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Hermès Expands in Nanjing as Luxury Industry Bets on Chinese Return

Hermès is considering using the metaverse for communications.
Hermès is opening a new, enlarged store in China’s Nanjing city. (Shutterstock)

Birkin bag maker Hermès is opening a new, enlarged store in China’s Nanjing city, signaling the luxury industry’s confidence in a strong return of Chinese shoppers after three years of tough Covid-19 restrictions.

Hermès, which first opened a store in the city in 2010, has now relocated to the upscale mall Deji Plaza, with a wider product selection spread across two floors, from silk scarves to leather goods, as well as home decor, jewellery and clothing. European luxury houses have continued to invest in China, expected to become the sector’s largest market by 2025, despite a turbulent year marked by disruptions as the country imposed strict curbs to contain the spread of the coronavirus.

News in late December that the country was relaxing travel rules pushed up the share prices of global luxury companies including the world’s largest, LVMH.

Hermès and LVMH both generated around 30 percent of annual sales in China in 2020, according to UBS. Mainland China, where Hermès counts 27 stores, has been a strong focus for the leather goods specialist. Last year, Hermès opened a larger store in Wuhan, and set up its first shop in Zhengzhou, in Henan province.

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China is expected to serve as an important source of growth in the coming months as Europe faces an energy crisis and the US economy cools. Bernstein analyst Luca Solca forecasts luxury sales could grow between 25 percent and 35 percent in the country this year while in the West they are expected around 5 percent to 10 percent.

By Mimosa Spencer; Editor: Emelia Sithole-Matarise

Learn more:

Are Hermès’ Sales Tactics a Problem in China?

Chinese luxury consumers say they feel rising pressure to buy less-popular items to gain access to sought-after Birkin and Kelly bags. The practice is reportedly on the rise at brands like Celine and Rolex, too.

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