In a bold shift powered by TikTok and e-commerce, Chinese manufacturers are increasingly advertising what they call “factory direct” alternatives to luxury goods. These products, they claim, are virtually identical to high-end designer pieces, crafted in the same factories, with the same materials and labor—just without the branding. It’s a seductive offer: why pay $4,000 for a French leather handbag when you can get the “same bag” for $80 directly from the Chinese source?

This trend has gained momentum since the Trump-era tariffs, which raised import duties on Chinese goods. In response, many factories and sellers turned inward, marketing their wares to Chinese consumers and savvy global buyers via social media and e-commerce platforms. Their message? You’re not buying a knockoff, you’re skipping the markup.

The 90/10 Manufacturing Claim

These manufacturers often claim they do “90% of the work,” with the final 10%—such as stitching in a lining, adding a logo, or assembling a buckle—completed in Italy or France to legally earn the “Made in France” or “Made in Italy” designation. In practice, this may be partially true for certain brands. But from an investigator’s perspective, the reality is far murkier.

At Compliancia, we specialize in supplier verification, import/export due diligence, and IP investigations across Asia and Europe. Our experience tells us that while some brands do outsource a substantial portion of production to Chinese or Southeast Asian factories, many still rely on European-based production—particularly in Spain, Portugal, and the Czech Republic—to ensure stricter quality control, protect their brand identity, and comply with EU regulations.

From Factory Rejections to TikTok Trends

Six or seven years ago, Chinese e-commerce platforms like Taobao were awash with surplus or rejected items from major global brands. Some were genuine products that failed quality checks—like a rain jacket from a Walmart-owned label that could be bought for $3 instead of its $40 retail price. To skirt legal exposure, sellers would list items under parody names like “ADADAS” instead of Adidas, or promote “genuine IKEAA chairs.” This grey zone allowed consumers to access genuine overstock or slightly defective goods at a fraction of the cost, blurring the lines between knockoffs and the real thing.

But today’s situation is different. What’s being marketed now isn’t just surplus stock—it’s a full-blown rebranding of unlicensed manufacturing into a morally justifiable alternative to luxury shopping. And while some products are indeed made with skill and quality materials, others are cleverly marketed counterfeits that can expose buyers to legal risks or disappoint in terms of durability and finish.

Compliancia’s Insight: What’s Real, What’s Risky

As an investigation and compliance firm operating on the ground in Asia, we see three critical risks emerging:

• Supply Chain Obscurity: Many manufacturers now use third-party freight forwarders and complicated routing paths to conceal origins. We investigate these cargo routes regularly to verify where goods truly come from and where they’re assembled.
• Supplier Legitimacy: Not all “factory-direct” sellers are who they say they are. Many claim to be OEMs (original equipment manufacturers), but are simply imitating high-end goods with little relation to the real brands. We vet supplier licenses, factory certifications, and staff employment records.
• IP Violation Exposure: Brands are fighting back. As luxury giants scale up enforcement through trademark lawsuits and customs seizures, importers—whether individuals or small businesses—are increasingly at risk. Understanding what is legal to import and what crosses into counterfeiting is more critical than ever.