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Hermes, try a scarf around just China

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Hermes, try a scarf around just China

Hermes is facing a decline in revenue growth driven by decreasing demand in its Chinese market. The brand recognizes the importance of maintaining its unique selling proposition in luxury offerings. Given the rise of high-end local brands, Hermes plans to introduce a 'China-only' line for affluent consumers. This strategy aims to appeal to China's wealthy individuals while promoting European luxury.

Hermes has a problem. Weakening demand in favourite market China has largely led to a downturn in revenue growth. Greater China and the wider Asia-Pacific region account for 40-42% of Hermes' total global revenue. This should make the French luxury brand revisit its marketing strategy. Luxury brands such as Hermes, Chanel, LVMH, Prada need to stick to their USP. What sets luxury brands apart is not just design and quality - 'product' - but the promise of an experience: brand equity riding on qualitative reputation. Hermes' Birkin bag is popular among 1%-ers. That's the whole point. Europe®, itself now fire-ringed from the turmoil being witnessed, still commands aesthetic-commercial influence and heft for new developed economies like China. So, it makes adequate sense for Hermes to create a 'China-only' line - selling its 'Europeanness' to customers who can afford it. Advt

China's HENRYs - High Earners, Not Rich Yet - are no longer treating that $12,000 Birken bag as a monumental buy. They have been buying high-end local brands that can give the entry-level Birken a run for its money. But it now needs a nudge. European luxury brands are about offering experience to the (affording) world, signalling status that comes with 'beautiful things'.


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