In fact Walmart sells so many Chinese products, they should change the name to the "Great Wall".

The link you referred to in Forbes magazine was posted by me.  My reason for the posting it was to point out the complicated reasons for outsourcing at least from a US perspective.  It is somewhat different in the EU.  Here is a link to recent news about Apple and their oursourcing partner Foxconn.

www.appleinsider.com/articles/12/01/31/foxconn_to_build_5_new_brazilian_factories_to_help_build_apple_products.html

I visited over a dozen factories in Europe and Japan and talked to Product Managers, Directors, CEO's, etc... The working conditions were excellent, they were extremely transparent, I could go and talk to the workers if I wanted to. They all worked decent hours and got excellent pay. When I was at the Leica factory, the product manager talked abut the R series cameras and how they had opened a factory in Portugal to produce them with cheaper labour in the 70s-80s. Portugal is poor now, but was even worse off back then. He told me that the reason nobody bought those camera's, and the reason that they brought production back to Germany was because the quality was just too poor and the camera's kept breaking and consumers just were not satisfied. This is after all a high end product that costs a lot of money (like the B&O). 

In every factory I visited, I always got the same response is that they all wanted to keep the quality control and manufacture to the highest degree and that they could not possible do that if they outsourced, especially if they wanted the best product quality possible. They wanted to keep everything in house, have their own workers that they trained for years through apprenticeship schemes, that had a passion and mindset of that company and that company alone. Where the product managers who went through schemes themselves, and even company executives all worked on site and looked over the factory everyday to check things have gone right.

Another reason they gave was that if they needed to make a change, or one of the trained workers stumbled upon an improvement, they could do it there and then, right in front of the product managers, run to the CEO's office and show him the improvement. The product testers, and designers who were in the same building, could show their design to the workers, get their input on it in how it would be practically to build it, and then have them manufacture it right then and there. 

All of these things are something that simply does not and will not happen in China. Why? You would have to relocate your whole base, all your designers and product managers, everybody. Open your factory in China, hire and train workers yourself to be trained in those products alone through apprenticeship schemes, look over those workers, try to get their inputs, do everything I described above. In the end this would not be cost effective at all or make much sense. Hence why all the high end, high quality manufacture takes place through companies that don't outsource to developing countries!

Tournedos – My point is that maybe one of the reasons they outsourced is to do better for their 

shareholders by making a bigger profit and therefore being able to pay out dividends. They just recently did it so perhaps we will see their share-prices rising and their shareholders, board-members, execs, and other who own their stock will be happy! That is however, not what is important about a company to me, and if this is one of the main reasons for outsourcing of many public companies then maybe a company like B&O should not have gone public...

The separation between rich and poor is not only people living in abject poverty, but for your information according to the human development index, China today has one of the lowest ratings in terms of human development in the world! That's according to the UNDP. It still has one of the highest levels of people living below the povery belt. Yes it's gotten a little better in the past 20 years but the poor have only marginally gotten better, the factory wages only go up 10 cents per hour per year or so... Whilst the factory owners and other elite are growing and getting richer. In China if you are not born into a rich family or have connections, then it is almost impossible to get anywhere. They hardly even have a middle class. 

In regards to Japan – They developed in completely different ways. Japan was the richest country in Asia during the Edo period (around 1600-1860) yet there was trade for less than 100 years only at the beginning of this era and only with the Dutch and Portugeuse. Then Japan locked themselves away from the world for a couple of hundred years and was perhaps the only country in Asia with any sort of Middle class. Japan was also thriving during the Meiji period with huge industries and many companies came out of this that we see today including electronics and camera companies for example.

Yes, Japan did copy many of the technologies such as optical technology from the Germans (perhaps much of which was copied during the war when they partnered with Germany). They also however invented many of their own things, for example the bullet train, many electronics, robots, etc... Yes Japanese quality wasn't very good in the 50s but it improved thanks to Japanese innovation and they developed through protectionism, not liberalization, and also through marketing their own companies. There was never the type of outsourcing there is in China now... Many of the Japanese brands we know today existed before the war, and they started inventing their own technologies and marketing them. At first many of these products were cheaper but they became more expensive. 

Japan might have been poor directly after the war, but so was Germany, and many other post-war economies that the US boosted in order to have countries to buy their products... They picked up extremely quickly and by the 1960s was a middle class society, by the 1980s the richest in the world until the bubble burst. The point is that Japan was never like China, and it developed thanks to their own innovations and their own companies becoming internationally competitive. China is doing almost the complete opposite in allowing other companies to produce in their country and not marketing their own goods. What will happen to China if those companies suddenly leave? It won't happen for a while, perhaps one of the reasons wages are kept so low...

In regards to American cars, in America most people drive American (or Japanese cars which are mostly produced by Americans here in America). Even in a cosmopolitan city where I live, San Francisco, you mostly see American and Japanese cars. There are hardly any European cars. Many Many Americans in major cities still buy American cars, perhaps not Buicks but GM and Ford for sure, especially SUV's and Pickup Trucks... 

In regards to B&O, my point was that even if they didn't make a profit as a company, everyone got paid and it worked, otherwise they would have closed years ago. Outsourcing wasn't the only route, but the route that the CEO chose. There could have been other ways to make money. Like I said, the Czech factory is not outsourcing, it is their own factory!

Puncher – Can you show me pictures of videos of the “hand assembly” you mention? I highly doubt it is assembled and quality control tested the same way as the Struer products. I don't have the cost breakdown but perhaps you can give it to me if you know it? Although I doubt that... The point is that it will cost less to produce the materials and components in China, as well as assemble the unit! Much Much less so the profit margin will be much higher in percentage per unit otherwise they would not be there, it's kind of common sense! Perhaps it would look the same, but I believe the quality control would be much more strict as it's their own factory that they can control 100% 24/7. And again I believe there is a reason beyond convenience and cost savings that B&O produced their own plastics and metals factory in Struer, even Automotive companies bought their Aluminum for cars because they knew it was the best available! They could have bought it from China as well! Again Puncher – name some extremely high end luxury products that are outsourced to China? There aren't many, if any... If it were the same quality, B&O would outsource their higher end goods to China as well...

Linder – Thank you for all this useful information. I really appreciate it. I hate Bose as well, my point was that they recently turned to Mexico from being produced in China as well. A B&O unit from China might (and does in the case of the iPod dock) sound better than a Bose unit from the USA or Mexico or wherever. I just gave it as an example of the fact that you can have something cost less and be produced in a country where the labour cost is much more. I believe that it is better value for my money when the company spends more to produce it and has it locally produced by their own employees in their own factory. That is my opinion. It's not only about sound quality but also about build, and the manufacturing process for me that makes it a better value for money!

China is still a country with some of the highest poverty rates in the world and one of the worst countries in terms of human development according to the UNDP. Hence why many are trying to escape from China to start a better life elsewhere. China was worse before, but it it still worse in terms of living conditions for most people than almost any country in the world. Just because it's gotten better doesn't mean it's anywhere near a decent level. 

I am not trying to solve their problems by not buying their products. For me it is the non-Chinese companies that outsource to China that I don't want to support. Partly because they don't want to support their local communities and workforce and outsource in order to fill their pockets, rip the consumer off by charging the same or more, not less than they were before, and dodging taxes which would again support their own country.

I have never and will never shop at Wallmart. The products are complete and utter garbage there and they are cheap. The point is that B&O is not being sold at Wallmart and if it were that would be a sad day indeed. In the US many consumers see Made in China as something that should be sold at Wallmart, not something that B&O and other higher end manufacturers should be doing...

Interesting article about Foxconn opening another factory in Brazil. Let's see if this happens. There's a huge controversy about Chinese companies buying out land in Africa in exchange for natural resources. Then using that farmland by hiring Chinese immigrant workers and the Africans losing out on their own land and work. Then the Chinese sell to the Africans at inflated rates, live off the land and also send the fruits/veg, etc... back to China. Many of my Cameroonian friends were complaining about this... I blame it on the corrupt governments of China, and many African nations for allowing this.

I think Dkatz is just a snob, pure and simple...

If you lived in a multicultural country, you'd be a lot more tolerant

Jonathan wrote:

I think Dkatz is just a snob, pure and simple...

 

Snob or otherwise, it seems he has seen and experienced an awful lot of designer items, brands and retailers ( not to mention the numerous factory visits round Europe !!) in the his first eight years of adulthood.

I say first eight years, as he describes himself as 27 and sadly unemployed for over a year now.  ( my deepest sympathies for that)

That means a very busy period aged 18 - 25 getting exposure to so many high end consumer goods - seemingly far more than I have, with 20 years extra adult life "life" behind me. 🤔