There is perhaps one
weapon, in the economic arsenal, that could well tame the Eastern Tiger and that is the end-user consumer. In a global capitalist economy, it is the consumer that ultimately holds the economic power. The commercial ‘ace up the sleeve’ if you like. If consumers choose to abstain or boycott
particular products or suppliers in protest, then ultimately it can force change. One of the best examples of this was when sportswear brand Nike faced a consumer boycott over child labour practices in the 1990’s. The consumer boycott of Nike led to the company’s global earnings dropping by 69% and a lasting damage to the brand. Consumers wanted greater social responsibility from the company. Nike were ultimately forced to respond to the consumer outrage and became committed to sustainability and made tackling things like childhood obesity part of its global corporate social responsibility. China is a much bigger, more diverse and harder
target than the likes of Nike to use consumer power against. However, there is a relatively easy thing the government could introduce to help; that is extended use of product labelling to inform and enhance consumer choices. For example, we are all used to detailed labelling
on food items to inform and help pick which products to buy based on a variety of personal choices. Things like ingredients for those with allergies; fat, sugar and calorie content for the health conscious; fare trade and free range for the ethically minded. Products wholly made in
China, packaged and imported are easy to identify by the ‘made in China’ label. However, there are many more products that are assembled and packaged in different countries, but the majority of the components are sourced from China. This is harder
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to identify, but the introduction of a Local Economic Factor (LM3) label can let consumers gauge the economic impact of their spending choices. LM3 is a methodology
that can be used by companies, government or community organisations to
measure how their spending generates local economic impact and benefit to communities. The LM3 formula has been used for many years to
measure how income entering an economy then circulates within it. The New Economics Foundation (NEF) originally adapted the model for use at the local level, and this version measures three 'rounds' of spending - hence Local Multiplier 3. The current version of
the model has been significantly improved so that it now differentiates between local and non- local impacts. The tool was first applied on a large scale within
Northumberland County Council where it was shown that: Every £1 spent with a local supplier is worth £1.76 to the local economy, and only 36 pence if it is spent out of the local area. That makes £1 spent locally worth almost 400% more to the local economy. The higher the number the greater the impact
upon local economies the purchase achieves. Labelling could also be extended to include other things such as environmental ratings and a grading on employee working conditions. However, just like free
range eggs are more expensive than those from battery hens, goods with a high ethical and economic grading will cost more than those with a lower one. Consumers are free to
choose, but in the end you get what you pay for. Angus Long is owner of
Impression Marketing and Writers4U 27
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