The internet outrage shared by netizens at the revelation that some luxury products are being made in factories in China, not in France or Italy by a seasoned craftsman is making the news right now. I decided to weigh in on the conversation and throw my POV into the ring of ideas to consider.
First, let’s start with a few definitions:
Luxury Goods = consumer goods that are expensive relative to average incomes and typically considered high quality. They may be considered high quality due to one or more of these factors – the quality, rarity, or value of the raw materials used to make them, the design of the product, or how they were made. They are often seen as a status symbols that communicate to others the wealth of those who can afford them.
Luxury Brand = a company known for producing or selling products or services of high quality and typically high price, often associated with exclusivity. These brands are typically seen as offering a superior level of luxury and sophistication. Hermes is considered to be the oldest luxury brand founded in Paris in 1837.
Why do we buy luxury goods?
In talking about this issue, I wanted to start with people. Human behavior and the drivers for why we buy things is complex. I want to dive in and look at why there is a luxury goods market in the first place.
Doing some research on this topic, found the following psychological drivers for why people buy luxury items:
- Social Identity Theory: People often define themselves by the groups they belong to. Owning luxury goods can help individuals feel part of an elite group, enhancing their social identity and self-esteem.
- Self-Enhancement: Humans have a natural tendency to seek positive self-regard. Achieving status and prestige through luxury goods can boost one’s self-image and confidence.
- Social Comparison: People frequently compare themselves to others. Luxury goods can serve as a benchmark for success, allowing individuals to feel superior or more accomplished compared to their peers.
- Symbolic Interactionism: Objects, including luxury goods, carry symbolic meanings. They can represent personal achievements, aspirations, and values, helping individuals communicate their identity and status to others.
- Scarcity Principle: The rarity of luxury items makes them more desirable. Exclusivity can create a sense of urgency and value, making people feel special for owning something few others have.
- Cultural Influences: Societal norms and cultural values often emphasize the importance of status and prestige. Media, advertising, and social networks can reinforce the desirability of luxury goods.
- Emotional Fulfillment: The act of purchasing and owning luxury items can provide emotional satisfaction, serving as a reward or a way to celebrate personal milestones.
It’s worth noting that none of these purchase drivers have anything to do with where a product is made. It just matters that the product is considered to be a luxury by some group of people.
False Outrage? Maybe.
Is all the commotion about the fact that some so-called luxury brands are using Chinese factories to produce their products real? One of the first thoughts I had was, “who in 2025 doesn’t know that China is the world’s manufacturer making it likely that all or part of everything we buy is made there?”
Since the free trade era began in the late 1960’s, American and European companies of all kinds have been moving or outsourcing their manufacturing there to take advantage of the lower cost of labor. I wrote a post about this last week – https://www.greatideagirl.com/offshore-manufacturing-how-did-we-get-here/
Thinking about where something is made being a value driver for a purchase, the Etsy + Local + Handmade market where consumers purchase in part because they like knowing they are supporting a local, handmade, or independent small business owner vs an impersonal big corporation. For these micro brands, being able to connect with the owner/designer/maker is part of the allure of the brand.
Place is also a component in purchases where superior quality is tied to the place like French wines, or olive oils from Italy or Greece, or tea from China. Another reason why place matters is when there is a long history of producing something like silk from China. Silk production began in China around 2700 BC so they have perfected the art of making silk.
It kinda feels like false outrage because who – in 2025 – doesn’t know that China is the world’s manufacturer. Since the late 1960s they’ve invested in the training, machinery, and technology to get really good at making things. Companies around the world began taking advantage of their low labor cost to make their products for less than they could in their home countries, allowing them to keep more of the selling price as profit.
The Psychology of Buying Luxury Goods
On the psychology of buying side, the folks buying a $35k handbag are not buying it because of where it’s made. They are buying it mostly because it silently communicates that they are the kind of people who can afford to buy it. They like how that makes them feel and how others think about them because of it. Luxury products are 95% aspirational purchases.
If the exact same bag, made with the same leather, and constructed in the same way, just without a brand name that has the fashion history of a Gucci, Chanel, Prada, or Dior, was being sold for $150 – THEY would not buy it. That handbag would not meet THIS consumers need for exclusivity and status. Luxury brands are status symbols ONLY because everyone can’t buy one. If we could all buy a $35k handbag, it would lose its desirability to us.
When was the last time you saw knockoffs of a Walmart handbag being sold on the street? Probably never. luxury brands get copied because most human beings aspire to be something that they aren’t right now.
I seem to recall some research that said luxury brands make most of their money from selling their lower cost versions of their products but the high-end and one-of-a-kind pieces establish their brand identity and mystique. It makes sense because only so many people can afford a $35k handbag, a larger number of people an afford it at $250, and almost everyone could buy it at $35.
Good Design Matters
The other issue is one of the value of a design. Before you can make something, someone has to have the idea for it and design it. Design is unique to an individual and their life experiences.
The Birkin bag was designed by Hermès chief executive Jean-Louis Dumas in 1983 from an experience on a flight seated next to actress/singer Jane Birkin on a flight from Paris to London. Birkin had just placed her straw basket in the overhead compartment of her seat when the contents fell out onto the floor, leaving her scrambling to recover them. Birkin explained to Dumas that it had been difficult to find a leather weekend bag she liked. In 1984, he created a black supple leather bag for her based on one of his 1982 designs.
Neither the idea nor design for this bag came from a designer in China. That was all Mr. Dumas. Most countries recognize the right of a designer to profit from his workthe West, intellectual capital like the design of a
Copying the designs of others is not the way to build a luxury brand that’s enduring. There has to be differentiation in design along with high-quality materials and construction.
Now would be a great time for Chinese luxury brands to promote their own designers and their unique design perspectives to the world. Brands like Shanghai Tang, Icicle, and Exception de Mixmind are a few of them.
Thanks for reading!
