The idea that domestic products should be cheap is outdated.

In two days, it will be the beginning of winter, and the approaching winter has once again heated up the topic of down jackets.

On November 3rd, the topic of 'Can you accept domestic down jackets priced over a thousand yuan' became a hot topic on social media. Netizens divided the pricing of domestic down jackets into two groups: some believed that a thousand yuan was too expensive, while others said that as long as the quality is good and the price is higher, it is also acceptable.

On the morning of November 6th, NetEase Yanxuan officially announced that although down jackets cost over a thousand yuan, the raw material cost is more than 900 yuan, the production process is complex, and the requirements for new product launches are high, resulting in short supply and out of stock shortly after launch. In order to apologize and express gratitude to consumers who purchased pre-sale products, they will compensate for this. As a result, the pricing issue of domestic products has once again sparked discussions among netizens.

▲On November 6, 2023, NetEase Yanxuan's official Weibo account released an announcement. Image/Social media screenshot

Domestic products are not synonymous with cheapness

In fact, the prices of down jackets on the market range from hundreds to thousands of yuan, and some high-end down jackets can cost up to tens of thousands of yuan. Why are domestic brands labeled as "low-end" and "cheap"? Setting aside factors such as product quality and craftsmanship, it is unfair and unreasonable to talk about the status of domestic products based solely on whether they are branded or branded.

The stereotype of domestic products being "cheap" has historical reasons. After the reform and opening up, China's manufacturing industry was in its infancy and did not have a mature production chain. The level of manufacturing technology was relatively backward, and it could only open up foreign markets with "low prices". At that time, the level of domestic economic development directly determined its low price level. Even so, at that time, domestic products could not be generalized as "cheap", such as Longjing tea, which was still considered a high-end commodity.

Ultimately, the price of a down jacket depends on the product itself, and it has little to do with the place of origin. There are also cheap products available abroad. Just because down jackets are domestic products, they cannot be defined as cheap goods.

Moreover, times have changed and after decades of development, China has become the world's second-largest economy. In 2022, China's manufacturing added value accounted for nearly 30% of the global total, and its manufacturing scale has been ranked first in the world for 13 consecutive years.

Of course, the competitiveness of domestic products is not only reflected in the domestic market, but also in some industries that have entered the high-end overseas market, shedding the label of "cheap". It can be said that China's manufacturing industry, known as the "world's factory," is forming a strong wave.

For example, the International Energy Agency's "2023 Global Electric Vehicle Market Analysis and Outlook" shows that China is the leader in the global electric vehicle market, with its electric vehicle sales accounting for about 60% of global electric vehicle sales. By 2030, China will still maintain its largest share of the electric vehicle market.

Moreover, in the international market, Chinese electric vehicles are not only abundant and of high quality, but also have a larger market. The flagship BYD Han EV sold in the Brazilian market is priced at 720000 yuan, while its price in China is only 280000 yuan. In the Brazilian market, the low-end Song Plus DM-i costs as much as 350000 yuan, while in China, the price of the same model is only a little over 150000 yuan.

At the same time, China's social and economic level continues to improve. With the supply side reform and industrial upgrading, a large number of excellent local brands have emerged. New China-Chic has also risen rapidly by virtue of Internet consumption. Both product quality and appearance design have been on a par with big brands, not only gaining market recognition, but also capturing many young consumers.

Obviously, the concept that domestic products should be cheap is outdated.

▲The price topic of domestic down jackets has become a hot topic on a certain social media platform. Image/Social media screenshot

No need to focus on cost and price

Speaking of down jackets, whether they are more than a thousand yuan expensive or cheap is mostly relative and mainly depends on whether they meet the psychological price range of consumers. Just like a down jacket, consumers have different positioning in their minds and are naturally willing to spend different amounts of money.

For enterprises, price is an important attribute of a product. The cost of a down jacket is over 900 yuan, and the selling price is over 1000 yuan. To be fair, the cost accounts for the majority of the price. After deducting marketing, sales, and other aspects, the company's profit is not high.

Of course, cost is only one factor in pricing goods, not the only one. Under normal circumstances, cost is only the lower limit of product price. The ultimate determining factor for product pricing is still the supply and demand relationship in the market, so most industries will dynamically price based on the supply and demand relationship.

For example, this summer, hotel prices have skyrocketed in various regions due to the transformation of many hotels and homestays in the past few years, resulting in a decrease in supply in the market and a sudden surge in demand. The supply of hotels is in short supply, and prices are bound to rise.

In fact, a single cost pricing, due to the lack of incentive mechanisms, will make it difficult for enterprises to form a virtuous cycle without healthy gross profit margins and hematopoietic capabilities. So, consumers don't have to focus on cost and price. Selling good goods at a low price is not in line with normal market rules.

In terms of the down jacket market, in recent years, in addition to factors such as rising raw materials and production costs, the implementation of the new national standard for down jackets in April 2022 has also forced brands to upgrade. The production and quality standards for down jackets have been further tightened, and they have been aligned with the international down jacket market. This means that the production cost of down jackets will further increase, indirectly driving up the price of down jackets.

Taking NetEase Yan Xuan down jacket as an example, the fluffiness and cleanliness of goose down are higher than the national standard. However, in terms of the average price of down jackets in the market, compared to other high-end domestic and foreign brands, a price of over 1000 yuan is still within the normal selling price range.

▲Workers from a clothing company in Jiangsu are rushing to produce down jackets for export to European countries. Image/IC photo

Consumers are no longer just looking for cheap prices

From the perspective of domestic consumption, in recent years, with the improvement of people's living standards and the enhancement of their consumption ability, they have begun to pursue quality. People not only focus on the thermal performance of down jackets, but also pay attention to the quality, style, and functionality of down jackets, preferably with a sense of technology that can showcase personality.

It is precisely the diversified market demand that drives brands to increase research and development investment, and maintain continuous innovation in down jacket design, technology, and techniques.

In fact, China has become a true "down country" nowadays, with 97% of geese and 74% of ducks produced in China, making it the world's largest producer, exporter, and consumer of down and its products, with four major advantages in resources, processing, price, and market. In 2022 alone, the import volume of down jackets in China was 5.176 million pieces, and the export volume was 78.312 million pieces, far exceeding the import volume.

In terms of manufacturing level, Chinese contract factories play a crucial role in global brands, with over 80% of well-known foreign brands producing down clothing and down bedding in China. Its production technology level is beyond doubt and has already entered the forefront of the world.

In terms of raw materials, the most important thing for down jackets is undoubtedly down. The Anhui West White Goose in China is widely recognized as the best material for making down jackets. The size of the velvet is about three times that of ordinary geese, and it surpasses Hungarian geese in various indicators such as fluffiness and cleanliness. In its place of origin, a single factory exports up to 300 tons to Canada every year. And NetEase Yan Xuan Yan's down jacket uses the Anhui West White Goose.

Of course, the high-end trend of domestic products is not just a matter of producing high-quality goods, but also depends on whether there is a large population in China to consume high-value items. Otherwise, even if they are produced, they cannot be sold.

According to a report by First Financial, public data from a certain institution shows that in the context of a significant decline in sales of down jackets during the "Double 11" shopping festival in 2022 compared to 2021, the sales contributed by down jackets priced over 1000 yuan exceeded the 500-1000 yuan price range; And among all price ranges, the year-on-year decline in sales of down jackets over 1000 yuan is the lowest, reflecting good resistance to pressure.

It can be seen that as a must-have item for winter, consumers' demand for down jackets is no longer for cheap prices, and their acceptance of high-quality, branded products is constantly increasing. The trend of high-end and personalized development of down clothing brands is obvious, and the cost advantage of China's self-produced and self sold products and vast consumer market make domestic down jackets more competitive.