In “Chinese Whispers,” we share the biggest news stories about the luxury industry in China that haven’t yet made it into the English language.
In this week’s edition, we discuss:
- Hermès denied there are “unspoken rules” of buying a Birkin handbag,
- Supreme New York‘s legal action against the copycat store in Shanghai, and
- MAC Cosmetics apologized for using the “wrong” map of China.
Hermès‘ renowned bag models — Birkin, Kelly, and Constance — are arguably the most coveted luxury handbags in the world. The fact that it is almost impossible for an ordinary customer (as opposed to celebrities and public figures) to just buy one at any Hermès store makes it sound extremely appealing to many wealthy Chinese consumers. Worldwide, it is known that customers need to establish a great long-term relationship with the brand’s salespeople to show their loyalty before becoming eligible to purchase a Birkin handbag.
In China, the way to build this relationship is specific. In what Chinese customers call as a “peihuo (配货)” practice, they need to reach a certain level of consumption — typically purchasing the brand’s accessories — with a specific salesperson at a specific store. Though the amount varies depending on a store’s location and the salesperson, it is common that a customer has to purchase at least $8,937 to $11,916 (RMB 60,000-80,000) worth of accessories in order to get their hands on any of those popular handbags.
On March 15, Chinese news site Shanghai Morning Post published an in-depth story detailing how three Chinese customers bought their first Hermès bags. The first customer, who visited Shanghai’s Plaza 66 department store, told Shanghai Morning Post that she spent around $1,490 (RMB 10,000) before she was able to buy Hermès’ Lindy. To be eligible to buy a Birkin, Kelly or Constance, she had to spend $8,937- $11,916, and for certain hot colors, the amount is higher. The second customer went to Hermès’ flagship store on Huaihai Road in Shanghai. She was told that she had to spend more than the value of any of three bags in order to buy one. The last one visited Shanghai IFC Mall but was told it was better to purchase a Hermès handbag at stores in China’s second-tier cities or abroad.
LadyMax, the Chinese fashion publication, followed up on March 15 with a statement from Hermès’ customer service team in China. The statement claimed what Shanghai Morning Post described was the personal behavior of the brand’s salespeople, which is in violation of the company’s policies. Chinese consumers should be able to buy any of their handbags as long as they are in stock, and they are welcome to report to the brand if they encounter salespeople claiming they need to make regular purchases.
The “peihuo” practice at Hermès has been an open secret to Chinese consumers in recent years. The practice actually provides business opportunities to many daigou agents, who purchase luxury goods on behalf of a group of consumers, as it is easy for them to meet the consumption quota. Whether Hermès’ denial of this practice is a way to crack down on daigou shoppers remains to be seen.
2. Supreme New York takes legal action against copycat store in Shanghai — Jiemian
Chapter 4, the company that owns the intellectual property for Supreme New York, has officially sought legal support from the Chinese government in its trademark infringement action against IBF/Supreme Italia, the party that set up a copycat retail store in Shanghai last week, according to an exclusive report by Chinese media outlet Jiemian on March 15. Chapter 4 claimed that the new store defrauded Chinese consumers and misled law enforcement, reporters, and even international companies like Samsung Electronics.
3. MAC Cosmetics China apologized for using the ‘wrong’ Chinese map in its U.S. ad campaign — Guancha
American beauty brand MAC ran into a political controversy after the brand’s latest advertising campaign used a Chinese map that did not include Taiwan. The brand was criticized for its oversight by Chinese consumers and the country’s official newspaper Global Times. On March 11, MAC issued an official statement on its Weibo account apologizing for the mistake, and they said they had already informed the U.S. team to change the ad.