Could Hermes Birkin Bag Sales Be Linked to China's Pork Prices? Xie Jinhe Reveals the 'Magical Connection': CEO Monitors One Key Indicator

Global luxury fashion brand Hermès recently held its earnings announcement, delivering a stable financial performance. However, its stock price immediately plunged more than 11%. In response, Xie Jinhe, chairman of Cai Xun Media, posted on Facebook highlighting a striking revelation from Hermès Executive Director Axel Dumas: the most critical indicator for Hermès is whether 'pork prices in China rebound.' The seemingly magical connection between expensive Birkin bags and pork prices at wet markets stems from the state of China's domestic market.

Why would Hermès Birkin bag sales relate to pork prices in China? Xie Jinhe explains that Hermès’ primary market is Greater China, which accounted for 43% of sales in the first half of this year—peaking at 52% last year. Thus, Hermès’ overall performance is directly influenced by sales in China. Axel Dumas believes pork prices, real estate, and the stock market are the three key factors shaping Hermès’ future—in short, 'China’s domestic demand.'

Xie notes that European luxury brands once heavily relied on Chinese consumers' spending power. For example, Louis Vuitton (LV) derived over 29% of its sales from China this year. However, as Chinese consumer spending declines, European companies now face immense pressure from China’s shrinking domestic market. Volkswagen, which once expanded significantly thanks to China, is now being overtaken by local Chinese automakers, retreating and even facing large-scale layoffs.

China consumes around 700 million pigs annually, yet the pig farming industry suffers severe losses. Xie points out that pork prices in China have been declining for ten consecutive years, forcing even Taiwan-based semiconductor giant Win Semiconductors to exit the business. Logically, with such massive consumption, pig farming should be highly profitable. Yet, in reality, nearly all pig farmers are losing money.

According to Xie, statistics show that 20 Chinese pig farming companies that disclosed their first-half results this year collectively incurred losses totaling 18.33 billion RMB. Given this trend, if Hermès is waiting for a rebound in pork prices to restore consumer confidence, it may need to wait much longer. It’s fascinating to see the future of the Birkin bag linked to pork prices—an unusual connection worth recording.

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