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Hermès, the maker of the Birkin bag, is opening a new, larger store in Nanjing, China, demonstrating the luxury industry’s confidence in a significant rebound in Chinese consumers following three years of tight Covid-19 restrictions.

Hermès, which first opened a location in the city in 2010, has since moved to the upmarket shopping centre Deji Plaza. The new location features a larger product variety spanning over two floors, including home items, jewellery, clothes, and everything from silk scarves to leather goods. Despite a rocky year marred by disruptions as the nation enforced severe controls to contain the spread of the coronavirus, European luxury houses have continued to invest in China, which is anticipated to become the sector’s largest market by 2025.

Share prices of international luxury corporations, including the largest in the world, LVMH, increased in late December as a result of news that the nation was loosening its travel restrictions.

According to UBS, Hermès and LVMH will each generate about 30% of their yearly sales in China in 2020. The leather goods expert has placed a lot of emphasis on Mainland China, where Hermès has 27 outlets. Hermès established its first shop in Zhengzhou, in the province of Henan, and expanded its storefront in Wuhan the previous year.

As Europe experiences an energy crisis and the US economy slows down, China is anticipated to be a significant source of growth in the upcoming months. According to Bernstein analyst Luca Solca, luxury sales in the nation could increase by 25 to 35 percent this year, compared to 5 to 10 percent in the West.