Huge Profits Behind Luxury Brands: Overseas Foundry

Recently, top brand Prada ( Prada) On the grounds that "the Chinese takeover may change the style of the brand", he refused the purchase request of Shanghai businessman Lu Qiang.

News came out that many luxury enterprises, including Prada, have foundry factories in China, but Prada's domestic stores say that all goods sold in the store are imported from Italy.

Overseas foundry is common.

Many luxury brands have foundry factories all over the world. According to the usual practice, the place of production and sale of their products are always crossed. For example, in the Chinese market can not buy marked " Made in China "Armani made garments, but you can buy Armani T-shirts marked" made in China "in Italy.

Overseas OEM is not a opportunistic behavior, but also a distribution of resources. For example, many luxury clothing companies produce factories all over the world, and the division of labor between factories is very meticulous. Italy Zegna luxury group is responsible for the production and research and development of fabrics, as well as the factories responsible for the production of belts and shoes, bags and small leather products. Overseas factories are distributed in Switzerland, Spain, Mexico, Turkey and China. Among them, factories in Spain, Mexico and Wenzhou in China are responsible for the production of sleeves and trousers, while shirts are produced in factories in Turkey and Istanbul. In addition, tailor-made clothing is produced in Swiss factories.

Luxury goods from different origins are under the same brand, and their quality and workmanship are not very different. However, it is undeniable that some products may have some differences compared with their origin. Therefore, some luxury companies distinguish them from trademarks.

Asia's first choice for subcontracting

Actually, Luxury goods Cards have always been taboo for overseas OEM, especially in the choice of subcontracting places. The reason for professional analysis is that companies worry that overseas OEM will lead to psychological fluctuations of consumer groups, which will cause negative effects. However, the cheap labor and transportation costs of the third world countries are the temptation of luxury brands. So after weighing the pros and cons, many luxury companies choose to sign confidential agreements with overseas enterprises to prevent the leakage of OEM.

Against this background, many countries in Asia, such as China, Vietnam and Malaysia, have become the first choice for luxury overseas foundries. Especially in many cities in southern China, luxury foundry factories have become commonplace, but they have been low-key and unnoticeable.

According to sources, many of the world's top luxury brands have already settled in China. In early 2007, Louis Weedon had already found an authorized manufacturer in China and began to establish a production base in Hangzhou, Zhejiang. Jiangxi Sheng Hong Garments Co., Ltd. is loved by Italy luxury brand Armani, and has produced some series of the brand. Jiangsu Sunshine Group is the secret production place of HUGO BOSS.

It is reported that domestic foundry is divided into two kinds: one is to produce finished products; the other is to participate in the process. Almost all the authorized manufacturers have signed a confidentiality agreement and are forbidden to disclose any details. The major luxury brands do not sell products made in China because of the brand marketing strategy.

In the eyes of most consumers, luxury brands, if they have labels of origin, are symbols of honor and are therefore willing to buy. Therefore, some brands in order to conceal the fact that they produced in China or other developing countries in Asia, and even find some remote processing plants to provide foundry services, some family workshop type processing plants even the local people do not know.

Will luxury products become extravagant because of subcontracting? Do Louis Weedon, Chanel's top brands label their "made in China" label and people no longer want to buy them?

In fact, almost all developing countries in Asia are now classified as luxury clothing processing areas. Luxury brand's demand for OEM is not only simple to produce a set of garments. The parts of a garment are usually arranged in different countries, and the final garment assemblies are assembled in Hongkong and other places. After being assembled into garments, they are transported to Italy, France or Spain to check their products. Only those who meet the quality requirements can label the brand. It can be seen that it is not easy to do the job for luxury goods.

Frequent problems bring credibility crisis.

With the increasing number of overseas subcontracting workers in luxury companies, there are more and more problems. Reports of blood and tears hidden behind top luxury goods have attracted people's attention more than once.

The secret of Vitoria is a world-famous underwear company whose head office is located in the United States. A large number of orders are sent to foreign processing plants every year.

At one time, a labor protection organization revealed that in Jordan's OEM factories, workers earned about 4 cents for every finished product, while in a secret store in Vitoria, a pair of underwear costs 14 dollars - 350 times the remuneration of workers. Workers eat the cheapest food and live in shabby wooden shed. All this is different from the luxury of "Vitoria's Secret" in the United States.

The reports of sweatshops brought a credit crisis to the "secret of Vitoria", and also made people pay more and more attention to the huge profits of luxury foundry.