How Good Are The Goods?

The term manufactured no longer means ‘handmade’. Manufacturing has changed tremendously over the centuries. The change has been dramatic, yet also very subtle. What began as a simple necessity, became science – and sometimes, art.

In ancient times, craftsmen and artisans made everything (coaches, statues, paintings). Everything was one of a kind. Merchandise was made in houses or workshops, to satisfy the production of essential and non-essential articles. Most items were custom-made, which meant that every product had real authenticity from the manufacturer. This process was rather time-consuming, until this era ended in the mid 18th century, with the Industrial Revolution (1760 – 1850). The Industrial Revolution introduced machine-based manufacturing, with the invention of many engines and mechanisms, like steam power and the Spinning Jenny; the latter was, essentially, a large loom that made it possible to increase clothing production to yet unimagined levels.

The Industrial Revolution transformed life. Think about it: less labor; human-machine interaction in factories; and a new business and social structure. But that does not mean the so-called ‘old ways’ were gone. The tradition and personal signature of certain unique products continued – with a twist. The easiest way to analyze the development of manufacturing is through clothing and accessories; both of these market sectors place high value in one-of-a-kind products.

[Louis Vuitton](louisvuitton.com) was founded in 1854, with its most iconic and beautiful product: trunks. Different shapes and materials are used today, but one thing prevails: the artistry of the manufacturing process. Every Louis Vuitton piece is completely handmade, as it has been since the 19th century. How much for a custom-made trunk? The price of a small sedan. The value? Well – you get the idea.

Bvlgari was founded in 1884 by a jeweler who created his pieces -like the house still does today- through pure skill of his artisan hands. A moderately gorgeous piece of jewelry by Bvlgari will set you back…several sedans.

“Does this mean Louis Vuitton and Bvlgari don’t have mass production?”, you ask yourself. The answer is: not necessarily. Many luxury houses do have mass production, because the range of products they manage is quite vast. Many even use outsourced manufacturing with certain products. Is this cheating, then? After all, the customer is buying the brand’s reputation, while it is somebody else who actually makes the product. Alas, that is the way business works. As customers, we must realize that many factors contribute to the pricing of the items we buy. Let’s keep in mind that, when we buy any kind of product, we are buying the name of a brand. This sole fact certainly adds to the value of the final product.

So: on one hand, we have custom-made, traditional products; on the other, we have mass production. Both hands are tainted with branding.

Why is a custom-made piece of luggage made in Uruguay far cheaper, than one made in England or France? Why is a mass-produced shirt more expensive in Japan than in the U.S., when both shirts are made of, say, cotton? How does local or national production battle with foreign products?

The truth is that, however relevant, the brand doesn’t make all the difference. Yes, it definitely pushes the price, but other factors contribute as well. For example, let’s analyze the case of the up-and-comer: Japan.

In the current economy, even when the percentage of luxury goods’ sales increases in a country, the consumers want to know what they are paying for. Usually it’s the brand but, let’s say that you want to buy a shirt. You see it on the window display at the store; you like it; you come into the store and look for it in your size; and then, you ask for the price. This new shirt is by the brand Kapital, and it costs $422.00 USD. You are (understandably) shocked. “What is Kapital, and why does it cost the same as my last Gucci?”, would be the question inside your mind – you are a knowledgeable, worldly consumer. “This brand is kind of unknown, after all!” So now, you are filled with questions.

You are right: the Gucci brand is older and more famous. Yes, Gucci is Italian and the manufacturing quality of Italian goods is one of the most prestigious in the world (something common with European countries, because of old fashioned brands). Then, how can this Japanese company, which was founded just in 1984, be competing in price with old, established brands? Just like you are now, many have also wondered why Japanese clothing is so expensive. Is it really worth the price?

The answer has three parts: manufacturing, materials, and pricing.

It is now common knowledge that Japanese manufacturing is one of the best in the world, probably stealing everybody else’s thunder. This is mainly because of Japanese workers. Unlike what happens in other Asian countries, Japanese manufacturing is not a chain of immigrants working endlessly. Japanese manufacturers are young, vibrant, with the upmost respect for tradition and the highest degree of ethics when it comes to what they produce. The Japanese chain of command is also very different. Therefore, it’s not surprising that major eyewear brands, of the likes of Thom Browne and Leisure Society, have their products manufactured in Japan.

Japanese brands also have very innovative and creative methods to treat raw materials, and they go beyond what is expected by the customer when it comes to satisfy their creative needs. They are known to use leather from wild, exotic animals, as well as special oils and chemicals; and delicate fibers.

Japan also has a different way to approach wholesale. Usually, when brands sell to retailers, it is the buyers who determine the retail price. In Japan it is the brands who set the price; with this, the wholesale price increases 50%, sometimes even higher, thus affecting the final retail price. Most Japanese brands create their own details for clothing, instead of importing them, and their workers’ wages are higher. This, too, is reflected in the final cost.

This smart approach to national manufacturing increases the price of locally made goods. It is the Japanese manufacturers themselves who place a higher value in the products they make. This is an approach that many countries might want to adopt if they are interested in protecting their national industries: when the manufacturers do not value the products they make, it is almost certain that they will not get any recognition and, in consequence, they will not make much profit. Valuing a product lies not only in appreciating it: it also implies the constant quest for improvement of the product, by making the methods of manufacture more effective. This will automatically elevate the quality.

On many occasions, it is very difficult to define with accuracy which factors play a role in the pricing of an item with exact accuracy. The fashion industry and its market are a fusion of quantity and quality, where the balance is not very clear. It is the costumers who decide which products they will buy. Whether they will lean towards luxury brands, or to more affordable retail prices, is a question that only time, and demand, can answer. In the meantime, manufacturing will continue developing and innovating, in order to satisfy the demands of an ever-changing society.

Text by [Alberto Lizárraga](albertolizarraga.svbtle.com)