Hermès: China at Last?
Hermès has taken a majority stake in Shang Xia (上下, literally means up and down), a Shanghai-based company, which will create, manufacture and sell a collection of clothing, accessories and other lifestyle objects using Chinese raw materials and artisanal know-how. Though they have enjoyed growth in China, there have been reports that the Paris-based brand is struggling to resonate with the Chinese customer.
Honestly, I’m torn as to if this is going to help Hermès gain share in China. Even though Shang Xia will be less expensive than Hermès, the merchandise will not be cheap, so it can’t compete on price. In terms of branding, I believe this will deliver a mixed message to the Chinese luxury consumer, who covets Western brands and does not place local brands on the same playing field. However, Hermès always delivers a quality product and there is no doubt that they will be fully supporting this brand. Will this be a triumph for Hermès? Only time will tell.
[I’m incredibly interested in the Chinese luxury market and how it will develop. Stay tuned to this space for more updates on this story and others relating to this topic.]