Hermès Creates Chinese Brand

On the high heels of Burberry's decision to acquire its partner in China in order to better focus on the nation, Hermès has revealed that it is creating a bespoke brand specifically for China's wealthy consumers.

Launching in September, the Shang Xia brand (literally, “up and down” in English), will remain “completely separate” from the main Hermès line to avoid customer confusion, reports the Financial Times.

Considered the world's second-largest market for luxury goods after Japan, Hermès' move to create a distinct brand for China comes as other luxury brands are expanding in the market by opening more stores. Burberry, for instance, has committed to a 66 new stores in China.

Vivienne Westwood is planning an additional 20 boutiques throughout the mainland, while Coach is opening another 20 locations and Ferragamo is planning 10 new stores. And it's not just luxury brands that are doubling down on the nation. Apple just opened its second Chinese retail showcase, in Shanghai, including a special VIP area for entrepreneurs and business executives -- think of it as the Ingenious Bar.

Chanel and Prada recently launched special products in connection with Shanghai’s World Expo, including a Chanel handbag shaped like a Chinese food takeaway carton. Sanford Bernstein analyst Luca Solca comments to FT: "Hermès was late in getting to China, and now stands behind, in consumer recognition, not only Louis Vuitton and Gucci, but Burberry and Prada as well."

Hermès' first Shang Xia store, in Shanghai, will initially sell home products including tableware and furniture with a traditional Chinese theme. Insteading of diluting the flagship luxury brand, its executives believe Shang Xia will compliment the parent brand, with 18 Maison Hermès stores across China already selling its famed Kelly and Birkin bags.

Florian Craen, the brand's MD for North Asia, calls Shang Xia "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."

Levi Strauss, meanwhile, is also launching a Chinese brand this year.