In Europe, many of fashion and luxury’s biggest names benefit from little legal loopholes that center on how they may use certain “Made in” labels. Because the country of origin for labeling purposes, according to the European Union’s rules of origin, is where the final production process is carried out and generally does not take the origin of other manufacturing efforts into account, some of fashion’s most esteemed brands can use the coveted “Made in France” and/or “Made in Milan” labels – and maintain the allure of domestic workshops and old-school craftsmanship – when the products were largely made outside of their own domestic factories.
For a concrete example, consider some of Louis Vuitton accessories. As the Guardian stated in 2017, “Louis Vuitton’s Italian shoes are the very height of luxury. Its Venice workshop claims to embody ‘ancestral savoir-faire’ in a region ‘revered for its fine shoe craftsmanship.'” This is, however, “far from the full picture, as many of the shoes and boots it sells for between £500 and £1,800 a pair and stamped as “made in Italy” are mostly made in Transylvania, a region better known for vampires than any tradition of luxury craftsmanship.”
Hardly a one-off venture, academics Dale Rogers, Thomas Choi, and Rudolf Leuschner wrote in their publication, Supply Chain Financing: Funding The Supply Chain And The Organization, that “while a Louis Vuitton handbag may carry a ‘Made in France’ label, [many of its] bags are produced in Romania.” The same holds true for many-a-luxury brand and their expensively-priced products.
As for how such labeling falls in line with the law, the reason is relatively simple: “after assembly [in Romania or wherever a brand’s products are being made], they are exported to France, where they are ‘finished’ so that they qualify for a ‘Made in France’ label in accordance with EU law.”
In theory, the “Made in France” label – and various its equivalents, such as those of Swiss and Italian ilk – is a valuable one. “Consumers care about the origin of their products. The Chinese, for instance, which are the largest nation of luxury consumers in the world, want their watches to be Swiss, their perfumes and cosmetics to be French, their cars to be German and their bags and shoes to be either Italian or French,” Bernstein analyst Luca Solca wrote several years ago.
For Italian brands, “‘Made in Italy’ is a consistent marketing statement that reinforces their brand positioning,” according to Solca. That positioning can be translated to prestige and premium pricing, which is passed on to consumers, making these labels far more significant than merely a legal requirement that calls for products to include specific notations about their origin. Such labels are an marketing tool that is central to the business of most luxury brands, which often use them in coincidence with long-standing messaging about their a brand’s history and its pattern of superior craftsmanship. (To a large extent, this remains true in the upper echelon of the fashion segment even as global supply chains become more complex and certain brands, such as Balenciaga, openly defy longstanding norms by proudly affixing their products with “Made in China” tags and other labels).
Meanwhile, in the U.S., where a “Made in the USA” tag has an appeal all of its own, labeling laws have become a topic of increased attention for manufacturers and regulators, alike. In much the same way as Italian and French brands are looking to label their products with the country that is their home turf, many American companies “want to showcase products that have been made in the U.S. by marking them with the phrase or using the Stars and Stripes in advertising,” according to Venable’s Melissa Landau Steinman, Elliot Kelly and Nikita Bhojani. However, before doing so, they caution that “sellers must understand the strict federal and state laws and standards for making such claims.”
They point to developing Federal Trade Commission (“FTC”) guidance as a critical point of reference. In accordance with the FTC’s current standard, a product that is advertised or offered for sale with a “Made in USA,” “Made in America,” or equivalent label must be wholly domestic or all or virtually all made in the United States. Specifically, “[a] product that is all or virtually all made in the United States will ordinarily be one in which all significant parts and processing that go into the product are of U.S. origin.”
The FTC cited this standard in the case that it filed against Williams‑Sonoma, alleging that the multi-billion dollar San Francisco-based home goods company violated the FTC Act by making overly broad claims in its marketing, including on social media, that certain of its products are “all or virtually all made in the United States,” when, in reality, they were imported in their entirety or contained a significant amount of imported materials.
The case settled in late March 2020, with Williams-Sonoma paying $1 million and vowing not to making unqualified U.S.-made claims for any product unless it can show that: (1) the product’s final assembly or processing occurs in the U.S.; (2) all or virtually all of the product’s processing takes place in the U.S.; and (3) all or virtually all of the product’s components or ingredients are sourced in the U.S.
Meanwhile, another recent case – Baum v. J-B Weld Company – centered on domestic labeling requirements, although, this time under California state law, which mandates that companies refrain from advertising a product as “Made in USA” if it “or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the U.S.” (This is subject to an exception for “merchandise made, manufactured, or produced in the U.S. that has one or more articles, units, or parts from outside of the U.S., if all of the articles, units, or parts of the merchandise obtained from outside the U.S. constitute not more than 5 percent of the final wholesale value of the manufactured product.”).
In this case, which was filed in a California federal court in April 2019, Felix Baum accused adhesive-maker J-B Weld Company of improperly using “Made in U.S.” language when its packaging, such as its various tubes, plastic bottles, and caps, was not made in the U.S. J-B Weld sought to have the case tossed out, arguing that California state law does not require product packaging to be made in the U.S., just the products, themselves. The case is still underway, but to date, the court refused to dismiss the case, and instead, held that it will be up to a jury to decide whether packaging falls within the scope of the state’s labeling law.
Taken together, Steinman, Kelly and Bhojani say that “these cases show that the ‘Made in USA’ regulation continues to be something sellers should pay close attention to when it comes to compliance,” particularly given that “FTC and class action plaintiffs have been, and continue to be, active in the ‘Made in USA’ space.” With that in mind, “Marketers seeking to make ‘Made in USA’ claims should evaluate their manufacturing processes and products — and, if necessary, look up the supplier chain — to confirm whether the products they sell meet the ‘all or virtually all’ standard or whether any claims about them need to be qualified” by way of language, such as “assembled in the USA of domestic and imported materials.”