StartNewsEven with production in China, luxury brands maintain prestige based on...

Even with production in China, luxury brands maintain prestige based on reputation and symbolism.

The recent exhibition of Chinese suppliers responsible for manufacturing products for major luxury brands did not undermine the prestige of the most traditional brands in the market. Despite revelations about the origin of their goods, names like Hermès and Louis Vuitton continue to preserve the symbolic value they have carried for decades. The central reason lies in the positioning built over time, long before social media shaped the perception of value.

The debate has taken on new proportions in recent weeks after the Hermès group, founded in 1837, surpassed the LVMH conglomerate for the first time in market value, becoming the world's largest luxury group. According to theBusiness of FashionThe market value of Hermès reached US$ 247 billion after LVMH reported results below expectations for the first quarter of 2025. A 5% drop in sales of leather goods and accessories and an 11% decline in Asia (excluding Japan) contributed to the decline in the performance of the French giant.

The power of belonging

For branding specialists, the luxury brand consumer audience is not essentially interested in production costs or the location of factories. "Hermès customers do not buy a bag for the material or where it was made, but for the meaning it carries," he states.Carolina Lara, specialist in strategic communication and branding and founder of theLara Strategic VisibilityIt's a matter of belonging, of narrative. These brands sell cultural symbols, not just products.

This perception is not the result of social media strategies or paid traffic. The positioning of established brands was built on consistent narratives, reinforced in reputable publications such asThe New York TimesFinancial TimesandThe WorldDecades of presence in reports, special features, and business sections, in addition to fashion, which solidified its image with the public.

Meanwhile, emerging or less prominent ones try to compensate for the lack of history with aggressive paid traffic campaigns on social media. There is a clear difference between brands that appear on vehicles like CNN,ExamorSeewhere journalistic coverage requires credibility, and those that limit their presence to sponsored ads," compares Lara. "The first build reputation; the second depend on constant investment to maintain relevance."

On-demand business model

Hermès, in particular, adopts a strategy that further reinforces its symbolic value: on-demand production. Unlike conglomerates that need to scale their operations across various market segments, the French brand keeps its offerings limited, creating intentional scarcity to maintain an aura of exclusivity. This practice allows the company to operate with high profit margins while avoiding issues such as excess inventory or liquidations, common in other brands.

"When you have a model based on high demand and low supply, it not only maintains the desire for the brand but also controls the consumption cycle," explains Lara. "There is no need for discounts or promotions, which preserves the perceived value."

The geopolitics of luxury

The current scenario also reflects a peculiar geopolitical dynamic. Luxury consumption in Asia, excluding Japan, experienced a double-digit decline, while markets such as the United States and Europe show greater resilience. Still, Hermès' target audience remains relatively immune to economic fluctuations. This stability contributes to the consistent appreciation of the brand in times of uncertainty.

On the other hand, LVMH, with its diversified portfolio of 75 brands across six different segments — fashion, beauty, jewelry, wines, among others — feels the impact of global crises more acutely. Exposure to the international market, although it offers revenue diversification, also increases risk during periods of economic volatility.

Despite Hermès' current leadership, industry analysts highlight that the competition remains fierce. Bernard Arnault, CEO of LVMH, holds a stake in Hermès, with 2% of the share capital under the control of the Arnault family. This shows that, even outside the current podium, the LVMH group closely follows the movements of its competitor.

In times of social media, where image building is often reduced to boosting and paid traffic, traditional luxury brands demonstrate that reputation and symbolic value are still irreplaceable assets. Decades of strategic positioning, well-crafted narrative, and presence in reputable editorial spaces that sustain its leadership.

The dispute between Hermès and LVMH remains open, but one thing is certain: luxury, more than ever, is beyond the product — it is, above all, a well-told story.

E-Commerce Update
E-Commerce Updatehttps://www.ecommerceupdate.org
E-Commerce Update is a leading company in the Brazilian market, specialized in producing and disseminating high-quality content about the e-commerce sector.
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