The feather down-market in mainland China is chaotically profound, with high-end brands squeezing profits by mixing low-quality products among standard ones and selling them at 10 times their actual cost.
Sina News reported that the Chinese authorities have recently penalized Yi Nian (Shanghai) Fashion Trading for selling poor quality counterfeit jackets as good quality products. Yi Nian is registered in China by South Korea’s E-Land Group.
According to a statement by Beijing Xicheng District Market Supervision and Administration Bureau, Yi Nian hired Dandong Xiangteng Garment to produce 80 down jackets on July 2 last year. The production cost for each piece was $11.84.
On Sept. 20, Yi Nian put seven items on sale at the Beijing Hanguang Department Store. In the Beijing Juntai Department Store, two jackets were sold at $252 each.
On Nov. 3, Yi Nian sold another two pieces. Unfortunately, one was sold for sampling and has not been recovered.
Under recognition that Yi Nian mixed poor-quality products with good ones, Beijing authorities said they would confiscate the brand’s “unlawful gains” of $208 from selling the products. The company must also pay $2,271 in fines and have seven pieces of women’s down jackets seized.
Red Star News reported on Feb. 15 from industry insiders that the production cost of a down jacket is mainly affected by the grade of the down feather. However, there is no specific standard for how much the product costs of down, fabrics, and accessories account for in the retail price of the brand.
Industry insider Cheng Weixiong said lower-priced products come from cutting production, procurement, and operating costs. That would include the fees for research and development activities, pattern samples, labor, logistics, brand promotion, channels, promotions, taxes, etc.
Cheng is a senior executive of the listed footwear and apparel companies such as Smith Barney Apparel, Bosideng International Holdings, and Yalu Holdings.
How much do the production costs of down, fabrics, and accessories account for in brand retail pricing? Cheng said that there is no specific standard.
Cheng said, “As far as I know, online brands generally control the price increase rate based on production cost between 1.5-3.5 times, while offline brands generally increase the price increase rate on the basis of production cost between 2.5-5 times. Or offline high-end brands have a price increase rate of 5-10 times on the basis of production costs, and a high price increase rate of more than 10 times.”
The down jacket of a high-end brand on the market is $1,153, providing that its filling is gray duck down, the down content is 80%, and the amount of down filling is 200-250g. Therefore, the price of the 80% gray duck down announced by China Down Information Network on Feb. 11 is $43 per kilogram. Based on this calculation, the retail price for a down jacket, which is only about $8 to $11, is only about 9/1000 of the cost of a high-end authentic jacket.
Cheng said that to meet the demand of low-end consumers at the so-called extremely low price, brands would use rayon fabric to replace down feathers. He said those that do so span from online, authorized distribution, private community domain, wholesale, live broadcast to other channels.
He noted, “This has seriously fueled the phenomenon of under-quality products in the market, with even renowned brands taking risks to seek high gross profit.”
According to Cheng, the arbitrage behavior of brands eager for quick success makes counterfeit products more popular online. In addition, the situation is fueled by the lack of adequate supervision and guidance on the market, production, quality, price, service, etc.
There are always buyers as long as factories and labeling companies go online through live broadcasting. Unfortunately, this system has ushered more people to dump many products at exceptionally low prices.