But they ARE eroding, it cannot be denied. In 1976, when I started playing bass, there were three brands of bass that folks took at all seriously: Fender, Gibson and Rickenbacker. Sure, there were Asian brands, but they were not taken at all seriously (for darned good reasons, as it happens. Feel free to flame me.... NOW!

) - And of those big three, Fender was BY FAR the most popular. I'd say 8 out of 10 gigging guys played a Fender back then. Now? I'd say about 1/2 - at most. I personally know two very frequently gigging bassists (other than myself) - neither owns a fender nor has owned one *years*. Me? My last Fender was bought on a lark in 2007 and sold a few months later - it just wasn't as nice as my Lakland or my Zon - so why keep it?
Look - Fender as a brand name is great - but it isn't what it was 40 years ago, and it will continue to slowly erode just because *that's what happens in the free market*. Big companies like Fender can never really keep up with smaller, more agile companies. Fenders stop-gap solution has been to push out a line of inexpensive instruments (MIC/MIK/MIM) and to pair Fender with their "budget line" Squier - I presume on the old Detroit assumption that once you have bought "into the brand" you'll stick with it, even when you upgrade. Buy a Squier affinity when you're 14, get an MIM Fender when you're 24 and a MIA Fender when you're 34 - something like that.
I'll tell you this: in 1976, if Fender started trying to sell off-shored instruments, I don't think it would have gone well. I could be wrong, but I saw how Ibanez basses sold back then (they were very cheap - and a decent value, really - but laughed at back then). So there they were, selling what were thought to be *expensive* instruments - and utterly dominating the market. The same cannot be said today.