Why does Prada reduce quality in China? Do not reduce prices!

Prada manufactures a wide range of products, from handbags and shoes to men's and women's clothing. About 20% of the company's products are currently produced in China. The company, headquartered in Milan, Italy, said in its initial public offering (IPO) prospectus that it is also producing products in countries with low labor costs such as Vietnam, Turkey and Romania.

China Prada quality reduction? Do not reduce prices!

Prada SpA is very busy in China these days. It not only opened stores in many places in Mainland China, but also made its shares listed on the Hong Kong Stock Exchange last Friday. It also brought more and more high-end fashion products to China to produce.

About 20% of Prada's products are produced in China. Prada's designer Miuccia Prada said in an interview that Other fashion brands will come to China to produce products sooner or later, because China's production level is so good. She also said that Chinese people are particularly good at making shoes.

European fashion luxury brands such as Prada, Gucci and Louis Vuitton have established a reputation for producing their products in France and Italy. The high prices of these branded products can be partly attributed to the superior production technology in France and Italy.

But for European luxury brands, the temptation to transfer some of their production operations overseas is increasing. The financial crisis has put pressure on the operating margins of this industry. Take Burberry PLC, a British fashion brand, for example, the company was attacked because it shut down its manufacturing operations in the UK and transferred its production operations to Asia.

Europe’s production capacity is also limited. Hermes is continuously recruiting new workers in France for two years of training. Although the 12th production facility of Louis Vuitton in France will start operating this month, it had to close some stores early last year because the inventory of these shops is decreasing.

However, luxury companies cannot consider profit and loss when choosing production sites. In Prada's home country Italy, "Made in Italy" has become a political issue. Senator Senator Santo Versace, who is the owner of the fashion company Versace, launched a lobby last year to pass a “Made in Italy” law that will require a detailed brand certification system. To increase the transparency of clothing in the source area. The law is currently awaiting the approval of the European Commission.

In order for a product to be marked "Made in Italy", most of its production costs must take place in Italy. And if luxury brands such as Prada produce products in China, Asian consumers they are trying to please may also feel dissatisfied. Armando Branchini, a luxury consultant, said that while Chinese consumers are prepared to pay higher prices for luxury branded products, they do not want products made in China.

Prada's products made in China are no different from their products made in Italy. The brand's pair of wedge-heeled shoes recently sold for $455, the same price as sandals made in Italy.