COMMENTARY

------By Daniel Inman

Over the last 10 years, the British luxury goods company Burberry has managed to catapult itself into the fashion stratosphere. A decade ago, it was seen as a conservative brand, with a reputation for making high-quality, though rather bland, raincoats (it invented the modern trench coat in the 1880s). In 1997, a new CEO, Rose Marie Bravo, arrived with an eagerness to reinvigorate the brand. The result: Within a few years, the characteristic Burberry chequered pattern became a fashion icon - an object of desire in boutiques across the world.

As Burberry's status has increased internationally, its standing back home has taken some knocks. First, it suffered a serious image problem in Britain as the brand became associated with hooliganism and loutishness, to the point where wearers of the signature khaki plaid were sometimes refused entry to pubs and other establishments. After years of trying, Burberry was beginning to make some headway in clearing its tarnished image, only to make a decision that would prove more unpopular than they could have possibly imagined.

Burberry's decision to close one of its British factories, and subsequently use a Chinese supplier, has caused a public furore in Britain. The company, for its part, says that the factory is making a loss and it can get the same job done significantly cheaper in China. When the factory closes (it was expected to close at the end of March, though it had not yet at the time of this writing), 300 jobs will be lost - a third of Burberry's total British manufacturing staff.

The people of Treorchy, the small Welsh town where the factory is located, have not been without their supporters. As would be expected, trade unions have come out to show their solidarity, but so too have some of Britain's most famous celebrities: actress Emma Thompson, Welsh sex symbol Sir Tom Jones and Manchester United coach Sir Alec Ferguson have all strongly expressed their disappointment.

The campaign to save the Treorchy factory, though spirited, looks doomed to failure. But what is interesting is that there has been a campaign at all. In America, it is not uncommon for businessmen and politicians to air their fears over what they perceive to be the pernicious consequences of China's economic rise.

Part of a pattern?

Britain, like America, has a hefty trade deficit with China - currently standing at about ¡ê12 billion (?17.5 billion) a year, triple the amount in 2000. Burberry's decision has demonstrated that British manufacturing jobs are not completely safe - though that has undoubtedly been demonstrated before to less outcry. Britain has hitherto been calm about the effects of China's growing significance. The question is whether anger directed at Burberry is simply a flash in the pan, or a sign of a broader mood of unease about globalisation and China's role in it.

Anger about outsourcing is nothing new for Britain, though there is something anachronistic about anger over lost simple manufacturing jobs. Ever since the UK began the shift to a service-based economy in the 1980s, manufacturing has become an ever smaller part of the country's economic activity. Some British jobs in the service sector are often threatened by being relocated to cheaper climes, like India. British banks like to cut costs by replacing expensive British call-centre staff with cheaper ones in India, so if you call your bank to speak to the local branch in Bristol, you may well have to speak to someone in Bangalore first. IT companies have followed this trend by shifting the maintenance of computer systems to southern India.

Such moves are not only unpopular with people who are made redundant, but also with customers. One of Britain's largest retail banks, Lloyds TSB, recently announced it was moving its call centres back to the UK, after the bank's in-house union claimed that 400,000 of the bank's customers had signed a petition expressing concern that their financial matters were being handled abroad.

Mostly, though, it is the people who work in certain services that worry about their jobs being sent abroad. The majority of British manufacturing jobs that can be done elsewhere have already been relocated. People do not expect companies to set up factories in Britain - that's why when Manganese Bronze, the company that makes the London Taxi, decided at the end of last year to increase its production from 2,500 cars a year to 20,000, there was no outcry over the announcement that the extra cabs would be made in China rather than the UK.

Different by design

Manganese Bronze's decision failed to create any controversy. The extra taxis produced are intended to be sold in Asia, so if it provoked any response among British people, it was interest in the peculiar idea of black cabs hurtling round exotic locales like, say, Shanghai. The black cab is arguably as much a British icon as is Burberry, if not more so. So why has Burberry been the subject of criticism while Manganese Bronze has got off without any scolding?

The answer lies in the small differences. Manganese Bronze has expanded their production into China instead of relocating jobs to China. Their factory in the city of Coventry will go on as normal. Burberry, a company that is already seeing very healthy profits, has cut three hundred jobs in a part of Britain where opportunity is scarce, and jobs are badly needed. This is naturally a very unpopular move.

The main reason that a company based in a developed country relocates its operations to a developing country is to save money. The money saved is usually passed on to the customer in the form of more competitive prices. This is what Manganese Bronze are doing: taxis built in Britain are sold in Britain at British prices, whilst taxis built in China will be sold in Asia for far less. Burberry will do no such thing. They will make the same sweatshirts that were being made in their Welsh factory in China at a much lower cost, and keeping the price the same, therefore increasing their already considerable profit per unit. For a British company to layoff three hundred of its staff to bump up its profit margin no doubt strikes the British public as greedy; and it does not matter whether they go to China or India to do this. It is not Burberry moving to China that has got the British public up in arms, it is the manner in which they have done so.

The tumult that Burberry has stirred is similar to what happened with MG Rover three years ago. When Britain's last car company breathed its last breath, its Longbridge factory in Birmingham was bought up by the Nanjing Automobile company. The 5,000 people who lost their jobs were unhappy, but without a buyer, MG Rover would have completely disappeared. While some people were concerned that the buyer was a Chinese company, the real cause of concern was the collapse of the company. Likewise, China is a factor in the Burberry case, but one that lies to the periphery of Burberry's perceived greed.