Luxury brands continue to tinker with different formulas in their quest for a larger share of the Chinese luxury market. Recently Burberry announced the buy out of its China partner to better focus on the Chinese market. Hermès announced the creation of a custom-made brand for the Chinese luxury market late last year.
Set to launch this September, the Shang Xia brand, which means “up and down”, is completely separate from the main Hermès identity. Shang Xia is a Chinese-bred brand. “It is a Chinese brand, developed in China with the Chinese team, based on Chinese craftsmanship and broadly made in China. We don’t want any confusion,” said Florian Craen, Hermès managing director in north Asia.
While other luxury companies have designed specialized lines for the Asian markets, such as Burberry’s Black and Blue Labels for the Japanese and Hong Kong markets, so far none have developed an unique local brand. The Company’s strategy is to keep its Hermès brand distinctly foreign. Unlike beauty brands, clothing and footwear luxury brands have done little to adjust their products because Chinese luxury consumers prefer foreign design over products designed for the local market. Reportedly, Levi Strauss is also launching a Chinese brand this year.
Why create a local brand? According to the Financial Times, luxury companies want to appeal to more Chinese consumer with localized products without impacting their brand value. Hermès has revealed little about Shang Xia except that it hopes “to pay tribute to the long existing craftmanship in China.”
Some analysts believe that Hermès is playing catch up since it entered the China market later by trying to capture the aspirational market that has been dominated by brands such as Louis Vuitton and Gucci. Perhaps, as the name “shang xia” suggests, Hermès wants the up- and down-markets in its strategy to capture a greater percentage of China’s huge luxury market without compromising its exclusivity. Or, is Hermès trying to be an early player in the emerging movement of Chinese or “home-grown” luxury brands?
The first Shang Xia store in Shanghai will sell home products like tableware and furniture with a traditional theme. A second store is expected to open in Beijing. Otherwise, Hermès has disclosed little about Shang Xia’s price range and target customers.