How Asian ueber brands grow: Shang Xia, Hermès’ Chinese Offspring

Shang Xia In a second in a series of articles on Asia’s ‘ueber’ (prestige) brands by Wolf Schaefer and JP Kuehlwein, the path to growth for Shang Xia, the Hermès-owned Chinese luxury fashion brand, are revealed.

The modern artisan brand Shang Xia is a perfect example for a brand with a mission – and a showcase for Hermès’ genius in building businesses with vision and patience. Extending the Hermès lifeblood of exquisite craftsmanship and timeless value into re-imagining ancient Chinese techniques and cultures, Shang Xia looks far into the future by taking a firm stand in the past.

Thierry Hermès opened a store to sell harnesses for horse carriages in 1837 and quickly became a preferred supplier to nobility around Europe. To grow the business, the next generations added saddles, carrying bags, boots, luxury tableware and other artisanal goods by expanding its ateliers and acquiring venerable manufacturers.

In 2008 Hermès created Shang Xia, “a Chinese brand, developed in China with the Chinese team, based on Chinese craftsmanship, broadly made In China” as Florian Craen, Hermès managing director in North Asia emphasised. Think of it as a Chinese ‘daughter of Hermes’ – a baby daughter. Because nobody seems in a hurry at this 175-odd-year-old institution to boost growth. It takes time for itself and its offshoots to become deeply rooted in their mission and create a myth.

Shang Xia

Growing with gravitas

The brainchild of Patrick Thomas, then-CEO of Hermès and Creative Director Jiang Qiog’er, Shang Xia means ‘Up-Down’ in Mandarin, describing the concept of applying ancient craft to objects that serve modern customers in the East and West. Of course it is also a perfectly poetic way to express the concept of ‘growing with gravitas’, letting the brand grow roots first before branching out and up.

Jiang Qiong Er, artistic director and CEO of Shang Xia

Shang Xia creative director Jiang Qiong Er

Years were spent on scouting artisan masters and creating a collection until finally opening a first boutique in Shanghai – without much fanfare. Even then the store was more of a temporary pop-up, albeit an exquisitely designed one, hidden in a corner of a luxury mall. You could hardly be more under the radar, which is exactly what the brand wants. Customers will discover it and appreciate it in the larger context of rebuilding a culture that was lost in the revolution and industrialisation, as Shang Xia VP Exceptional Edition Clara Lin explained to us.

This is also why Hermès spent the past few years rebuilding a traditional Shanghai mansion, which now not only hosts Hermès but also Shang Xia, including a very exclusive and mind-opening educational centre, teaching customers about ancient rituals and customs. And, this is why Shang Xia has started developing unique, artistic and limited if not singular products and collections that are not for sale, but will be auctioned only through Christies. The brand purposefully straddles the line between commerce and culture, art and craft, design and high end curatorial work, (re)creating a parallel universe of its own, rooted in a long-lost heritage envisioned for posterity.

Shang Xi mansion

It is, as Jiang told the Financial Times, ‘a cultural investment project … [At other brands] the life of the project is five years or 10 years, at Shang Xia the dream is 100 years, 200 years’. Then again at prices around US $6,300 for a cashmere jacket or US $54,000 for a small side chair, looking at longer time spans comes almost naturally.

Hermès is believed to invest a net US $10-15 million a year into Shang Xia which adding boutiques in Beijing and Paris. But it plans to break even this year and has stated that there are no plans for further expansion in the short term.

Like this latest offspring, the ‘maison-mère’ does not seem in a hurry to canvas China with stores either. Hermès has opened some 25 stores in China since 1997, thus avoiding the declining sales and store closures many of the previously fast-expanding luxury brands are now experiencing in China.

Shangi Xia furniture

Mission and myth of reaching beyond

This heavy investment and relative ‘snail’s pace’ make perfect sense when seen in the context of Hermès’ believes and a mission that goes beyond making money. Hermès believes in the values of craftsmanship, creativity, skill, integrity, patience, precision and that they are ever more valuable and worth preserving in a world that is fast paced, often low quality, automated.

Shang Xia is a quiet agent of healing the wounds of the Cultural Revolution – at least for the rich and the artisans.

The brand’s 100-page-thick ‘brochure’ (in the form of a traditionally bound book), which Lin gave us at the end of a wonderful tea and incense ceremony during our visit, presents the products in the context of design director Jiang recounting her personal family memoires and illustrating them with romantic present-day family scenes that mix the traditional and new.

You can explore the art of Pu-erh tea rituals or listen to hymns about rural life of Taiwanese tribes in their native Paiwan language on an enclosed CD. We recommend you do your own, soul-southing Shang Xia pilgrimage – at least through their website.

Wolf Schaefer and JP Kuehlwein co-authored the book Rethinking Prestige Branding: Secrets of the Ueber-Brands.


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