The high fences are dense and sharp with barbed wire. Every entrance and exit is guarded by security. You must wear a work number plate when entering and exiting. All suppliers are not allowed to enter after four o’clock in the afternoon… District 3, Overseas Chinese Industrial City, Dalingshan Town, Dongguan, Guangdong, this shoe factory named Xingxiong is known for its strict management.
Few people know that what is born from more than 6,000 migrant workers here every day is synonymous with a series of high-class society such as Prada, ColeHaan and Camper. In addition to Dongguan, there are countless factories in Shenzhen, Wenzhou, Hangzhou and other places in China that are OEM production for these international luxury brands. They are large or small in scale, either direct order or “second order”, or finished product or only a certain process. But there is no doubt that they are all genuine products.
However, when they finally meet the people who consume them, people will not be able to discover the relationship between them and Chinese migrant girls. Due to the cheap image of “Made in China”, most of these products will eventually be labeled “Made in Italy” or “Made in Paris”.
These luxury brands that still claim to use pure European craftsmanship have been ashamed of mentioning some of their products from China for many years, but this is no secret in the industry. After the 2008 financial crisis, in order to reduce costs, the number of luxury goods and foreign mid-to-high-end brands that shifted the focus of production to China is increasing.
“On the premise that the process is guaranteed, (the Chinese factory) has an absolute cost advantage, why not do it?” The director of a factory in Hangzhou, Zhejiang, told this newspaper.
Paper That Does Not Need To Be Torn
“There are many things that are inconvenient to say, because there is no need to tear this piece of paper. It is already a common fact, and consumers don’t need to care too much.” On the phone, the factory manager said in a relaxed tone.
Someone is more cautious than him. Yang Huaguo, the only contact person at Dongguan Xingxiong Shoe Factory, who can be found on the Internet, declined to be interviewed, and also refused to disclose which brands the factory OEMs for. “The company has regulations.” He said.
According to the supplier Zhang Ming (pseudonym), this factory is “strictly managed.” After four o’clock in the afternoon, these suppliers are not allowed to enter the factory, because workers will gradually get off work after four thirty, and the factory refuses all outsiders to enter the factory on the grounds of safety.
In the past five years of supply, Zhang Ming has never received any sample of finished shoes from the factory. Whenever the Xingxiong factory needs a certain material, it always cuts off a piece and sends it in, so that it can still be fed. However, he still saw some finished products when they entered the factory for feeding. “All of them are world-renowned brands!” He recalled, ColeHaan, Prada, Camper and Tim-berland were more impressive. Among them, ColeHaan is the most, accounting for more than 60% of the total output of Xingxiong Plant.
The situation is similar in a place called “Xing’ang Industrial Park” about ten minutes’ drive from Xingxiong Factory. At 5 o’clock in the afternoon, when the factory was off work, a large number of workers in blue and orange overalls poured out of the park. Everyone seemed to be in a hurry. When stopping a female worker to ask the factory what brand of shoes, she said as she walked, there are many brands. “Is there Prada?” “Prada has.” The answer was simple, and the English that he blurted out was slippery. When you continue to ask, you start to be alert, “What are you asking about?”
Another female worker and a male worker respectively introduced that the factory produces finished shoes, all of which are exported; Prada mainly produces in Xingxiong factory. Xingang only does it when Xingxiong is too busy.
Xing Xiong and Xing Ang are both affiliated to Hong Kong Xing Ang International Co., Ltd., one of the top ten shoe manufacturers in the world, and is one of the 18 factories invested by it in the mainland. Xing Ang International was officially listed on the Hong Kong stock market in 2007 under the name of Jiuxing Holdings (http://1836.HK). Public information shows that the main products of Jiuxing Holdings include many world-renowned brands including Nike, Guess, LVMH, Prada, Timberland, Clarks, Rockport, EasySpirit, Ecco, etc.
In addition to Dongguan, in China’s Shenzhen, Wenzhou, Hangzhou and other regions, there are countless factories that are processing on behalf of international luxury brands. In the eyes of industry insiders, it is no secret that luxury brands act as agents in China. Many luxury brands, including apparel and leather bags, have set up production lines in China at the end of the last century. After 2004, signs of entrusting processing to Chinese manufacturers have become more and more obvious. After the 2008 financial crisis, in order to reduce costs, the number of luxury goods and foreign mid-to-high-end brands that have shifted their production focus to China is increasing.
Tianjin Jinda Garment Co., Ltd., jointly invested by China, Italy, and Hong Kong, mainly produces Pierre Cardin brands. According to the company, every quarter, the company will introduce high-level management and advanced technology from Italy’s largest suit manufacturing and sales group. Relevant person in charge of the company said in a telephone interview with reporters, “The craftsmanship of Pierre Cardin’s men’s formal wear is done here.”
In addition, most of RalphLauren products are produced in China. The famous apparel manufacturers Luen Thai Group and Esquel Group, headquartered in Hong Kong, have undertaken most of the production of Ralph Lau-ren in the past few years. It is reported that the POLO orders placed by RalphLauren to Luen Thai can reach hundreds of millions a year. Luen Thai has branches in Dongguan, Qingyuan, Jiangsu and other places. In the past few years, most of the POLO orders were produced by Luen Thai’s own factories. Recently, Luen Thai has also begun to outsource to other factories in order to control costs.
OEM Industry Chain in China
There are two types of agency processing in China: one is to produce finished products; the other is to participate in the process. Perhaps the embroidery processing is located in China, and the cotton front and back may be processed in Malaysia, but most of the finished products are produced.
A staff member of the Dongguan factory of Luen Thai Group revealed that luxury brands have general agents in the country. After receiving orders from the brands, the general agent will carry out different styles of clothing according to the equipment situation of those processing plants that can be used for foreign trade production. When issuing a package, a different factory must be selected according to different styles and other requirements each time.
It is the same first-line brand, and may share a garment processing factory with other first-line or second-line or even mass brands. At the same time, according to the different styles of each year, the processing plants that provide production are not fixed. The factory will receive a sample before production, and some foundries will be outsourced when their business is too good. This is the so-called “second order.” “Some first-tier brands will even find some remote processing plants to provide OEM services for fear of being known that they have OEM services, and even find some family workshop-type processing plants.” She said, “Guangdong factories produce. The equipment is better, while the Jiangsu and Zhejiang generations have more raw materials.”
Theoretically, these processed clothes will be returned to the company’s Hong Kong headquarters, gathered in Hong Kong and shipped to fashion gathering places such as Italy, France or Spain, and then sold to various countries.
However, due to the high cost of transportation and tariffs, in the eyes of industry insiders, all garments or other products produced in various regions may not necessarily be sent to the headquarters. The staff member said that some are produced in China and have Italian labels, and they have not even gone out to customs. After these finished products are processed through simple procedures, they are usually directly wholesaled to agents or directly sold in stores. Although the sales staff of the specialty store repeatedly emphasized that their products are handmade by European craftsmen and then exported to China.
Professor Liu Wenwen, a senior expert on brand strategy development of China Apparel (8.730,0.06,0.69%) and China (Dalian) International Brand Introduction Center, told reporters that high-end luxury brands should retain their origins in order to protect their historical and cultural values. What conditions can be labeled “Made in Italy” is not an industrial standard, and there is no international uniformity of rigid regulations, but it should be a pursuit. Each country has different requirements for each country, but at least it is necessary to ensure that the core process of the product is made in Italy and the main raw materials are also from Europe before it can be marked “Made in Italy”.
A foreign article stipulates that it is necessary to ensure that most of the product (the part that determines its quality) is produced in the country, and the cost (labor, materials, etc.) incurred in the production of the country must account for at least 50% of the total cost. Only those who meet the above two criteria can be marked with the label made in that country. According to this provision, for products processed and produced in China, the label “Made in China, Designed in Italy” seems more reasonable.
Different from the hot production sites of Dongguan Xingxiong and Xingang plants, the relevant person in charge of the PR Department of Prada Trading (Shanghai) Co., Ltd., Prada China headquarters, categorically denied that there are production lines in China in a telephone interview with this newspaper. “We don’t have any production lines in China. As you can see, almost all of our products are labeled Made in Italy, and they are all pure Italian craftsmanship and technology.” However, the British “Financial Times” special writer, fashion industry person EchoGu said that Prada found a factory in China that met the technical requirements two years ago, so it produced it in China. Due to the cheap image of “Made in China”, their CEO proposed that the label of origin should be cancelled and all changed to “Made by Prada”.
The reporter saw in the Prada store in Shin Kong Place in Beijing that every shoe, every piece of clothing, every bag, without exception, was marked “Made in Italy”. The idea of “Made by Prada” has not yet been implemented.
In response to a written question from this newspaper whether there is a processing agency in China, Prada China headquarters stated that it must be confirmed by Milan to reply.
Prada’s prudence has its own reasons. The skilled craftsmen who represent the pure Italian craftsmanship need 30 years of skill polishing. In the two factories in Dongguan, you can mostly see young people around 20 years old, and rarely see employees over 30 years old.
Their salary levels are also very different. A long-standing banner hung outside the gate of Xingxiong Shoe Factory states that a large number of general workers are recruited with a monthly salary of 1,300 yuan. Of course, if they choose to work overtime, the salary will be considerable.
A statistic shows that the average hourly wage of European clothing workers is about US$20 and working hours are fixed; while the wages of Chinese workers are very low, labor costs are only 1/20 of those in Italy, and they can often work overtime.
After the financial crisis, factories in Zhejiang and Guangdong clearly felt that customers were lowering prices. The number of orders has not decreased, but the unit price has been lowered a lot, with an average price reduction of more than 30%. Zhang Ming said that during the entire financial crisis, the orders of the Xingxiong factory did not decrease but increased. Of course, the price was also cheaper.
In addition to foundry, the pace of Chinese manufacturing companies has gradually extended to upstream design and brand operations.
Larger processing plants are already transforming to R&D. For example, Xingang International, Luen Thai, Esquel and others already have their own brands.
It is reported that Sino International has more than 3,000 R&D personnel, and its annual R&D expenditure is close to one billion yuan. As long as the customer puts forward a concept, the design team of Xing Ang International can design at least five styles in a short time, and can design more than 100,000 styles a year.
The notice board erected outside the factory of Xingxiong shows that Xingxiong is also developing its own brand, called STEL-LALUNA, which is currently listed in various provincial capitals in China and has 102 chain stores.
Honest Brand
Ouyang Kun, head of the China Representative Office of the World Luxury Association, told reporters that luxury brands have both bright and dark production in China.
The old Italian luxury brand Armani (Armani) belongs to the “Ming” way. Gigi, the head of Armani’s public relations department, told reporters in detail that Armani has many brands, of which GiorgioArmani is purely Italian craftsmanship and raw materials, while EmporioArmani is partly produced in China, and the sub-line brand Ar-maniExchange is fully authorized by the cooperative business. Production and operation.
Gigi said that it is a rule to put the label on where the product is produced, otherwise it will not pass the inspection of the Import and Export and Industry and Commerce Bureau. I believe that every brand can do this.
Zhejiang Hangzhou Shenghong Clothing Co., Ltd. is a well-known luxury goods foundry in the industry. The company has been engaged in the OEM production of luxury brands since 1999. It has mainly produced the ArmaniJeans and ArmaniExchange series under Armani, as well as the clothing of the brand. The most high-end ArmaniCollezioni series.
Shenghong Garment’s factory manager Zheng told reporters that the Armani made in his factory is all finished products, and sometimes many orders will be packaged to the following cooperative enterprises. Factory Manager Zheng proudly said: “In fact, foreign brands have already recognized the technology of Chinese factories.”
However, Director Zheng avoided talking about how to train workers so that their skills can meet the requirements of luxury brands. He only said that the factory only recruits specific craftsmen.
Factory Manager Zheng has received a lot of orders recently. He said that because of the cost control of luxury brands after the financial crisis, the number of orders received by mature and experienced factories has increased, while orders for small-scale factories have decreased.
reporters in the Emporio Armani store in Beijing Xinguangtiandi did see that each piece of clothing was clearly marked with different origins in Chinese, such as “Origin: Italy”, “Origin: Serbia”, “Origin: Shenzhen, China” and so on.
Also honest is the British national treasure Burberry (Burberry). Last year, the brand resolutely announced the relocation of its factory to China in spite of the multiple resistances in the United Kingdom on the grounds of pursuing economic benefits. Burberry closed its main UK plant in the Ronda Valley region of South Wales, and according to the “globalization” plan put forward in September last year, it will officially move its production line to Shenzhen, Guangdong, China.