Manufacturing vs branding - top 100 valuable brands are into branding, not manufacturing

Trump and Modi are aiming to create jobs through manufacturing. This is central part of their economic agenda.

A graduate student in Economics could explain the practical limitations of these ambitions. But if the concepts of wages and productivity are beyond then, all they need to do is look at Forbes list of world's most valuable brands.

They need not employ a researcher for this. Even a cursory glances at the Forbes list will drive home the point. 14 out of the top 20 most valuable brands int he world are American. A similar number in top 100 most valuable brands are American. No Indian brands exist in the top 100.

What’s this got to do with factory jobs? Just this: Most of these globally valuable brands do not make the bulk of their goods and services in their country of origin, for good reason. MBA 101 tells us that value addition, and therefore competitive advantage, lies in the ephemeral business of branding rather than in the tangible activity of manufacturing. As a businessman Mr Trump should understand this: He has made a fortune licensing his brand of gaudy realty around the world, and no American workers are involved in building those monstrosities.

However, they don't realize that value is created in branding, not manufacturing.

If wage inflation and exchange rates are making manufacturing costly in China, mega-corporations can choose from: Vietnam, Bangladesh, Laos and Cambodia, Sri Lanka, Honduras, even Jordan and Israel. India should be on that list, but isn’t because of that seventies law that severely curtails the flexibility of corporations to hire and fire in factories employing more than 100 workers. Which large corporation – Indian ones included – would like to take on the challenge of hiring more than 100 workers who can, in effect, never be fired?

Source: Article by Kanika Datta in Business Standard, Dec 29, 2016