Today is the day that luxury brand Burberry pulls out of a factory in Wales and moves production to China, a move that has prompted questions about brand provenance, started protest marches and even inspired celebrity boycotts.
Burberry obviously has sound commercial reasons for moving its productions to China. The shirts manufactured at the factory in Wales sell for around £60 at retail and each one costs around £11 to make in Wales. The company believes it can have the items made for around £5 in China, doubling its cost savings and increasing profits.
But luxury brands particularly need to keep a very close eye on their reputations. After all, a brand is only deemed ‘luxury’ if it has a high price point (maintaining an elite positioning); uses the finest materials (partly justifying the price tag); and offers buyers the chance to participate in a certain ‘lifestyle’.
Can Burberry maintain these values while closing the factory? There are some interesting considerations.
Burberry’s whole brand is based on this idea of ‘Britishness’. This is something that buyers in other parts of the world outside the UK are particularly allured by. The idea of Britishness is somehow tied up with history, monarchy and class. By buying a Burberry item, you buy a little piece of old British class with modern design.
Can you still claim to be British when outsourcing the production somewhere else? Even if Chinese workers can make the items for less money and with the same amount of skill, aren’t you really buying Chinese workmanship rather than British? But does that matter? If the design is British, does it matter where it is made?
The truth is that despite celebrities declining to attend Burberry’s then-cancelled Baftas party earlier this year, the move to China will probably have little impact on sales. Unless the items show a drop in quality (which is unlikely), then the company will find that most people forget the whole affair relatively quickly. Perhaps the notoriety will even give it more of an edge.
You do wonder if the company could have turned the affair around, however, and made it into a positive PR push for the brand. Why not keep production in Wales and boost your income by widely publicising just how British the brand really is – making a real selling point out of the fact that it is made in an expensive country and you don’t WANT to use cheaper labour? Isn’t there something very luxurious about buying something that COULD have been made cheaper, but wasn’t, because there is a moral reason not to make it cheaper? As more and more buyers get turned on by the idea that luxury is having enough money to be able to do good for the world (see celebrities using brands like Toyota Prius and People Tree to show off that they can afford to care), couldn’t Burberry tap into this?
What do you think? Will this affair really hurt Burberry’s reputation? Let us know your views.