Chinese manufacturers are pushing back against the luxury brands from the US and Europe that benefit greatly from consumerism. Social media in China is currently flooded with videos accusing luxury brands of selling products made in China with “Made in US” or “Made in Italy” labels. A TikTok video went viral showcasing a luxury handbag maker exposing the truth behind the production of high-end fashion items in China. Despite the knowledge that many luxury items are produced in China, wealthy Western consumers continue to pay exorbitant prices for these products, indicating they have fallen for a marketing gimmick that has been around for ages.
One Chinese factory, known as “Senbags2,” broke down the production costs of a $38,000 Hermes handbag, revealing that the majority of the cost is due to the brand logo rather than the actual materials and craftsmanship. The breakdown included costs for leather, thread, hardware, oil, zippers, lining, and labor. According to the worker, the labor costs to finish one bag are $600, bringing the total production cost to $1450. This significant difference in cost compared to the retail price highlights the massive markup luxury brands use to generate profits.
To counter the impact of the new 10 percent import tariff imposed by the US, Hermes announced a price increase in the United States starting May 1. This move is aimed at neutralizing the impact of the tariff on the company’s earnings. This situation highlights the ongoing economic tensions between the US and China, with the tariffs taking a toll on luxury brands that rely on Chinese manufacturing. Chinese manufacturers and consumers are utilizing social media to draw attention to the reality behind luxury brands and their manufacturing practices.
The controversy surrounding a White House press secretary wearing a Chinese-made dress to justify Trump’s trade policies added fuel to the fire in the ongoing US-China economic battle. Chinese Consul General Zhang Zhisheng claimed that the lace on the dress worn by the press secretary was sourced from a Chinese factory, sparking accusations of hypocrisy and irony on social media. The incident underscores the larger issue of US-China trade tensions and the impact on various industries, including luxury fashion. While some defended the press secretary, others questioned the authenticity and origin of the dress.
Amidst the escalating trade tensions between the US and China, the luxury fashion industry is facing challenges as production costs rise and consumer sentiment shifts. The imposition of tariffs by the Trump administration on Chinese imports has led to retaliatory measures from China, creating uncertainty in the global market. Chinese consumers are showing a growing preference for local luxury brands over Western ones, especially as similar quality products are available at more affordable prices. The luxury goods market saw a decline in 2024, with China’s contribution dropping significantly from 50 percent to 12 percent.
The future of the luxury fashion industry remains uncertain as trade tensions between the US and China continue to escalate. With changing consumer preferences and rising production costs, luxury brands may need to rethink their strategies to adapt to the new economic landscape. The exposure of the manufacturing practices of luxury brands in China has shed light on the disparity between production costs and retail prices, raising questions about the sustainability of the current business model. As the world watches the economic battle between the US and China unfold, the luxury fashion industry stands at a crossroads, facing challenges that could reshape the industry for years to come.
