A new book out by author Dana Thomas, called Deluxe: How Luxury Lost its Lustre, explores how the manufacture of luxury goods, and in particular luxury clothing, has been outsourced almost in its entirety to a handful of developing countries such as China and Turkey.

Thomas explains that despite the protestations of certain luxury house owners, the competitive landscape for luxury goods companies is one which makes this phenomenon hard to resist.

For the last sixty years, the actual production of luxury goods themselves has become much like any other type of product.  The big difference – something which I often explore in my academic thinking – is the way in which these luxury goods have been marketed to make you feel a particular way.

In my Theta-Lambda dichotomy of personality types, Lambdas purchase luxury goods which help them connect to their desire for challenge and individuality.  Thetas, on the other hand, purchase goods which help them affiliate themselves to a certain group of people or lifestyles.

Luxury goods brands understand this marketing principle so they mostly produce cheaply and market generously.  As Thomas notes in her book, the lion’s share of a product is made in China but then a small piece (a piece of stitching or pocket, for instance) is added in the West so that the ubiquitous ‘Made in China’ label can be avoided and the luxury illusion can be maintained.

Dana Thomas recently wrote Deluxe: How Luxury Lost its Luster, a well reviewed book about the history and transformation of the luxury goods industry from bespoke simplicity to global commoditization.

We’ve already mentioned an excerpt of the book that was published in the UK’s Times; I recently came across an interview with Thomas on AlterNet that hits on many of the topics in the book, and found it quite interesting.

You say the corporations that have taken over the luxury industry want to democratize luxury. Why isn’t that a good thing?

The luxury tycoons wanted to democratize luxury; they wanted to make it accessible. That’s a very noble idea except there wasn’t a noble reason behind it. They just wanted to make more money, and if they sold it to more people in more places and had a higher markup, they’d make more profits for themselves and for their shareholders.

Read the whole interview here.

As we mentioned in this recent post, buying a fake handbag can feel like a victimless crime. The buyer might feel good about saving money–perhaps even bragging to friends about it–and think that the luxury company won’t miss the revenue from a single bag. But purchasing counterfeit handbags and other goods might not necessarily be consequence free. Dana Thomas wrote an article for the New York Times last month that highlights several illicit activities and organizations that stem from counterfeiting:

Most people think that buying an imitation handbag or wallet is harmless, a victimless crime. But the counterfeiting rackets are run by crime syndicates that also deal in narcotics, weapons, child prostitution, human trafficking and terrorism. Ronald K. Noble, the secretary general of Interpol, told the House of Representatives Committee on International Relations that profits from the sale of counterfeit goods have gone to groups associated with Hezbollah, the Shiite terrorist group, paramilitary organizations in Northern Ireland and FARC, the Revolutionary Armed Forces of Colombia.

Trying not to sound overly preachy or like a scaremonger, these organizations should not–must not–be funded by counterfeit goods. What can luxury companies do to stop them? They can’t necessarily go after counterfeit manufacturers themselves–that’s the job of law enforcement–but they can be transparent and acknowledge that counterfeiting is a serious problem they face. Too many luxury companies worry that talking about the problem will make more people aware of it thereby tarnishing their reputations. But the counterfeit problem is real and will become worse if companies ignore it.

If luxury companies can give people a better reason to stop purchasing counterfeit goods, everyone will be better off.