We Talked to the Head of Hermès's Crystal Brand About Luxury, Young Consumers and Doing Business in China

The age gap between our European and Chinese customers is about 25 years.

Charles-Henri Leroy, a tall Frenchman in a dark gray suit, turned up on the fourth floor of Shanghai's Plaza 66. He has lost count of how many times he has been to China, but never in such a rush as this: less than a day in the city, then a flight back to Paris.

Leroy is now the international director of Saint-Louis, the French crystal homeware brand. Its history goes back to the 16th century, when it mainly made glass. By the 18th century, with the glass industry booming, a village had grown up around the Saint-Louis factory in France — housing, a school and a church for 650 workers — and the company moved into crystal.

In 1995 the Hermès Group bought Saint-Louis, making it one of the group's three home brands (the other two are Hermès's own home line and the silverware maker Puiforcat, which Hermès acquired in 1993). Saint-Louis sells crystal tableware, glasses, lighting and decorative objects, all made by hand.

The brand's official history describes it this way: "The French royal family was always among its main clients ... no historical film of that era was shot without the glittering ornament of Saint-Louis."

A long history and fine craftsmanship give a brand something to talk about, but they can also be a constraint: it has to honor its own identity and tradition, and so it often looks conservative.

Leroy calls the brand's performance in China "very successful," yet hardly anyone here has heard of it. Saint-Louis entered China in 2010, selling crystal pieces through agents in multi-brand boutiques in Shanghai, Beijing, Guangzhou and other cities. In 2014 a home boutique combining Saint-Louis, Hermès (home) and Puiforcat — the Hermès-Puiforcat-Saint-Louis store — opened in Shanghai. To promote itself, Saint-Louis has put on exhibitions of crystal paperweights and staged displays of crystal homeware together with high-end residential developments.

Prices for the products it sells in China run from 1,000 yuan to millions of US dollars; the cheapest piece, a clear crystal wine glass, costs about 1,000 yuan.

Leroy thinks Chinese consumers take to crystal quickly, even though there is no end to the "education" still to be done.

"Crystal glasses of the same model still differ slightly. The rim may not be exactly the same thickness, and we have to explain that to consumers. Some people don't accept it. They need to know that a handmade piece is not the same as a mass-produced one," Leroy said.

The Hermès Group does not publish figures for its home business. But according to the group's 2015 fiscal-year briefing, while home products made a "solid" contribution to growth, the "Other" category they sit in accounted for about 4.3% of sales. Leroy said China currently accounts for less than 10% of Saint-Louis's sales, though that could reach 20% in the future.

Nearly six years after entering China, Saint-Louis still has no official Weibo account — unusual among luxury brands, and especially for one that is new to the Chinese market and needs the exposure.

"It's not quite like promoting a shampoo," he said. "We don't call it marketing or promotion; it's closer to education. Education takes time, but once consumers have experienced it, they remember."

The most effective way to "educate," in Leroy's view, is to meet consumers face to face, including inviting them and the press to visit the factory in France. "Nothing can replace the experience of touching it."

Leroy has worked at the Hermès Group for 25 years. Before Saint-Louis, he was Hermès's manager for South America and North America, operations director in the UK, and client relations director at Hermès International.

We talked with Leroy about how he reads Chinese consumers, the opportunities he sees in the market, and where he plans to take the brand.

Q = QDaily

L = Charles-Henri Leroy

Q: Saint-Louis came to China in 2010. What opportunity did you see then?

L: The most important thing, I think, is that Chinese culture fits our brand's values. We have made things by hand for centuries, and that is completely unique. Chinese people have loved craftsmanship and objects with substance since ancient times. We have that history.

At the Hermès Group we always say: let the product speak, the brand is only a mark. The craftsmen sign their work with the brand's name, but in the end it is still a story about hands and skill. We know Chinese people respect and like this kind of craft and quality. Quality matters a great deal to us.

As for timing, we felt the market was ready by 2010. First, more and more Chinese people were traveling abroad, including to Hong Kong to shop. Second, the shipping conditions were ready too. Saint-Louis's goods are expensive to make and difficult to transport, especially the crystal chandeliers — bringing those into China took us two years. In that time we had to reach agreements with the Chinese government on importing crystal chandeliers, including agreements on selling them here. It was a very long process and took a lot of our time.

Q: Your products are expensive.

L: We also have products at 1,000 euros.

Q: Have you studied who your customers actually are?

L: We have, but it involves their privacy, so we can't share it.

And we don't define consumers by age or income. At the Hermès Group we welcome any consumer, from 16 years old to no upper limit. I think that has to do with the product. We don't design and make a vase in order to attract, say, women lawyers aged 35 to 45. It isn't like that.

Q: Did you do market research before Saint-Louis entered China?

L: Frankly, we never do market research. One reason is that Chinese consumers are everywhere in the world, France included. We saw more and more of them buying from our dealers while they were in Europe, and that told us they were interested in our products. Then one day we decided it was time to grow further: if Chinese consumers are interested in us, why not expand there so people can buy our products in their own country?

If I have to name a target consumer, I'd say there are two kinds. One is people who love the French way of life — they like a beautiful table and fine tableware, objects with texture and weight. The other is people who hire architects and interior designers for their homes; they are our second most important group. We have to find them and get our products to them. We are working with more and more architects and interior designers, suggesting they build our crystal chandeliers into new homes, and hotels too.

Luxury is about creativity and quality. We offer high-quality products to any consumer; you either like them or you don't. It isn't like cosmetics, where you draw a line around your customer. In luxury you are always trying to surprise people — not to meet a need, but to create one.

Q: Do Saint-Louis's customers in Europe and America differ in age from those in China? What does that mean for how you talk about the brand?

L: They do. For us, I think the age gap between our consumers in Europe and in China is about 25 years. China has a lot of wealthy young consumers. Broadly, what we have to do is educate them about our products and our brand. Chinese consumers don't know our brand and our products, and they don't know how we differ from others. That education is ours to do.

Q: How do you educate them?

L: Events, first of all. We invite Chinese consumers to use and experience our products. We also invite a small number of consumers and a lot of journalists to visit our factory in France, and they share the experience through magazines and other media. It's not quite like promoting a shampoo; we don't call it marketing or promotion, it's closer to "education." It takes time, but once consumers have experienced it, they remember.

We need consumers to see the difference between a handmade object and a mass-produced one. Crystal glasses of the same model still differ slightly. The rim may not be exactly the same thickness, and we have to explain that to consumers. Some people don't accept it. They need to know that a handmade piece is not the same as a mass-produced one.

Q: What do you make of luxury brands running boutiques on WeChat?

L: That's an interesting point. We've noticed that many brands are opening stores online, and some of them are online only, with nothing offline, which is strange. Nothing can replace experience. Cultivating consumers matters, I think — letting them try the product and feel it. Many people buying a car want to drive it at least once, because a car is expensive. Luxury goods are the same.

It's hard to show a crystal chandelier online. We can of course use technology to show it: in September, for instance, we're doing something special, bringing in a gaming company to make 3D models of the chandeliers. You pick a crystal chandelier on an iPad, take a photo of your house, and the technology puts the chandelier into your house, in 3D. That is part of what technology can do, but nothing can still replace the experience of touching it.

Q: What are Saint-Louis's plans beyond Beijing, Shanghai and Guangzhou? You mentioned Chengdu earlier — what impression did it leave on you?

L: Yes, a couple of days ago I read a newspaper piece about Chengdu, about how the city is remaking itself, and it made a strong impression. Last year we found a partner in Guangzhou, and we also plan to sell in other cities through the interior-design route. We're doing that now, and Chengdu is indeed in our plans.

Q: Is there anything about the Chinese market that excites you?

L: Probably how fast consumers accept and understand handmade products. Even though I keep saying we have to educate Chinese consumers, appreciating craft and technique is part of Chinese tradition. China has a long history of craftsmanship, and people grasp very quickly what skill lies behind an object and how it was made. You rarely see that in other countries. The United States, for example, doesn't have it; it's a very young country without that tradition.

Q: Is there anything that puzzles you, or that you find hard?

L: Protectionism — may I say that? Importing products into China is hard; you'd understand if you saw the whole approval process. There's no way around it, we have to face it and get through it, and it is not simple at all. When our products are imported into China, the process is far too complicated. For a lamp, a new model, getting the license sometimes takes two years. That is our biggest difficulty in China.

Q: Does what Hermès has learned in China help Saint-Louis?

L: On the business side, we are learning from them. Hermès in fact handles all the behind-the-scenes work for us, importing and shipping and so on, which helps us a lot. On products, whether it's Hermès or Saint-Louis, the values are the same: creativity, quality and craft.

I think Chinese consumers understand luxury better than they used to. Their incomes are rising. At first they bought the "obvious" luxury goods, watches and cars and the like, but now they are starting to care about themselves — no longer "showing off," but paying attention to things like decorating the home. I'm not sure "showing off" is the right word, but on the whole they're doing less of it. That's useful for us. We believe a good number of high-standard interior-design firms will come to China in the future; this is clearly a fast-growing market.

Q: You said Saint-Louis works with architects and interior designers. How does that work?

L: Generally project by project. Chinese consumers want to feel safe about their interior-design choices, you know, so they consult professional designers. Our approach is to find these interior designers and architects, share our values with them, tell them who we are. We also take part in the trade fairs in Milan, with a stand every year, to show our products and educate these professionals. If you have a house with 15-meter ceilings, we can supply a 10-meter crystal chandelier — we have already done that for our top clients.

Q: What are your plans for local marketing in China?

L: We could work with Chinese artists to design paperweights together. We could also work with them on new crystal chandeliers. These are all things we're planning. Doing this may make it easier for us to share who we are and raise awareness of the brand.

Q: Anything you'd like to add?

L: One thing you didn't ask is whether we are successful in the Chinese market. The answer is yes. (How do you measure success?) Two ways. One is sales: China currently accounts for less than 10% of Saint-Louis's sales, but that could reach 20% in the future, or it might not. The other is how many Chinese consumers come to Europe to shop, because that shows their interest in our brand.

Of course there is still a lot for us to do. I think it's a trend for (professional) interior design to move into the homes people actually live in. I think Chinese consumers care more and more about decorating their own homes. Ten or 20 years ago probably wasn't a good moment for us to enter the Chinese market, but it's different now. Back then people cared about showing things off — handbags, accessories. Now we've entered new territory, where people pay attention to their inner lives and their surroundings, and have become more "selfish." Being "selfish" isn't a bad thing. Why not?

Cover image from Saint-Louis