As millions of businesses cop the heat of the US tariff war, Chinese manufacturers are pushing back against the gratuitous world of consumerism from which Western brands benefit greatly.
Chinese social media has exploded this week with a flurry of videos from factory workers and retailers accusing luxury brands in Europe and the US of selling their products with “Made in US” or “Made in Italy” stamps.
One luxury handbag maker attempted to shatter the illusion in a TikTok video that has exploded online. He claims an unfathomable amount of the coveted fashion pieces pushed by brands, hocked by celebrities plastered on billboards across the developed world, are actually produced in China at a fraction of their retail prices.
It might already be well known, but the fact these luxury brands still turn outrageous profits is proof affluent Westerners haven’t really accepted they’ve been ensnared by a marketing gimmick as old as time.
And while it’s clear the Chinese manufacturers pointing this out are trying direct customers their way, “Senbags2” gave a revealing rundown on exactly how much it costs to make a $38,000 Hermes handbag, or at least one that looks exactly the same without the post-production thrills.
Hermes is a European company that manufactures its products in France. The label alone attracts wealthy buyers looking for handmade, high-quality goods that specifically aren’t mass-produced in a factory. The so-called social benefits of being seen with a luxury item are also a big part of high-end companies’ marketing.
But the outrageous price tags have understandably led to suspicion, mostly among people who don’t want to spend their year’s rent on some buckles attached to dead cow skin.
“This Birkin bag at Hermes boutique will cost you $38,000. But what is the real cost out of the factory?” the Chinese proprietor said, telling viewers to “welcome to the real world”.
“Today I’m going to break down, step by step.
“First thing’s first. Hermes only use the leathers from the three top-level suppliers. One is called Nuti from Italy. The second is Weinheimer from Germany and the third is Haas from France.
“One piece of togo leather (enough for one bag) costs US$450.”
The worker explains how high-end bags use the “Rolls Royce of thread” called Fil au Chinoise from France, which costs about US$25 per luxury bag.
Further components include the metal “hardware” for the bag, which costs about $150 and then the oil used to treat the material, which comes in at $50.
The zippers and internal lining come in at around $110 wholesale.
But then comes the manpower.
“French artisans are much expensive than Chinese artisans,” he said.
“To finish one bag, the resource cost would be $600.”
The total came to $1450.
“But why does Hermes charge you $38,000 per bag? That’s because more than 90 per cent of its price is paid for its logo,” he said.
“But if you don’t care about the logo and just want the same quality, same material, you can just buy from us. because for our bags we use exactly the same material. From our factory, it only costs $1000.”
Hermes has since announced it will raise its prices in the United States from May 1, a move aimed to offset the new 10 per cent import tariff.
“It will be a complementary price increase that we are currently finalizing, but which will allow us to neutralize this impact,” said finance chief Eric Halgouet during the company’s quarterly earnings call.
Press Secretary’s dress causes a stir
It’s clear China is not backing down as the economy stumbles through the current period of uncertainty. From manufacturers to diplomats, the nation’s most heavily-affected have taken every opportunity to point out the absurdity of the White House’s economic policy.
So when White House press secretary Karoline Leavitt strolled in front of the cameras in what appeared to be a Chinese-made dress to justify Trump’s dramatic escalation, the Chinese had a field day.
Chinese Consul General Zhang Zhisheng, based in Denpasar, Indonesia, posted an image of Leavitt at the podium in Washington and claimed that the ornate lace on her dress was sourced from a factory in Mabu, China.
“Accusing China is business. Buying in China is life,” Zhang wrote on X.
“The beautiful lace on the dress was recognised by an employee of a Chinese company as its product.”
That was enough to light the fuse.
Social media immediately lit up with accusations of hypocrisy.
“Leavitt slams Made in China while rocking a Chinese-made dress, hypocrisy much?” read one post. “Classic politician move: blame China, but keep the cheap goods.
“How does Karoline Leavitt manage the crushing irony of slamming ‘Made in China’ while strutting in a gorgeous Chinese-made lace dress at the White House podium?”
But not everyone was buying the narrative.
Some users defended Leavitt, suggesting the online sleuths had mistaken a French original for a knock-off. “Fake news. She’s wearing the French original whereas the advert shows a Chinese copy. It’s funny indeed, but the spin of the tweet is dishonest,” one said.
Others pointed to China’s alleged reputation for counterfeiting, arguing the lace could be a bootleg.
“Chinese people are notorious for bootleg clothes. It’s more likely they copied a luxury brand’s jacket,” another user offered.
Tariffs taking their toll on luxury
The luxury fashion industry finds itself under an unflattering spotlight once again. During a global cost of living crisis, it is downright absurd for luxury brands to sit straight-faced while attempting to sell plain white, or stylistically ripped, T-shirts for $3,000.
And now, the inner workings of the White House threaten to bring the whole castle down.
US President Donald Trump’s administration has imposed tariffs reaching up to 145 per cent on Chinese imports, citing national security concerns and China’s alleged role in the fentanyl crisis, among other things.
While certain electronics have been temporarily exempted, the overarching strategy aims to reduce America’s reliance on Chinese manufacturing.
In response, China has retaliated with its own set of tariffs and export restrictions, intensifying the economic standoff.
The developments have severe implications for the luxury goods market. With rising production costs and shifting consumer perceptions, brands may now need to reassess their strategies entirely.
The growing sentiment of nationalism among Chinese consumers is also brewing preference for local luxury brands over Western ones, especially when similar quality is available at a more accessible price point.
The global luxury goods market saw an overall 2 per cent decline in 2024, with China’s contribution dropping from 50 per cent to just 12 per cent of global sales.
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