Gucci's new sneakers are labeled "Made in China", sparking brand image controversy

Gucci's new premium sneakers Drip are marked "Made in China". (Reuters photo)

[Financial Channel/Comprehensive Report] Italian luxury brand Gucci’s new high-quality sports shoes break the past tradition of being made in Italy and will be made in China. Some industry insiders said that as Gucci strives to win back the favor of middle-class consumers, this move may damage the high-end image that the brand has built over the years.

"Reuters" reported that the move highlights the challenge faced by Gucci creative director Demna, who must create innovative products while controlling costs to attract "aspirational consumers", who are the majority of luxury consumer groups and are more price-sensitive than the super-rich.

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Demna is expected to release his latest series at Milan Fashion Week on Friday (25th). His success is very important to Gucci parent company Kering and its CEO Luca de Meo. Mayo took over the CEO position last year with the goal of turning around the group's decline. However, after the stock price rebounded at the beginning of the year, the stock price has stagnated this year. As the flagship brand of Kering Group, Gucci's sales have halved in the past three years, and its profit margins have been squeezed, forcing the group to close dozens of stores.

Demna has designed a futuristic sneaker called "Drip". Gucci's official website shows that this is the first sneaker Demna has designed for Gucci. It went on sale last (August) as part of the designer's Primavera series.

This laceless shoe is made of nylon, canvas or suede. It retails for 820 euros (approximately NT$33,600) in Europe and starts at US$1,050 (approximately NT$33,600) in the United States. Although it is priced lower than many Gucci shoes, it still belongs to the luxury range. The official website states that the shoes are "Made in China," and "Reuters" reported that the Drip shoes displayed in a Gucci store in Paris were also marked "Made in China."

Gucci's official website shows that another leather sneaker from the Primavera series is also marked "Made in China." A brand spokesperson said the shoes are produced in China for similar technical reasons related to the shoe's design. In addition, all shoes on the website with a country of origin label are made in Italy.

Gucci stated in a statement that Italy will "always be at the core of Gucci's manufacturing model and brand image." The brand's decision to cooperate with China is the same as it has cooperated with Swiss and Japanese suppliers in the past to produce watches, eyewear and other products. The statement said the brand selects partners with the technology and capabilities best suited to achieve the performance and quality standards pursued by the brand. A Gucci spokesman added that there are currently no broader plans to move production outside of Italy.

China is the global center for sports shoe production, however, some analysts believe that Gucci's abandonment of Italian manufacturing may trigger a backlash. Analysts at Berenberg bank said this would create potential tension between Gucci's attempts to re-establish its luxury status and the brand's origins.

Simon Whitehouse, a luxury business consultant based in Milan, said bluntly, "Made in China does not look good."

Two people familiar with the Kering Group revealed that the brand has also begun to lower the prices of some products, including products in China, in the hope of regaining market share. Analysts at Barclays said the price cut surprised some investors, who are now more concerned about any further actions that may affect Gucci's image in the minds of consumers.

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