WPIC Made for China Insights

Jake's Take: Why is Hermès Outperforming Louis Vuitton in China?

Published on: November 2, 2023

Jacob Cooke

Co-founder & CEO

The competition between Hermès and Louis Vuitton’s branding and digital marketing campaigns in Asia is very informative—and offers several lessons for brands in the luxury sector and broader consumer space.

Both are leading brands that have had exceptional success in the region by engaging with local cultures, influencing luxury consumption preferences, and investing in digital campaigns. They have made different brand and media choices with differing levels of engagement, which I explore below.

Hermès’ Q3 2023 revenues in Asia, excluding Japan, increased by 21% versus 2022, and the brand continued its luxury market-leading sales growth momentum. According to Hermès, “Sales were robust in Greater China, Singapore, Thailand, Australia, and Korea. As a reminder, the third quarter of 2022 was exceptional following the lifting of health measures in China. A new store opened in July in Tianjin in northern China, and petit h stopped over at the Beijing China World store in September.”

LVMH’s Q3 2023 revenues in Asia, excluding Japan, increased by 11% versus 2022. According to LV, “Following the immense enthusiasm generated in July by the first show of new Men’s Creative Director Pharrell Williams, held on the Pont-Neuf bridge in Paris, Nicolas Ghesquière’s boundless creativity continued to captivate audiences, with the Women’s Spring/Summer 2024 ready-to-wear show held at the Maison’s future location at 103 avenue des Champs-Élysées.” It seems these events and recent changes to brand messaging did not translate as effectively into the Chinese market. LV was also having issues curbing parallel channels for its perfumes and cosmetics division in China.

The Hermès brand continues to focus on ‘carefully crafted essentials’, featuring elegant designs with balanced yet vibrant creative directions. Text and brand tonality are more graceful and understated than those of their competitors, and the brand has typically avoided the use of flamboyant popular athletes, pop musicians, and top actors. Social media campaigns often focus on Hermès’ product quality, luxurious natural beauty, unique design elements, and charming expressions of contemporary quiet luxury. Hermès often combines hand-drawn illustrations and simple, clever animations with exquisitely art-directed photos and simple, clever videos.

The LV brand continues to focus on ‘Innovation and Creativity’, featuring bold new designs, high-tech materials, and sensational partnerships. Rihanna, Jay-Z, Beyoncé, Kendall Jenner, Messi, Ronaldo, Yayoi Kusama, J-Hope, Kris Wu, Jeff Koons, Murakami, and numerous other top LV ambassadors appear on LV’s social media, as well as in big brand sponsorships including the 2024 Paris Olympics, UNICEF Partnership, LV FIFA World Cup, LV Sailing Cup, LV BMWi Luggage, and LV × Nike Air Force 1. The LV brand is a whirlwind of glamorous VIPs, global events, and legendary artists, as well as a supporter of gender, sexuality, racial, and ESG causes.

As Hermès Executive Chairman Axel Dumas stated, “In difficult moments, there’s what we call in finance the flight to quality, so we’ve benefited from it.”

The continued strength and carefully engineered exclusivity of the Hermès Birkin Bag, supported by more sophisticated and refined brand messaging and content creation, allows Hermès to communicate more effectively with their high net worth, educated target audience in China. LV, on the other hand, seems to be more interested in younger, more socially conscious luxury lifestyle audiences who enjoy chaotic celebrity, media, and social trends, especially from the USA and Korea. LV appears less interested in creating its own unique and consistent visual language and refined, exclusive brand culture.

The following examples from Hermes and LV social media channels in China help to present this contrast and support the use of more intimate and personal brand images connected to unique brand values that create real differentiation. Top stars and leading influencers work with numerous luxury brands and often become overexposed.

One of the biggest challenges for successful brands is differentiation. It seems that Hermès has enhanced its brand differentiation by carefully and organically evolving its brand images, digital content, and customer relationships. Hermès still focuses on equestrian themes and traditional leather production methods while embracing new lifestyle trends within their Hermès tonality and design language. The opening of the uniquely Hermès-curated HermèsFit Gym in Asia is a perfect example of this sartorial and fun approach. LV, on the other hand, prefers gigantic multimedia brand explosions presented on Europe’s and Asia’s most prominent stages, highlighted by the Pharrell Williams Pont Neuf Opening Show and Football World Cup Trophy Presentation.

Successful luxury brands establish hero products and memorable brand associations that drive sales, margins, and loyalty, inspiring new customers without alienating or confusing existing ones. Reasons to believe in the brand are logically connected to consumer preferences and digital communities, not just media flashes and virtue-signalling fads.

Success in China is supported by more organic creative direction developments and authentic tones of voice that connect to local cultures, not popular political movements.

WPIC is looking forward to seeing if Hermès will continue its brand leadership in China and Asia with quiet luxury, and if LV will continue to overextend its brand equity.

Please let us know if you would like to learn more about how we reached these conclusions and how we analyze brand performance and consumer behavior in China and other Asian markets. Just send us a meeting request.

Don’t forget, WPIC helps brands master the complexities of Asia and find the best possible opportunities for their needs.

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