The prospect of Chinese factories flooding the market with cheap haute couture products that they apparently already make for luxury brands like Louis Vuitton, Gucci and Dior is frightening TikTokers into thinking of grabbing bargains while they last.
These fears are exaggerated. China is the world’s biggest producer and consumer of textiles. But its factories produce relatively small quantities for European and American fashion labels.
Influencers informing Western consumers on social media that they can grab sweet deals at factory prices don’t usually talk to the Hermes clientele. The two sets of buyers don’t overlap.
There are those who would scramble to buy a $5 legging, and there are those who are happy to cough up an additional $95 for the label on that piece of clothing – trade war or no trade war.
By its nature, the fashion industry leaves little on the table for folks who make the clothes and shoes. It imposes an environmental cost on countries that mass-produce fashion, and that cost is climbing with the rise of fast fashion. Here’s how the economics works: the $100 legging does cost somewhere close to $5 to make and $95 to design and sell. But throw in extra dollars for water and air pollution, and it doesn’t make sense to keep churning them out to bring down a fashion brand. ‘Fly Buy Shanghai’ works so long as buyers know they are getting an original Nike for a little – not a lot – less.
Moving beyond the mass market, the ultra-luxury segment has an even more tenuous relationship between prices and production costs. Economies of scale apply in reverse, with deliberately limited production driving up prices.
The threat of fashion dumping, in fact, makes a genuine (read: with brand label) Birkin handbag even more desirable. Factories don’t cut the mustard against creators of aesthetics. A few months from now, they could be peddling last season’s fashion.
