The reason behind value is similar to the value of a military/exclusive medal. It's a "legitimate" way for the owner to signal prestige.

In economics terms - a Veblen good

https://en.wikipedia.org/wiki/Veblen_good

True but not entirely.

There are big quality differences and often luxury brands do use material and labor that makes a bag cost hundreds of dollars or euros to produce.

But not all do and sometimes they flounder or cheat on certain products.

The margin between that production cost (Tanner always gives an estimate) and the actual price is definitely a function mainly of the prestige associated with the brand.

I.e. other factors such as shipping, display (think flagship stores), advertising & sales labor costs play much less of a role in the luxury segment.

There are a lot of people who will pay a lot of money to show that they are better than others.

Still the best shop was the one who sold stuff only to fit people - didnt have big sizes (I always wondered if they didnt sell big sizes at a premium).

No, because they don't want fat people tarnishing their brand.

Too hard to make them look good? I don’t think it’s strictly impossible.

I can understand why a bag that has been hand sewn by skilled artisans in some tiny town in Italy (say) might be expensive. Skills take time to learn, and the labor is costly. (The leather itself seems to be a negligible fraction of the cost of production.)

What I dont get is what stops Chinese manufacturers from recruiting equally skilled local artisans in Asia to create their own luxury brands, and what stops Hermès from outsourcing their own bag manufacturing to those artisans in China instead or France or Italy.

Its not like China doesnt have a rich craft tradition. Do those domestic luxury brands exist? If so, why arent they sold for export?

On a past trip to Paris and Florence, I wondered why there were so many non-tourist Chinese living in the region. It turns out... Many of those "Made in Italy" luxury goods are made by skilled Chinese artisans (in Italy).

The value of those "brands" are based on perception and the existing brands have put a lot of work into cultivating their brands historically.

https://www.newyorker.com/magazine/2018/04/16/the-chinese-wo...

https://forum.purseblog.com/threads/inexpensive-immigrant-la...

On a side note, this also applies to some "Made in America" brands too. Some of my favorite American brands used to host factory tours for their customers -- they tended to have a majority if not all southeast/east Asian workers making their garments and bags.

Also interestingly Italy was basically the 2nd country hit with a massive spike in Covid cases right when the pandemic hit, as there had been some leather/fabric trade show with participants flying to and fro (I don't recall the specifics)

I remember reading it was "undocumented" Chinese nationals who were traveling back and forth between China and Italy. One of Italy's largest textile factories is literally within miles of the Wuhan lab and many speculated that many of the workers were moving back and forth and brought the virus from the factory to Italy.

But you are correct in the fact there is no denying Italy was hit very early on, well before many realized what was going on. I remember seeing an article were Italian doctors were concerned they had five deaths in a single weekend from new strain of influenza they hadn't seen before.

Are you saying that people living in America who (or whose parents) were born in China wouldn't be American?

The description of "non-tourist" Chinese is intended to describe persons that are of Chinese ancestry, and in these contexts, more likely than not, immigrants from China now living-in, and/or working-in a different nation, for example, France, Italy, or the United States; their (primary) purpose for physically being there is not tourism/leisure/recreation.

No, a person living in America who was born in China, or whose parents were born in China, could self-identify or be identified as Chinese, American, both (e.g. "Chinese-American"), neither, or something else entirely.

I think the implication is that these are people who trained in their home countries and were brought to Italy so the luxury brands could continue claiming a "rich history of Italian craftsmanship." In a way it's true but it's also lying by omission.

Yes. There's also an interesting tangential topic of so-called "counterfeit" or "replica" luxury goods where they can sometimes be unofficial items produced from the exact same factory, in-country, or abroad as "extra-runs", as well as items produced by those "skilled artisans" that previously worked at the official factories recreating the same items, using the same methods and materials, unofficially elsewhere.

Prato, just outside Florence, "is home to the largest Chinese community in Italy and one of the largest in Europe (...) the medieval Tuscan town of 195,000 counts around 12% of its residents as Chinese—though undocumented residents are suspected to bump the percentage up much higher" (to quote the first result I found on google search)

The rabbit hole of Chinese and Italy goes even deeper. They go gaga about Italy, at least Chinese women. I've listened to two Chinese women go on and on how Italy has a culture similar to Chinese etc. Prato is the tip of the iceberg if you ask me.

> What I dont get is what stops Chinese manufacturers from recruiting equally skilled local artisans in Asia to create their own luxury brands, and what stops Hermès from outsourcing their own bag manufacturing to those artisans in China instead or France or Italy.

A bag of this sort gets dramatically less valuable to the clientele if you cut the price by half. They don't want a cheaper version. If anything, they want it more expensive.

>A bag of this sort gets dramatically less valuable to the clientele if you cut the price by half. They don't want a cheaper version. If anything, they want it more expensive.

There's a name for this: https://en.wikipedia.org/wiki/Veblen_good

the French are good at finding answers to these questions, often to the benefit of themselves...see https://atelierwen.com

Yeah, luxury bags aren’t about buying a bag but owning an object that signals status.

Making it cheaper or local or available to more people is not the goal.

Beyond a certain price, all goods become jewelry.

It’s very hard to compete on quality in leather bags without a reputation and a good bricks and mortar network because online customers have no way to tell the quality and even in person customers probably lack the knowledge - so from the producers perspective why bother spending more?

>Do those domestic luxury brands exist? If so, why arent they sold for export?

The value of a luxury brand is in the history, reputation and social proof. I bet there will be Chinese luxury brands eventually, only after decades of cultural export. You can argue that South Korea "suffers" from the same problem as well, with SK being relatively new on the global stage. However Japan has luxury brands (like Commes Des Garcons, Issey Miyaki) that were established 50-60 years ago.

it also depends on which luxuries market you're targeting.

South Korea is making a big splash in cosmetics, for example, but has never been a particularly large textile hub.

It's seemed to me that there's a specific fast/good/cheap rule for consumer products.

1. High quality

2. Pays lower-level employees fairly

3. Low cost

Pick 2.

Consumers will complain that they can't get all three and frequently blame assorted factors such as price-gouging and CEO pay but I suspect that those rarely make as much of a difference as consumers hope.

This does happen to an extent with smaller upstart brands.

For instance, in men's shoes, Grant Stone made a name for themself offering a very similar, albeit even better built, product to Alden for roughly half the price.

In guitars we see companies like Eastman doing a similar labor arbitrage producing products similar to Martin and Gibson.

The key though are price savings. These could be argued to be 'luxury' to an extent in that they're notably quality products, but the attraction is the savings from labor passed onto the customer.

The type of luxury we're dealing with for the Birkin's of the world is based on brand cache more than anything else. Price is simply not a factor, so it doesn't make any sense to take measures to reduce it. Worse, the moment a brand gives a hint that they're doing anything remotely cost cutting is going to be catastrophic as it goes against their 'spare no expense' mantra.

> What I dont get is what stops Chinese manufacturers from recruiting equally skilled local artisans in Asia to create their own luxury brands,

Luxury brands are selling a story, and that story is generally ‘European, old (100+ years)’. Companies like Rolex and Hermes have perfected this, upstart luxury brands from China would need a good 20+ years or genius marketing to start building the type of brand that can sell a story.

It's certainly not impossible though, we now have luxury Japanese brands.

I think a bigger struggle for any Chinese brand would probably be rampant counterfeiting; for luxury goods to prosper, customers need to have a way to ensure they're getting the real deal. And China currently accounts for 75% of counterfeit goods by value seized at US ports.

I've bought many leather wallets in the US even from seemingly upscale places like Nordstrom's. They all kinda fell apart after a few years. I bought a leather wallet in Italy near the Trevi Fountain for roughly the same price almost decade ago and it's by far the best wallet I've ever owned. It's even aged in a nice way.

https://lasellaroma.it/product/wallet-cod-5026/

Because "made in China" doesn't sell. A quality Chinese manufacturer could do a quality bag, but it would sell as just a good bag, with a price reflecting the quality of the materials and workmanship that went into it. I can imagine a lawyer, doctor, etc... buying such a bag as it is a work tool that will see heavy use and it is important for the image to have a reasonably nice looking bag.

But luxury is more than that, you buy a story and exclusivity. You want to think you are one of the few, you want to think about the small town in Italy, get the idea that by your purchase you contribute to a tradition, it has to be special, and China can't deliver that. At least not for handbags, I guess it is a different story for, say, ceramics, where China has a recognized tradition.

This may not be the case for Hermes, but designer brands sometime also mean great and new design. Personally, I spend extra for Rick Owens and Balenciaga just because of the ideas they put into the looks.