China and The USA’s Trade War - Luxury Caught In The Crossfire?
Tariffs on Chinese goods under the Trump Administration soared to 145%. As Americans primarily rely on goods from China, this has ignited a certified trade war between our two countries, and vendors within are certainly not exempt from the effects. With this sky-high rocket, Chinese vendors have taken to the internet to show American consumers the power they have in the Luxury goods market - specifically, that they can copy any Birkin, or duplicate any Gucci. And that if it’s not a duplicate, they already have such a major share of factories that work for the real company, so the quality is essentially exact. Buy direct, for a better price for the American consumer, and better profit for the Chinese manufacturer - while the Trump Administration gets nothing.
This raises a whirlwind of issues, from legal to economic to political. However, in the legal world especially, fashion is going to have a tidal wave of potential influx to compete against when it comes to the American market. Ever since this exposition from Chinese vendors, there has been a surge in American consumers using DHGate, Taobao, and Aliexpress to buy dupe luxury to fulfill their desires. Especially as the fears of recession loom closer, many consumers are losing faith in the concept of real luxury being a safe and worthy investment when counterfeits are easily abundant and incredibly well done, so much so that even the companies themselves struggle with authenticating between them.
This majorly impacts the Intellectual Property of luxury brands, as not only do these counterfeits infringe upon their designs, but they also steal away their marketshare. And in the fashion industry especially, obtaining a US patent is incredibly hard as one needs to prove their is a unique feature or purpose to an item in order for it to be protectable, not to mention the fees are expensive and process is lengthy. Combine that with how many luxury brands manufacture in China but assemble in their European home countries, the licenses they give to the overseas factories to operate in their name can easily be exploited, and their processes replicated to make grey goods - goods that are the exact same quality, but are not authorized for sale by the parent owner company.
As the Trump administration and Luxury brands try to fight back against this rise, there is no denying that it is incredibly alluring to the consumer. To an average consumer, the ability to get something of similar or even exact quality for a much cheaper price, especially as cost of living soars and a recession draws near, sounds like an absolute steal. While it may hurt the companies, there are a niche of consumers that is ultimately growing that do not care for the designer label, and will transition to a focus on cost efficiency, functionality and durability. As alternatives show that it can be found in places outside of designer label assurance, the divide will only grow steeper, and understandably so.
Luxury has become, in the mind of the consumer, just that - only worth what they think it is worth. In order to regain their market share, and more importantly, consumer trust, these brands need to find something else to draw in a consumer, differentiate their positioning, and highlight their quality as superior. While there will always be loyalists who believe in the difference, the world is ever changing, and it will be an uphill battle to cap the group growing in the other direction.
