Hongkong Listing Exposes China'S OEM Industry Chain Luxury Dilemma

Recently, including Italy famous

According to the global luxury report, although 83% of people represent the top level in China.

Outsourcing production of 80%-94%

Over the past 10 years, Samsonite has pformed from production manufacturer to main distribution and marketing company, which is responsible for the company and outsourcing to third party suppliers.

According to the information disclosed in the prospectus of the company, in 2010, about 94% of Samsonite's products were produced by third party manufacturers, of which the total amount of Chinese OEM accounted for about 84% of the total output in 2010, while the rest came from suppliers in Vietnam, Thailand, India and Bangladesh.

Prada disclosed in the prospectus that about 20% of the company's finished products were completed by 11 self built production enterprises in Italy and the United Kingdom, mainly including leather goods, footwear and clothing products, while the remaining 80% of the finished products were manufactured by outsourcing manufacturers in China, Vietnam, Turkey and Romania. The amount of purchases they paid in the last fiscal year ended January 31, 2011 amounted to 260 million euros.

"Our five largest external manufacturers include: a manufacturer who designs and develops shoes for many other high-end fashion brands in Hongkong, and a developer and manufacturer of footwear, handbags and other leather accessories in Turkey; a leather manufacturer listed on the Istanbul stock exchange; a manufacturer of sports brand shoes in Taiwan, and a Italy men's suit and coat manufacturer."

Prada has revealed that they have had 4-8 years of cooperation.

60% luxury brands have Chinese factories.

In fact, as early as 2009, the global luxury report has revealed that 60% of the international luxury brands own their own production lines in China.

Although Mai Shi industry, the president of Mai Zhi industry in Zhongshan, is closely related to the identity of Prada's foundries, insiders told reporters that they specialize in the manufacture of a leather handbag which Prada is the main player.

At the same time, their customers also have the famous handbag brand Coach and H ugoBoss, V ersusV ersace, A igner and so on.

Armani (A RM ANI), a Chinese company, told reporters that the G iorgioA RM ani of the company's brand line is pure Italy's technology and raw materials, while Em porioA RM ani part is produced in China, and the sub line brand "Hou" is fully authorized to be produced and operated by a joint business.

Reporters learned from various sources that Zhejiang Sheng Hong Garment Co., Ltd. is their foundry factory.

"Until 2009, we still accounted for 60% of the total sales volume of our company."

Xia Meng Yi Jie Market Sales Department official disclosed.

It is reported that the company is a joint venture between a Western-style clothing manufacturer in Wenzhou and 50% of the top men's brand Zegna in Italy.

30% China's market growth

The difference between quality and workmanship of luxury goods from different brands of the same brand is hard to judge in the industry.

However, it is undeniable that the influence of overseas OEM on consumer psychology has made the luxury goods owners keep tabs on this topic, especially in the Chinese market.

The global luxury market report, which was released jointly by Bain consultants, a leading international consultancy, and the Italy luxury goods producers association, showed that luxury goods sales in the US market increased by 12% last year, Europe increased by 6%, Asia reached 22%, while luxury goods sales in China increased by 30%.

If we calculate the purchasing power of Chinese consumers overseas, China has almost become "a paradise for luxury consumption".

However, Chinese consumers reject the luxury goods produced in China by up to 86%.

One side is the consumer market, the other is the mature foundry industry chain, which makes those luxury brands who want to look for factories in China have to be careful.

Is it feasible to reduce production in China?

It is reported that in May this year, due to the rising labor costs, Lou Frank, chief executive of C oach, told a gathering of Chinese Americans that in the next 5 years, the company will go to factories with lower wages in India, Vietnam and Philippines, and the proportion of production activities in China will be reduced from the current 85% to 40%-50%.

"We have begun to shift production activities out of China to other Asian countries with less prosperity."

C oach's sales revenue in China increased 1 times last year to $100 million.

It plans to raise its revenue to $500 million by 2014, gaining 10% of China's luxury goods market and planning to list in Hongkong.

However, in China's first textile network general manager and senior analyst Wang Qian, it seems that the high-end products pfer production is difficult to form the general trend.

"Labor is only part of the cost. In addition, China's production advantages are also matched by the industrial chain. For example, the garment industry can purchase fabrics, accessories and other products within 50 kilometers of the garment industry, but Vietnam and Bangladesh are difficult to achieve, and the pportation of related raw materials requires a lot of cost."

Wang also believes that Vietnam's current production capacity is limited, about 10 billion, while Bangladesh can not reach that level, "the middle and low end products are eager to shift, but for the high-end production enterprises, the Midwest can undertake, and there is still room for 5-10 years."

It is not difficult to see that in the coming period, OEM luxury enterprises should constantly measure and balance the risk of "air tightrope walking" in the market and production sectors.