Gucci and LV handbags value : pit you have no discussion or expensive to have a reason?

by Min Leung Saller

According to a television station in Italy, Gucci's handbags costing 1,000 euros cost only 24 euros. Coincidentally, an article claiming that "Louis Vuitton manufacturing costs are only about 200 yuan" is also circulating on the Internet.

Luxury is not mysterious, but its manufacturing process is full of suspense. There is a saying that luxury brands spend a lot of money on promotion and development, and their manufacturing costs only account for a small proportion of the price, especially clothing, shoes or bags. In addition, there are no clear industry statistics on how many or which sectors are outsourced to developing countries. In the past two years, when Prada was listed in Hong Kong, China, analysts hoped to obtain some clues about Chinese foundries from their prospectus, but did not do so.

Pit you have not discussed?

Recently, a television station in Italy reported that Gucci used cheap Chinese labor in the Scandic town factory in Florence, Italy. The daily labor time is up to 16 hours, and the prescribed working time is only 4 hours, and it is not given on Saturday. Break time. Aroldo Guidotti, the head of the subcontractor Mondo Libero, said on the show: "Gucci is very aware of his illegal employment." He also said that the company sold handbags to Gucci for 24 euros, but at Gucci's store, These handbags are priced at up to 1,000 euros. In this regard, Gucci said that in view of the media exposure of Chinese workers seriously overtime work, the company will strengthen the control of suppliers.

This is not the first time Gucci has been exposed to similar scandals. As early as 2001, there were five employees who left the company "blood and tear complaints" Gucci Shenzhen flagship store is "sweatshop." They said that Gucci's flagship store in Shenzhen restricted employees through more than 100 behavioral rules: drinking water to apply, going to the toilet to report, and even 7 months pregnant employees still have to work night shifts. At that time, the public relations department of Gucci China Trading Co., Ltd. Shanghai Headquarters immediately responded by saying that the relevant complaints were thoroughly investigated and a series of measures were taken, including the removal of relevant management personnel and store supervisors.

In addition, the low cost and high price of the product is also a topic that these luxury brands cannot talk about. There was a news that the Gucci store in Beijing’s Shin Kong Place was stolen. The store manager reported that a bag worth more than 20,000 yuan was stolen, but in the end the police did not have a criminal case because the package price was several hundred. yuan.

A luxury foundry manager broke the news, a new Gucci leather bag worth 10,000 yuan, worth about 700 euros in Europe. In the cost structure, the fabric costs about 50 euros, plus rivets, buttons, zippers and other materials, the total price of a leather bag does not exceed 90 euros. Gucci has always claimed that its bags are handmade in Italy, but most of its styles are completed in the overseas production process, the cost of each bag processing is less than 4%. In the Chinese mainland market, the cost of the Gucci package with a value of 10,000 yuan is about 4,000 yuan, so the gross profit margin can be as high as 60%.

Coincidentally, the online writer "Drunken Dolphin" who claimed to have worked in the "manufacturing factory" once said in an article: "A certain Louis Vuitton handbag with a counter price of about 20,000 yuan, I estimate that the mass production cost is 200. Yuan or so. The batch size may need 400 yuan." The article also mentions that the synthetic material used for LV bag is embossed PVC coated canvas or oxford cloth, and the price of "quality PVC resin is more than ten yuan a kilogram. ". If the hardware is mass production, it will take 20-50 yuan. In this way, the cost of a Louis Vuitton wallet is between 220-450 yuan.

It is not only Gucci and LV that have been questioned by value. In May last year, there were media reports that the Armani suit or jacket of tens of thousands of yuan, the fabric is not from the fashion capital of Italy, but from a Shandong enterprise, the cost is only a few hundred yuan. The foundry also claims to provide fabrics for international luxury goods such as BOSS and Zegna.

A leather industry expert said in an interview with the media that since the 1980s, many internationally renowned brands have begun to search for production bases in China's coastal areas. Many old overseas brands, which have been in existence for decades or even hundreds of years, have gradually dropped their manufacturing and processing links in China. “People know that Italian leather goods are famous, but you know that Italian labor is very expensive. Ordinary technicians charge 20 to 25 euros per hour, seniors have to 30 to 35 euros, and once hired, lifelong, workers enjoy The benefits can even be doubled, and the cost can be imagined.” The leather industry expert pointed out that many well-known Italian leather goods factories often do not have many workers, at most like our Chinese workshops. "But you think about it, every year, so many top brands of leather goods are constantly entering the stores in China and the world. Can only rely on these dozens of workers?"

Although the large number of processes and even the finished products are from the foundries of developing countries, most luxury brands are reluctant to recognize the cooperation with these foundries. The tellers emphasize that the products are directly from the country of origin. import. “The reason why luxury brands sell expensive and attract buyers, in addition to design, and its packaging, its own brand packaging naturally has to match its price, therefore, the brand country is the origin of luxury brands advertise their own One condition is naturally unwilling to be known by the buyer that its production process is completed in developing countries,” said the expert.

Is there a reason to be expensive?

For the accusation of public opinion, luxury goods are also grievances. For them, although the cost of raw materials and processing is not high, the marketing cost of luxury brands is very high.

Zhou Ting, a luxury goods expert and dean of the Institute of Wealth Quality, pointed out that the Gucci cost of only 24 euros is out of context, because this is only one of the many aspects of its production, and the cost of many links is not calculated, the production cost The proportion of the price is only a small number, and some luxury goods only cost 50%-60%.

In fact, the brand value in the cost of luxury goods has become an important one. In addition, taxes and tax rates are also part of the price. For example, the price of French luxury brands is cheaper than China's, and the price difference is about 20%, mainly because of taxes and fees.

In the luxury goods industry, such a cost calculation formula is popular: “raw material + processing cost + luxury brand value + market public relations cost + flagship store annual cost + tariff and government tax rate = actual sales price”, in which raw material cost is often less than 10% .

The industry believes that the success of a luxury brand is the result of continuous operation and investment. In addition to marketing maintenance, its own brand value, such as celebrity effects, historical stories are all expensive factors. In other words, brand value is the most important part of the price of luxury goods. The value of luxury goods itself is very different from the value of sales. It is because the real value of luxury goods lies in the brand, not in itself.

In 1869, Egypt Pasha (Governor) Ismail ordered a suitcase from Louis Vuitton. After that, in 1877, Russian Crown Prince Nikola and Spanish King Alfons XII became users of the Louis Vuitton brand. More than 100 years ago, it began to customize boxes for the royal family. This is enough to entice consumers and make Louis Vuitton a veritable world luxury brand. Consumer demand for luxury goods has long surpassed the value of the use of goods, and more is a spiritual satisfaction.

“In this industry, the price is not a problem. The price is low, but it will be cold.” Yang Yang (pseudonym), who has been in the luxury industry for more than a decade, told the International Finance News reporter that strictly speaking, luxury goods are not For ordinary commodities, prices vary greatly with supply. When the cost of luxury goods rises, it will increase the price. When it is difficult to sell, it will rarely cut prices. "However, the cost of many luxury brands is indeed quite high. For example, Burberry has a waterproof, wrinkle-resistant, breathable and durable fabric, which is purely handmade."

A staff member of Dolce & Gabbana also revealed to reporters that the company sometimes prefers to destroy the season or some damaged items, and does not sell at a reduced price.

“The consumer of luxury goods is there, and the price is really a cloud. Even in the off-season, customers are scarce and rarely sold. If discounted or reduced, it will give customers an illusion, whether the product quality is problematic or the style. Outdated. A few years ago, the style was approved by the headquarters, and it may be launched at a certain time. Such products will have a small discount. The discounts are generally the lowest level of luxury consumers, with a monthly salary of over 10,000 yuan. Still like to buy new models, do not care about the price." Yang Yang said that luxury goods themselves are not a necessity for people's lives, but products with "unique", "scarce" and "exclusive" attributes. After satisfying the basic needs of life, people also need something to improve the quality of life. The luxury industry of “elegance”, “exquisiteness” and “personality” is catering to people's needs. Therefore, the price of luxury goods is dozens of times, hundreds of times, or even thousands of times of the same kind of ordinary goods. This is also a marketing strategy of luxury goods, which must be distinguished from other goods. People who buy luxury goods may like it. Design, perhaps because of its brand spirit, or perhaps to highlight its social status, the gap between its cost and price will not be too concerned, these are often concerned about the purchase of luxury non-mainstream people, want to buy Also reluctant, naturally the work of luxury goods or the place of origin, the cost is heavier.

For the high price of luxury goods, Ou Yangkun, chief representative of the China Representative Office of the World Luxury Association, analyzed whether Chinese people buy luxury goods not because of their income and age, but because of consumer psychology. In the luxury goods industry, the price is only a symbol, and the brand brand brings consumers unlimited glory: low-key design, traditional workshop-style production methods, limited customization... The series of labels that luxury brands painstakingly manage all make consumers feel Mysterious, it will use luxury goods as a symbol of its own identity, and this is also the brand side through years of precipitation and brand maintenance.

However, it is undeniable that the overall profit margin of the luxury goods industry is now declining. Some analysts believe that no matter from the domestic market or the international market, there are more and more doubts about the cost of luxury goods, and it also reflects the rational trend of consumers from one aspect.