SHINY THING$ 0181 ✨

“This week’s Shiny Thing$, a piece that covers China’s TikTok campaign around US luxury consumption (extra relevant on the heels of our Birkin exit last week) comes to you from veteran writer Alexei Barrionuevo, for Rally”

The Chinese fired a return salvo in Donald Trump’s tariff war last week, and their weapon of choice were TikTok videos targeting the image of luxury fashion houses like Hermès, Gucci, Prada and Lululemon.

In the videos, people purporting to be workers in Chinese factories claimed women’s handbags and other luxury products were being produced in China. They offered to sell them directly to American consumers for a fraction of their retail prices.

In one video, a man claimed Hermès was marking up Birkin bags more than 25-fold from their actual production cost. A new Birkin that Hermès retails for $38,000 costs $1,400 to produce, including labor, the man claims. “We use the same materials, same leather, same hardware, same edge oil,” he says on the video, noting that “90% of the cost is the logo.” 

Hermès didn’t offer a defense to the claims, while Lululemon fired back, saying they were not true. “Lululemon does not work with the manufacturers identified in the online videos and we urge consumers to be aware of potentially counterfeit products and misinformation,” the company said in a statement.

While shocking, the Chinese videos, some of which garnered millions of views, offered no proof that the luxury items were being principally manufactured in China. They are part of a propaganda campaign designed to confuse Western consumers and stir economic nationalism in China. Still, by challenging notions of perceived luxury brand value, they prompted online discussions about whether consumers should reconsider whether they are paying for authenticity or a brand’s reputation.

Rally investors, however, would do well to remember China’s deep legacy of counterfeiting — China accounted for 84% of the total value of counterfeit and pirated goods seized by U.S. officials in 2023 — and the storied tradition of craftmanship that has made the Birkin a highly sought-after fashion collectible around the world.

Hermès says its artisans hand stich each Birkin, which is then stamped with a unique code indicating the year of production, workshop, and the artisan who crafted it. Artisans may need to be trained for five years before they are allowed to make their first Birkin or Kelly. 

When it comes to its signature bags, the French company’s labeling practices not only meet but exceed requirements set by U.S. and European regulators, which stipulate that a product’s final substantial transformation must take place domestically for it to carry a “Made in” label. Hermès also adheres to France’s stricter OFG (Origine France Garantie) certification, which requires that at least 50% of a product’s unit cost be generated within the country.

Hermès also continues to lean into homegrown production. The company currently has leather goods production sites in nine of France’s 13 regions. Last month, it announced a 10th hub for 2028 in the French department of Calvados. The new project is in addition to the three other leather workshop sites currently under development in L’Isle-d’Espagnac (Charente), Loupes (Gironde) and Charleville-Mézières (Ardennes).

But amid the intensifying trade tug-of-war between the United States and China, the family-controlled company expects to fully shift the burden of tariffs the Trump administration is placing on European goods to its wealthy clientele in the U.S.

The price hikes will be on top of regular price adjustments that were around 6%-7% this year. “We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines,” Finance Chief Eric du Halgouet said during Hermès’ first-quarter earnings call.

The price hikes mean Birkin bags could get even more exclusive and potentially see more interest on secondary markets.

This week Shiny Thing$ delves into the history of the iconic Birkin and its legendary craftsmanship.

From sick bag to iconic collectible

The Birkin arose from a casual conversation between a 1980s-era influencer and a Hermès CEO.

In 1983, Jane Birkin, a British-born actress and singer, was seated next to Jean-Louis Dumas on a plane from Paris to London. She was putting her straw basket bag into the overhead compartment when the contents spilled out. She complained to Dumas about how difficult it was to find a weekend leather bag she liked. The French executive listened intently to her ideas for a better one. At one point, she “drew it on the sick bag — or the not-be-sick bag,” Birkin later recalled. “And he said, ‘I’ll make it for you.’”

Birkin emerged in the 1960s in the Swinging London scene, where she began her acting career. She gained early notoriety for doing a nude scene in Michelangelo Antonini’s “Blowup” which starred Vanessa Redgrave and Sarah Miles.

Later, she dipped her toe in French cinema, where she met French pop star Serge Gainsbourg on the set of “Slogan” — she won the female lead even though she didn’t speak French. Their decade-long relationship, which was sometimes volatile (she once tossed herself into the Seine during a heated row), made her a beloved figure in France, where she became a citizen and died in 2023.

Hermès, meanwhile, produced the first Birkin bag in 1984, based on a 1982 design. It was the second signature handbag for the French firm, after it officially renamed the Bugatti the Kelly in 1977 after Grace Kelly, who popularized the bag in Alfred Hitchcock’s 1954 film “To Catch a Thief.”

The first Birkin was a black bag using supple calf box leather. From the outset, each Birkin was made entirely by a single, well-trained and experienced artisan, who sews the bag using a saddle-stitching technique the company developed in the 1800s. Hermès says it takes over 18 hours to produce a single tote.

Artisans begin by choosing the leather skin. They examine each skin in detail, removing flaws like mosquito bites or other small defects. While many Birkin bags are made from a single skin, multiple skins may be required depending on the size of the bag and type of skin used. Lizard skin bags, for example, use four to five skins, according to Madison Avenue Couture.

Hermès uses precious metals like gold or palladium to craft the bag’s hardware, including the lock, turn-lock closure and studs (diamond detailing is another custom option). Artisans attach them to the bag using a “pearling” process to ensure they stay in place.

If the final bag passes inspection at the workshop, it is stamped with the year, workshop and artisan. Then it is sent to the Hermès logistics department for its final inspection before it is packed with the signature orange box and shipped to a boutique.

Any Hermès bag that fails inspection is destroyed, the company has said.

The totes proved popular from the start. By 2014, Hermès was producing 70,000 Birkin bags a year, according to an estimate in The Economist. They became a fashion-statement fixture on the arms of global celebrities like Kim Kardashian, Victoria Beckham and Jennifer Lopez.

The company has long offered made-to-order customizations for its wealthy clientele. Customers can even send in a Birkin for a “spa treatment” to recondition the bag after heavy use.

But purchasing a Birkin bag from a Hermès boutique is difficult, to say the least, and that’s by design.

“Unless you have established a relationship with a sales associate and spent well into five figures, you are unlikely to be offered an opportunity to purchase a Birkin bag,” writes Judy Taylor, CEO and founder of Madison Avenue Couture. “If you do get the chance, you will have no say about the size, leather, or color.” 

Hermès’ scarcity strategy has helped make its signature handbags its biggest sellers. The Birkin and Kelly generate 25% to 30% of the company’s total sales, The Wall Street Journal reported.

That has created a challenge for Hermès as the high-end fashion resale market has grown and prices have soared for vintage Birkins on the secondary market.

In 2016, Christies sold a Himalaya Birkin for $300,168 at an auction in Hong Kong. More recently, private parties on Rally bought out a Sellier Faubourg blue Birkin for $181,500 in January and a blue Lézard Birkin for $68,000 in early April.

Counterfeits are harder to spot

For decades, knockoffs of the pricey bags have circulated in Asia. And in 2020 a scandal rocked the French fashion world when 10 people, including seven former Hermès workers, were convicted of producing dozens of counterfeit bags, including Birkins, in a criminal enterprise estimated at more than $22 million. The defendants received sentences ranging from six months of suspended jail time to three years in prison. The French court awarded Hermès 580,000 euros in damages.

In recent years, as the quality of Chinese manufacturing has improved, it has also become tougher for less-savvy customers to distinguish the differences between quality knockoffs and their French originals. Due to abundant low-cost labor, large economies of scale and significant state support, Chinese net exports of manufactured products have ballooned more than 25-fold over the last two decades, according to the Center for Strategic and International Studios.

That explosion has undercut foreign competitors and contributed to the growing appetite for tariffs in the U.S. and Europe.

French luxury goods houses have fought back. In 2010, the Pro France Association created the OFG label to further promote and defend French manufacturing. To qualify, at least 50% of the added value of a product must come from France and the final manufacturing stage needs to occur in France. That means that a product like a Birkin, which carries the OFG label, must take on its essential or definitive characteristics in France. 


Four decades later, the Birkin continues to thrive, despite Jane Birkin’s own mixed history with her namesake tote.

After initially using the bag Dumas named after her, she stopped using it, complaining of tendinitis in her shoulder. Then in 2015, she asked Hermès to rename the crocodile version of the bag after learning of disturbing practices at an alligator factory in Winnie, Texas, that sent its skins to a Hermès-owned tannery. The factory, according to a People for the Ethical Treatment of Animals (PETA) investigation, allegedly was using inhumane practices such as slaughtering the animals while they were “still conscious and able to feel pain.”

Hermès soon gave Birkin reassurances that it would clean up such practices and ethically treat the animals. Her name has remained on the bag ever since.

Until next week…