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Jun
2015

Luxury brands under the microscope

tanlun

Some years ago, the Chinese luxury consumer was purely driven by brand ownership and the attached status this provided. They didn’t question the ethics or honesty of the brand, but assumed that it was perfect. This same assumption of perfection was the antithesis of the assumption that everything Chinese was imperfect, the ying and the yang of a luxury lifestyle.

The slower economy, increased consumer knowledge and greater confidence in themselves has led the same consumer groups to dig a little deeper into the brands and their own purchases. They have started to look past the brand name and its general reputation and to really understand what they are being sold, and some brands are finding this uncomfortable.

An example recently in the media has been Zegna. Its entry-level suit sells for about 20,000 RMB, and uses their fabric but that which is made in China rather than Italy. Consumers have been talking about how bad this is, a brand like Zegna selling a suit made of ‘Chinese’ fabric! They don’t care that the fabric quality may be of a Zegna standard, but that it was made in China. Again the perception is that anything made in China is of poor quality and not worth a great deal of money.

There are other brands making product in China such as handbags and clothing that is not sold here, but exported overseas, but across the product range in most stores in China, some of the products have been made here, the difference is that the brand doesn’t or hasn’t told anyone until now, so the consumers start to dig for answers, and when they find information that shows that the brand wasn’t entirely honest with them, they spread the news on social media. Brands naturally want to avoid this situation, because they cannot control the wildfire that follows.

So, consumers can turn against the brand very quickly, but what unfortunately the brands are not doing is thinking on their feet and using transparency to justify their positions. If for example Zegna had said to its customers ‘our entry level product is 20,000 RMB and is made of materials designed and made to our standards in China. However, you can have the same design and quality product, but made of Italian made fabric for 40,000 RMB’, they would sell more high end products and the consumer would see them as an honest brand. It’s a win-win.

Using the fact that a product is based on non-Chinese materials and hence is more expensive has been a justifiable reason to purchase a product in China for many years, and this has not changed. What has changed is the fact that the consumer now wants to understand what makes the difference in pricing of products from the same brand, not because they want to pay less money, but because they just need to know. So tell them.


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