Luxury pricing is being called into question amid the U.S.–China tariff war. In this op-ed, two RMIT University experts – Fashion & Textiles lecturer Dr Amanpreet Singh and Fashion & Textiles dean Dr Alice Payne – weigh in.
A series of viral TikTok videos is shaking up the luxury fashion market as alleged original equipment manufacturers (OEM) in China stand on factory floors and break down the cost of luxury fashion products. This has sparked intense debate regarding authenticity, transparency in sourcing, and the changing dynamics of luxury retail.
These viral videos unveil $5 yoga pants allegedly manufactured in the facilities producing Lululemon’s products, highlighting a significant contrast to premium pricing.
Another video details the cost breakdown of a $38,000 Hermes Birkin bag, supposedly costing only $1,400 to make. These indicate that the huge difference between the prices is the addition of a logo or label.
The question arises: Is this transparency or a strategic ploy during a trade war?
Exposing supply chains or discrediting luxury brands?
Observers indicate that this TikTok trend strives to demystify luxury brands by revealing their manufacturing processes. This narrative implies that high-end goods are often manufactured alongside mass-produced products, thereby raising questions about the legitimacy of their high pricing.
A viral clip claims that 80 per cent of luxury bags are manufactured in China and shipped to Europe merely for labels to be added. This statement, albeit possibly inflated, aligns with customer scepticism regarding luxury pricing being more closely tied to branding than artisanal skills.
However, luxury brands promptly refuted these false claims. Louis Vuitton and other luxury brands maintain that they don’t engage in production within China and highlight the significance of European craftsmanship. Some analysts view this as a tactic to erode Western luxury amidst geopolitical tensions.
The timing of these videos indicates a likelihood of retaliation. Chinese manufacturers affected by tariffs are aiming to embarrass the luxury brands and appeal to consumers who feel overcharged. Country of Origin has a significant and positive impact on brand perception and social status. Product labels such as “Made in Italy” are highly regarded, while “Made in China” is often associated with a less favourable reputation.
This trend navigates the dichotomy of whistleblowing and smear tactics, revealing global supply chain issues while aiming to undermine luxury brands' reputations and promote alternative purchasing options.
TikTok as a strategic platform amid U.S.–China trade tensions
The geopolitical subtext is hard to ignore. TikTok has become a battleground in the U.S.–China trade conflict. The emergence of these videos on TikTok during this crucial time is not coincidental, bridging Chinese creators with Western audiences in an unprecedented manner.
This aligns with the rise of tariffs (up to 245 per cent on certain exports), encouraging Chinese manufacturers to seek innovative ways to bypass conventional supply chains that tariffs target.
These TikTok videos recommend consumers to bypass retail markups and tariffs through direct purchasing. Some videos provide strategies for reducing import duties, while others fervently call for revolt against tariffs, holding the government accountable for economic challenges.
Chinese media and businesses capitalise on these videos to demonstrate the detrimental effects of U.S. tariffs on American consumers. Crucially, this is happening while TikTok’s fate in the U.S. is in a state of jeopardy. It is striking that during this window, when TikTok is still accessible, a wave of content beneficial to Chinese economic interests is flooding American users’ feeds.
What direct factory access means for luxury’s value chain
Logistics experts emphasise that international shipping has facilitated small parcel deliveries from China; however, recent regulations are imposing restrictions on this system. The termination of the $800 import exemption is perceived as a catalyst for innovative strategies by Chinese manufacturers in response to tariff threats.
Genuine original equipment manufacturers (OEM) for luxury brands operate under strict non-disclosure agreements, making insider exposés doubtful. Industry experts in manufacturing observe that legitimate factories rarely jeopardise relationships with brands. They warn that consumers might be exposed to inferior products, thereby undermining the value associated with luxury design and craftsmanship.
Cutting brands out of the equation, if done on a large scale, could impede innovation and threaten artisan job opportunities within the fashion sector.
However, this situation compels luxury brands to clarify their sourcing and pricing practices. Customers seek to understand the rationale behind the pricing disparity of a bag valued at $200 being retailed at $2000.
Consumer motivations and responsibility
A massive visit to these videos reflects shifting consumer motivations, and one driver is simple economics. Shoppers may be excited by the prospect of acquiring luxury goods at a fraction of the cost, by skipping retail prices. This may be particularly attractive during periods of economic uncertainty, leading consumers to prefer a $1000 bag instead of a $5000 counterpart.
Beyond mere pricing, there is a distinct appeal associated with ‘silent luxury’, which emphasises understated elegance over prominent branding. Younger consumers often praise getting the same product without a logo, emphasising value over brand.
However, consumer responsibility and awareness are also crucial. The dilemma is that low-cost products can match branded products in quality and materials, but they do not carry the same brand prestige. This suggests that luxury often hinges on brand narrative and legacy.
Consumers captivated by these bargains must weigh risks and ethical concerns. Purchasing prompted by TikTok may unwittingly cause consumers to obtain counterfeits or low-quality imitations. In addition, the deliberate purchase of counterfeit goods can tread into legal and ethical territories.
Therefore, it is the responsibility of consumers to investigate and discern genuine products from imitations while considering some financial savings and functional product attributes.