Hermès and Exor spent 15 years building a Chinese luxury brand, then wrote it off

Shang Xia was launched in 2010 by Hermès together with Chinese designer Jiang Qiong Er, on a thesis no other European luxury house had tried at scale: build a genuinely Chinese luxury brand — furniture, tea, homeware, then fashion — rather than sell European heritage to Chinese buyers. Hermès held the founding stake and carried the brand through its first decade.

On 9 December 2020, Exor — the Agnelli family holding company — invested roughly €80 million through a reserved capital increase and became majority shareholder at 82.3% of economic and voting rights, with Hermès staying on as a minority. Hermès booked a non-recurring profit of around €80 million on the sale, and Exor framed the deal as taking Shang Xia 'to the next stage of its development'.

The next stage was the write-off. In its audited 2023 accounts, Exor marked the carrying value of its Shang Xia equity to €0, down from €67 million a year earlier, citing 'the company's poor performance and the uncertain outlook for China's macroeconomic environment' and a sales decline it described as double-digit. The 2024 accounts then fully wrote off a shareholder loan to the holding company — principal HKD 836 million, €118 million including interest — with Exor's stated reason that there was 'limited visibility on future cash generation'.

Exor's 2024 letter to shareholders reports that Shang Xia cut operating costs by close to 55% and halved its operating losses against 2023 on flat revenue — still loss-making, with the China luxury market down about 20% that year. The brand continues to trade, but Exor's own filings record the equity stake and the loan as worth nothing.

Exor wrote off €67M equity and €118M loan after Shang Xia's sales fell double-digit; the brand kept trading but was valued at zero.

The founding thesis misread the buyer: wealthy Chinese shoppers wanted European heritage (Cartier, Hermès, LV), not a domestic label signalling the Chinese identity they did not seek from luxury.

The range drifted from furniture and homeware into fashion, which Exor itself later said had 'complicated' the business model and had to be simplified back out.

Exor doubled down at the worst moment: its December 2020 investment came just before two years of Covid disruption and a China luxury slowdown that exposed the brand's thin margins.

Losses were funded with shareholder loans rather than faced, so one poor year was enough to wipe both the equity (2023) and the accumulated loan balance (2024).

A national-identity luxury brand works only if that nation's rich want it. Richemont learned this with Shanghai Tang; Hermès and Exor repeated the bet and wrote the venture to zero.

Shang Xia continued trading into 2025 with a streamlined range and lower operating losses, under Exor's majority ownership. Hermès remains a minority shareholder alongside founder Jiang Qiong Er. No sale, restructuring or wind-down has been announced; the cost so far is recorded entirely as impairments in Exor's filings.