Wednesday, May 2, 2007

High Fashion Brand Made in China

While they may still not yet be designed in China, luxury consumer goods are increasingly being made there. As Asia Times put it in a recent article:

“Don’t be surprised if you find the Prada, Armani or Burberry products you are wearing are made in China. Goods “Made in China” are no longer limited to cheap, low-end products. More and more brand-name luxury consumer goods are made in this “world’s workshop”, largely because of growing domestic demand as more and more Chinese can afford them.”

The trend is set to continue, and the World Luxury Association has estimated that 60 percent of the world’s luxury brands will manufacture in China by 2009.

Asia Times also notes an Ernst & Young report that says luxury goods sales in China in 2004 were US$2 billion, putting China in third place after Japan and the US and this figure is growing rapidly as more and more local Chinese are becoming affluent. With growth of 20 percent estimated to 2008, and 10 percent a year to 2015, sales could reach US$11.5 billion - and I assume this does not include what well-to-do Chinese buy when on overseas business and shopping trips (see more consumer wealth and spending information here and here).

There are certainly challenges for the luxury end of the market, and quality control is critical, but it is clear that China will see more and more high-end production coming its way. Lower cost does not have to mean lower quality.

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