Secret International Luxury Pricing Process

　　 Everyone wants to open this curtain to explore the background of luxury goods, especially after the quality problems of more than 10 luxury brands such as Chanel and Armani.

　　 Luxury goods Assembly and processing path

"China is one of the processing bases for these luxury brands. In fact, almost all developing countries in Asia are classified as luxury goods processing areas. Luxury brands are not only required to produce a ready-made garment in China. The processing of embroidery is naturally placed in China. The cotton precursor may be processed in Malaysia later. These processed clothes went back to Hongkong, and assembled in Hongkong to assemble into garments, then shipped to Italy, France or Spain. Familiar with high-end clothing Jia Jia said.

Guangzhou Manzi Trading Co., Ltd. is the sole distributor of MNG in China. Miss Wang, director of the Shanghai branch of the company, said that the clothing of the MNG brand is the same as many large brands of clothing. It is processed all over the world, and then sent back to the headquarters of Spain for inspection. "As far as I know, in Asia, MNG has factories in Hongkong and Guangdong." Miss Wang said.

Garments manufactured in China or other countries and regions will surely be sent back to headquarters. Mr. Zou, who has been steeped in the clothing industry for many years, calls it a "theoretical operation mode". Due to the high cost of transportation and customs, the products produced in the world should be sent back to headquarters for inspection, but not in operation. Of course, there should be no certificate of quality issued by the headquarters without the return to headquarters, and the product without inspection is the most dangerous.

Actually, MNG It is not a luxury brand. It is more of a fashion brand, or a luxury brand. It is a second-line brand. But like MNG, most of the first-line brands are domestically produced. "Not all garments are produced in China, some are imported purely." Jia Jia said.

How can domestic manufacturers produce these "big names"? According to industry sources, a brand usually has a manufacturer's general agent in the country. After receiving the order of the brand, the agent will carry out the contract of different styles of garments according to the equipment of the garment processing factories that can be produced by foreign trade. Every time we choose different garment factories according to different styles and other requirements. In other words, being a first-line brand may share a garment processing plant with other front-line or second-line or even popular brands, rather than some view that a major brand of all garments is monopolized by a garment factory. At the same time, according to the different styles of the year, the processing plants that provide production are not fixed.

"If we calculate the cost of processing in China, the cost of luxury clothing is very low. The clothing factory may sell products to the general agent at 5% of the clothing market price." Liu Man, who managed to trade clothes, said. She introduces that the enterprises that subcontract to luxury brands are mostly in the Pearl River Delta region, especially in Dongguan and Humen, Guangdong. "Their production facilities are better, and there are more raw materials for Jiangsu and Zhejiang."

Jia Jia also disclosed the "open secret" of the industry: "some brands are afraid to be known that they have factories in China or other developing countries in Asia, and even find remote factories to provide foundry services. Some home workshop factories even do not know the locals."

from Fabric The beginning of the fare increase path

Jia Jia analyzed and calculated the cost of garments made of luxury brands. At the retail price of clothing, 20% of the price is spent on the early stage of the garment, and the payment to the designer and some handmade details almost cost all the previous costs. Next, the whole production cost will be 20%, which includes not only the cost to the OEM manufacturer, but also the cost of accessories such as accessories after returning to the head office. These high-end clothing brands still need about 10% of the marketing expenses, while the annual fashion show of two times takes the lead. What is left behind by customs duties and channel costs?

"Don't think that the profits of luxury goods are very high, not dozens of times." A luxury goods practitioner, who does not want to be named, complained that "the majority of luxury goods, to be exact, the profit margins of high-end brands at a more reasonable level. Clothing is usually in dozens of percent, of course, some specific categories except.

"But not all brands spend 20% of their initial cost on design." Jia Jia said. According to reliable statistics, only about 30% of high-end clothing will be designed for work, while nearly 70% of high-end clothing is only "basic +LOGO".

So who will account for 20% of the design cost? This is the brand value and the intangible assets are the most influential.

Are all the luxury goods entering China full of money? "Not so. At present, there are not many luxury brands that are really profitable in China. What we all value is the potential of the future market." One industry insider said. The newly rich Chinese really let these luxury brands see the future, especially a report from Ernst & young, which has strengthened the confidence of LV. According to the report, "in 2015, China will replace the United States as the second largest consumer of luxury goods in the world."

Look at more specific cost calculations. Take the clothing with a market price of 1000 dollars as an example, Mr. Zou has given a "value-added" process to a luxury garment. First of all, the total production agent buys the processed garments from the foundry factories at about 3% (about 30 US dollars).

The general production agent plus the market price of 10-15% (about $100-150) will sell garments to luxury enterprises.

On this basis, the luxury business plus the market price of 30% (about 300 U.S. dollars), according to this price, and then send these high-end clothing to each country or region's distributor general agent, taking into account the tariff factors, the distributor general agent will add the market price of 50% (about 500 U.S. dollars), become the final market price of 1000 dollars, according to the same price to distribute to the dealers. These distributors are usually subordinate agencies of the general agency.

Such pricing can basically guarantee the profit of the general agent after excluding tariffs. The relative price difference between the general agent and the luxury enterprise is not large. He mainly reaches the target of luxury enterprises after sales and sales volume, and then pays a labor cost from the latter.

In addition to the listed LV, almost all the luxury business owners are asked "the sales and growth rates of the Chinese market" will reply that "the market is not bad, we are not listed companies, so there is no need to disclose financial data. What we value more is the potential of the future market."

Another example may prove that luxury days in China are not always well served.

Nanjing West Road, Shanghai, which has always been known as a luxury distribution center, has several stores selling luxury clothes all the year round. The salesperson also reveals that sometimes the turnover is only a few thousand dollars a day, while in the Nanjing West Road of the small size, the daily rental of luxury stores is even in dollars, and it may range from dozens to hundreds of square meters.