Hermes Brand Value Reaches New Highs

A Christie's Hong Kong auction from 2015 of a Hermes Birkin bag

The luxury economy in Hong Kong is thriving more than ever. Forget Louis Vuitton and Gucci -- Hermes is where it's at.

Christie's Hong Kong just held its sale of Hermes handbags and it netted a whopping HK$45.59 million. Apparently clients from 20 countries were fiercely bidding for Kelly and Birkin bags.

This Birkin bag went for four times its estimate

Hermes bags are highly coveted because they are handmade and take months to make, let alone months or years on the waiting list for your order to be processed.

The French company is best known for using quality materials and skilled craftsmen (and women) to make its objects, but it's the Kelly and Birkin bags that everyone wants. They are the ultimate status symbol.

Even better when the bag is made from crocodile skin.

The world record for a Hermes So Black series handbag was set last night with a rare, limited edition matte black Niloticus crocodile Birkin bag from 2010. The final price was four times the low estimate at HK$1.625 million (US$208,000).

The So Black series was created by Jean Paul Gaultier when he was Hermes creative director from 2003-2010.

Have a spare H$2 million to buy this Birkin bag?

But one bag that was sold for even more was another Birkin bag made from Himalaya Niloticus crocodile matte white (though it is brown on the edges) complete with a buckle that is 18k white gold and diamond encrusted. It dates back to 2011 and its price? HK$2 million (US$252,892).

Many people don't see the point in such extreme luxury, but to see buyers willing to bid fiercely for these items show there are people with lots of money to burn, and the gap between the rich and poor is widening even more.

But don't worry if you didn't get your Hermes bag this time -- Christie's is holding two more sales next month in London and New York.

Although Hermes won't get a cent from this sale, its brand value has been elevated to even greater heights.

Picture of the Day: How is This Art?

Sofia Coppola's Birkin handbag becomes an art piece thanks to Jeff Koons

Apologies -- I have one more thing to mention about Art Basel Hong Kong that happened last week.

One of the galleries presented this "piece" by American artist Jeff Koons.

Called Birkin Bag Black (Shelf) 2014, it features the famed Hermes handbag, mirror and acrylic shelf.

Koons didn't even have to buy the highly-coveted bag that takes months to order because they are all handmade in workshops in France. Director Sofia Coppola donated it to him to create for auction in 2014.

Coppola had asked her father to buy her a Birkin when she was "way too young to have one". When Francis Ford Coppola got to the Hermes store with a wad of cash, he was apparently mistaken about the cost of the item. "They said, 'Oh, no... it's one more zero.'"

And then it was in Sofia Coppola's closet for a long time. "It's very decadent so I'm happy it's now an art piece," she said at the time. Her bag was auctioned off for an undisclosed amount.

In the end US$5.5 million was raised for the United Nations Foundation through a charity called Project Perpetual.

And lo and behold, we got to see this "artwork" in Hong Kong.

But really... is this art?

Canada Goose Takes Flight in HK

For mainlanders this is the must-have winter jacket these days

Hermes, Chanel, Gucci and now Canada Goose.

The Canadian down jackets are a must-have for mainland Chinese shoppers, and while they have been flying off the racks in luxury department store Holt Renfrew, the US$900 jackets will soon be available in Hong Kong.

This past Christmas when I was in Vancouver, mainlanders descended on racks of Canada Goose jackets at Holt Renfrew, trying them on and snapping them up. I've heard stories of them calling up their friends in China and asking them what size and colour they want, and buying 10 to 12 at a time.

The Chinese are snapping up the jacket in Canada stores

How do they even pack them all into their suitcases?

The latest news is that a sign in Chinese in a Toronto store states shoppers can only buy two jackets per day, probably due to complaints from local residents unable to get their hands on the prized jackets.

Dani Reiss, president and chief executive of Canada Goose knows he's onto a hot product and is eager to expand to Asia.

"A lot of people from the mainland often go to Hong Kong to buy products. That's one of the reasons why it makes sense for us to have a store in Hong Kong," Reiss said. "Even though it's a warm-weather climate, [where the temperature] almost never goes under zero."

Dani Reiss plans to open stores in Hong Kong and Beijing

The Toronto-based company will have two flagship stores, one in Hong Kong, the other in Beijing, and an e-commerce presence on Alibaba's Tmall, and set up an office in Shanghai.

The Hong Kong store will be in IFC mall and is expected to open in the fall. An interesting fact is Reiss is the third generation to run the company that was started by his Polish immigrant grandfather in 1957.

There should be no problem in selling Canada Goose in Hong Kong -- it's subtle in its look, very functional and it's a status symbol to wear. What more do you want in this day and age when Chinese luxury spending has to be a bit more discreet these days?

The War on Books at the Airport

Page One bookstore is quitting the airport after its lease was up in April

From tomorrow there will be fewer reading material for sale at Hong Kong International Airport.

There were two bookstore chains, Relay, and Page One, and the latter has lost all six of its airport bookshops with its leases up in April.

Both bookstores' biggest shops near gates 20 and 21 will be replaced with luxury brands MCM and Hermes. Relay's other stores will be relocated to smaller spaces near departure gates.

But that's not all -- there will be five bookshops at the airport that will be run by mainland publisher and bookstore chain Chung Hwa. One wonders what kind of reading material will be for sale there.

It is believed the change in the bookshop vendors may have something to do with pressure being put on the Airport Authority to shut down bookshops selling politically sensitive books, in relation to the saga of the missing booksellers.

There will be fewer Relay stores in the airport

However, an Airport Authority spokeswoman said the decision was made to reduce bookstore space because of a "change in reading habits and advancement in technology", following regular customer surveys on travellers' needs.

When asked to comment, a spokeswoman for Page One said the proposed units up for tender by the authority were not appropriate for the chain to continue its presence in the airport, and cited the economic downturn as another reason.

Lisa Leung Yuk-ming, associate professor in the department of cultural studies at Lingnan University, said Chung Hwa had "quite a strong mainland Chinese background" and people might come to the conclusion that there were political reasons behind the change in book vendors.

"Airport book shops became a haven for all these controversial books about Beijing government officials and their sex lives and how they made their way [to power] through corruption," she said.

"They were a haven not only for books but for magazines publishing gossip tabloid stories about the mainland government. This might be a reprisal for bookshops selling these kinds of things or it might be self-censorship by the airport itself to try to weed out these problematic bookshop labels.

Pro-China Chung Hwa bookstore chain will be moving in

"It might be a more proactive strategy to let more pro-Beijing commercial presses have more space at the airport as a way to toe the official line -- [and say] these are the books you should be reading rather than the problem [ones]."

The Airport Authority spokeswoman declined to address concerns over a political motive for the reduction in bookshop space. "The selection of books to be offered in the shops is decided by bookstore operators," she said.

It sounds like the airport is taking a cue to be more politically correct and ensure it doesn't rile up Beijing. But really, those bookstores did make a lot of money from selling these books that are banned on the mainland.

So instead of confiscating the books when travelers enter China, why not stop them from even coming in in the first place, by cutting the number of bookstores in the airport and putting in a pro-China shop?

Talk about waging a soft power war on culture.

In the meantime I, like everyone else will have to buy our reading materials before we head to the airport. It sounds like this new reality is only the beginning of the new normal...

Playing Musical Luxury Chairs

Hermes' flagship store in Galleria in Central may be up for sale soon

It's intriguing to find out luxury brand Hermes is planning to sell its flagship store in Central and rent space in nearby Prince's Building.

Hermes may replace either Alfred Dunhill, Ralph Lauren or Brooks Brothers whose leases will be up in the next two years.

One wonders why Hermes Asia Pacific says its decision to sell and rent instead "is a significant investment which proves Hermes' confidence in the local retail market".

Surely it means the opposite?

Hermes bought the space in 2002 for HK$190 million

The luxury retailer only owns properties in Paris and Hong Kong, so why sell the latter?

"The sale of Hong Kong is probably the result of aiming to cash in after seeing huge capital appreciation of the retail property rather than concern about poor retail sentiment," said one source.

Hermes had bought the 7,500 sq ft store in Galleria in 2002 for HK$190 million.

Hong Kong Economic Times says the space is now for sale at HK$1.5 billion, or HK$200,000 per sq ft.

Not only would that be a whopping amount, but it is also the first time in nearly a decade that ground floor retail space like that is on sale, according to Michael Chik, managing director of agency Sheraton Valuers. "This transaction will serve as a benchmark in the market," he says.

Coach had to vacate its premises due to the weak retail market

Looking at it strictly as a real estate investment, it makes sense to sell. But what about its vote of confidence for Hong Kong, if it was the only other city outside of Paris that Hermes invested in?

It's very interesting the luxury brand bought property here instead of say, Japan decades ago.

Nevertheless, the retail market is not doing well in Hong Kong now, thanks to the massive drop in mainland visitors to the city.

Bag and accessory retailer Coach closed its 13,000 sq ft flagship store at the foot of D'Aguilar Street in Central in September. It was charged a penalty of HK$130 million for terminating the lease two years before the October 2017 expiry date.

In its place is Adidas that will pay a rent of HK$5 million a month, less than what Coach paid at HK$7 million since 2008.

What would be interesting to know is how much longer Abercrombie and Fitch will be able to sustain in Pedder Building, paying HK$7 million a month too...