Da Vinci – an example of the importance of “Country of Origin” for luxury products

I spoke of the country of origin being one of the critical success factors in location and csf posts. (location and critical success factors for SCM-luxe)

Now here comes a perfect example illustrating the importance of “location” – even in China!

 The Chinese are quite blasé of counterfeit Louis Vuitton bags and Rolex watches available in almost all Chinese city corners (apparently there are well defined locations in each city which specialize in such goods – albeit done surreptitiously). So when it was revealed by the New York Times  (see http://www.nytimes.com/2011/07/19/business/global/chinese-upset-over-counterfeit-furniture.html) that the upscale furniture distribution company Da Vinci was actually selling “made in China” products as “made in Italy” the reaction of the market was surprisingly virulent. Customers revolted, stormed the press conference by the company and a web campaign started to “out” similar company’s passing of local produce as luxury products made in more exotic shores.



Da Vinci's CEO, Doris Phua, breaks down after being

heckled by customers during a press conference

to address allegations of misrepresenting country of origin

of its luxury products



This reaction is as much a sign of the maturing of the Chinese market as far as luxury products are concerned but also the more fundamental aspect of the importance of location for a luxury product irrespective of the geography or market where the product is ultimately sold.

On the other hand a common complaint by Da Vinci’s customers was that they bought fakes at the price of a genuine article. Does this mean, that customers were ok with fakes as long as it was not at the price of the real one? The customers felt cheated?  A case of limited morality or limited information sharing?