"Made in Asia" label helps, hinders luxury goods makers

By Sophie Hardach

TOKYO (Reuters) - Years ago, when the first Armani boutiques opened in China, a furious customer walked into one of the shops, brandishing two Armani T-shirts.

He wanted to know why one of them, the one he had bought in the shop, was labelled "made in China", while the other, the cheaper T-shirt, said "made in Italy."

The second T-shirt was, of course, a fake. So was the "made in Italy" claim; Armani T-shirts are no longer produced there.

These days, many fashionistas are still confused over what is real, what is fake, and whether a product's country of origin says anything about its quality.

Even a "made in Italy" label no longer guarantees that a bag or a pair of shoes was hand crafted by artisans in a Tuscan workshop. Instead, the bag could have been stitched together by illegal workers in clandestine Italian factories, and the shoes assembled from plastic soles and leather shipped in from China.

And yet, Asian manufacturing remains a taboo in the luxury sector where image is everything.

Faced with shoppers' concerns about product quality, environmental standards and working conditions in Asia, many European luxury goods makers swear that their factories will always stay close to home.

But some are going on the offensive, arguing that new manufacturing sites can actually boost quality and creativity.