Is it worth it?

One of the most pervasive myths about designer bags is that they are simply overpriced accessories. While it’s true that designer bags come with a hefty price tag, this myth oversimplifies the value they bring. The price of a designer bag reflects the craftsmanship, quality of materials, brand heritage, and exclusivity. The leather used is of the highest quality, often sourced from specific tanneries that provide supple, durable hides. Additionally, top luxury manufacturers maintain strict quality control, ensuring each bag meets the brand’s exacting standards, alongside meticulous detailing and care. These factors, combined with the brand’s history and reputation, contribute to the bag’s price. It’s not just about paying for a name; it’s about investing in a piece of art that has the potential to appreciate in value over time. Now, imagine if you were told that these high-end bags that are symbols of superiority and status were far less expensive than what you actually thought and what companies’ price tags show.

In a digital age marked by transparency, a recent TikTok exposé has left consumers questioning the true value of luxury goods. Worldwide, netizens are scrutinising the hefty price tags associated with high-end brands following revelations from Chinese manufacturers that they provide much of the labour behind these sought-after products. The creator, known as Wang Sen, has stirred a notable frenzy online, revealing that more than 80 per cent of luxury bags are produced in China. In a viral video, Sen elaborates on the practices behind these luxury labels, claiming that brands like Gucci, Louis Vuitton, Prada, Chanel, and Hermès mislead consumers by attaching extravagant labels while keeping production costs exceptionally low. Sen adds that consumers have been “misled and poisoned” by clever marketing strategies that promote these high-end products as status symbols. “Welcome to the real world. Now you see that those bags are made in China by our intelligent and diligent Chinese artisans,” he quips, urging consumers to reassess notions of luxury. Such revelations have compelled many to re-evaluate their notions of luxury, as consumers grapple with the idea that much of what is branded as high-end is essentially produced in the same factories that manufacture more economical options. The impact of Sen’s revelations has been profound, prompting a wave of Original Equipment Manufacturer (OEM) suppliers to step forward with similar claims. Brands like Lululemon, Zara, New Balance, and Nike are now also under scrutiny as suppliers surface, revealing that the so-called luxury dichotomy may extend beyond bags into clothing, technology, and even lighting fixtures. As part of this narrative, Sen provided shocking cost comparisons, stating that a Hermès Birkin bag, often priced at an eye-watering USD 38,000, requires merely USD 1,395 to construct. Armani, on the other hand, pays USD 270 to a supplier to manufacture handbags, which are then sold in the retail market for just under USD 2,000, according to media reports. This stark contrast begs the question: Why do consumers willingly pay such inflated prices for products originating from the same source? The conversation surrounding this issue is more than just about handbags; it’s become a dialogue about consumerism and marketing tactics.

Last year, Italy’s competition watchdog launched an investigation into luxury fashion groups Armani and Dior for unfair commercial practices over allegations that they used suppliers that underpaid and overworked their staff. As part of the probe, the AGCM watchdog and the Guardia di Finanza financial police carried out inspections at the headquarters of Giorgio Armani SpA and GA Operations SpA as well as Christian Dior Italia Srl. In April 2024, an Italian court placed a unit of Armani under partial judicial administration for one year after it found one of its suppliers used subcontractors that violated labour laws. Giorgio Armani Operations — a company wholly owned by Giorgio Armani, which deals with the design and production of the label’s clothes and accessories — was not itself accused of wrongdoing. But the court said one of its suppliers subcontracted production in the Milan area to what it called “Chinese workshops” mainly employing Chinese and Pakistan nationals. In June last year, a Milan court ordered that another top fashion company be placed under judicial administration. In response to the investigation, Dior — which is owned by French luxury giant LVMH — said it condemned “the discovery of illegal practices at two of its suppliers responsible for the partial assembly of men’s leather goods.” It denied media reports that the suppliers had been making Dior handbags, and that “the cost of producing these bags would be ridiculously low”. “Remember that the profitability margin of the Dior house is entirely in line with the luxury industry,” it said. News reports had cited court documents saying that the supplier’s around-the-clock working hours and safety shortcuts allowed it to charge Dior €53 for a bag that retailed for €2,600. The court documents cited by the media said the practices discovered were not a one-off phenomenon but represented “a generalised and consolidated production system.” For years, luxury companies — and even non-high-end retailers — have been linked to forced labour claims in countries like China and India. The implication is that retailers turn to developing countries to reduce the cost of production, but often, that’s tied to worker exploitation. In recent years the scrutiny over the clothing supply chains and their practices has increased. Italy lies at the centre of such probes because it is home to thousands of small manufacturers that account for 50-55 per cent of the global production of luxury clothing and leather goods. According to a 2023 Statista report, there are between 200 and 250 brands globally that fall under the “luxury” label. Of these, 70 to 100 are considered top-tier, enjoying elite status and commanding skyrocketing prices. Traditionally, these brands promote their European roots, emphasising artisanal craftsmanship and heritage. Their official statements often list production hubs in Western Europe. While these brands maintain their European mystique, the online revelations suggest that at least some production may be outsourced to Chinese factories operating quietly behind the scenes. These manufacturers often work under non-disclosure agreements, preventing them from openly naming the brands they produce for. As the US-China trade war heats up, discussions like these indicate a significant shift in the marketplace, one that aims to cut out the middleman and unveil the realities of production. The conversation also raises broader questions about the meaning of “Made in” labels and the ethics of luxury pricing. With Chinese OEMs now stepping forward to showcase their capabilities, the age of luxury secrecy might be giving way to a more open, if not complicated truth. While luxury brands may retain their allure, it’s clear that the narrative surrounding them is undergoing a seismic shift.

Views expressed are personal