Despite the luxury slowdown in China, Hermès believes the time is right for it to succeed in the country.
While other luxury companies’ sales are falling flat, Hermès is doing as well as ever, having announced that sales in Asia (excluding Japan) were up 17 percent in the first half of 2014. Rival LVMH’s sales in Asia (excluding Japan) were up only 3 percent.
Regarding the slowdown, Axel Dumas, Hermès’ CEO and a sixth-generation descendant of the founders, told Financial Times, “So far we haven’t seen any impact on our figures.”
As many of these luxury companies slowdown their expansion in China, Hermès is once again bucking the trend. In September, the company opened its first maison in Mainland China with the opening of its Shanghai maison. The company’s other maisons are in Seoul, Paris, New York, and Tokyo.
The timing couldn’t be better for Hermès, as it is poised to ride the wave of more sophisticated Chinese luxury shoppers who are becoming more sophisticated and less logo-conscious.
“Hermès’ more classic style fits well with the high-end Chinese consumer’s shift to less ostentatious items,” said Torsten Stocker, a retail partner at consultancy AT Kearney in Hong Kong.
What is the secret to Hermès’s success in China?
The secret, according to FT, is that “Hermès represents what China aspires to be: not just another nouveau riche nation with more money than taste, but a country of sophisticated affluence and understated extravagance.”
Hermès head in China, Cao Weiming noted, “Two to three years ago, we started to see some changes, even before the anti-corruption campaign began, as the market moved naturally toward greater sophistication, where consumers are more brand-knowledgeable than show-off.”
The company is not just paying lip service to the Chinese market. Four years ago, the company founded its own Chinese luxury brand, Shang Xia. Unlike other Chinese luxury brands, Shang Xia is a celebration of Chinese culture with every piece of the collection inspired by Chinese culture and art.
image source: hermes.com