Shanghai Tang focusing on Chinese heritage to win luxury market

Asia Briefing found itself in the front row of a fashion show in Shanghai last week, rubbing shoulders with China's top fashionistas, as well as actor Nicole Kidman and supermodel Du Juan. Any signs of an economic slowdown, as evidenced by last week's gloomy gross domestic product figures, were scarce.

It's only at events like the 20th anniversary party for the Shanghai Tang fashion chain, in the city's financial hub, that you get a sense of how far China has come in the past few decades.

This is so far removed from the China of the Anti-Rightist Campaign, the Great Leap Forward and the Cultural Revolution that’s it’s like a different planet, as elaborately coiffed industry figures take their seats beside the catwalk.

China’s luxury market has long focused on luxury brands such as Louis Vuitton, Chanel and Ermenegildo Zegna, but increasing self-confidence is translating into an interest in Chinese brands, which has been to the benefit of Shanghai Tang.

Anyone who has visited Hong Kong, or increasingly other mainland cities, will be familiar with Shanghai Tang. It sells fashion and other items inspired by the Shanghai of the 1930s. Long popular with Westerners, it's now getting big in the mainland too.

Hong Kong

The chain is emblematic of the changes in China in the past few years. Opened by Hong Kong entrepreneur

David Tang

in 1994, when China was still hard to get into, it was a popular Hong Kong brand, but confined really to one location in the retail centre, Pedder Street.

In later years, Abercrombie and Fitch outbid Shanghai Tang for the €5 million lease, but it responded by opening an arguably cooler building on Duddell Street nearby.

"When Tang opened Shanghai Tang in 1994, China wasn't open to business. He had no choice but to open in Hong Kong, with aspirational images about what Westerners had of China," said Shanghai Tang's executive chairman Raphael le Masne de Chermont.

Shanghai Tang now has 48 boutiques, mostly in China and Hong Kong. When it opened in 1994, it sold colourful 1930s Shanghai-styled clothes, and costumey items such as chairman Mao watches.

“How do we see our expansion? China and Hong Kong, because we have to be strong in our domestic market. The Chinese customers are our number one, which was not the case when I joined, when 90 per cent were Western. Today they are 55 per cent Asian, and the first nation consuming Shanghai Tang is Chinese,” said le Masne de Chermont.

The group has hired top Chinese fashion designers, including Masha Ma and Wang Peiyi, to design its clothes. The next step is to open the brand to wholesale, and that is starting soon in London and Europe, but the main focus is always going to be Asia.

“That’s where the luxury brand revenues are coming from. The number one consumers are Chinese. In 2001, when China started to explode, the consumers wanted Western brands.

“Then there was a second step in 2008, a moment of China with the Beijing Olympics and China was also bailing out the world. The whole world went to China, which became proud of its own culture, and we are advocating designing as per Chinese heritage and culture in an elegant and modern way.”

Luxury brand

So how has president Xi Jinping’s corruption crackdown affected Shanghai Tang? “It doesn’t affect us because we are a premium luxury brand. We are affordable luxury and we are politically correct – we are a Chinese brand.

“We cultivate and advocate a Chinese beauty and aesthetic and therefore it’s okay to buy Shanghai Tang, even for the officials. It’s not like having a diamond watch on your wrist. It’s chic but it’s Chinese, it’s made in China. The vision of the brand is to show the beauty of China to the global market,” said le Masne de Chermont. And as for that other Chinese headache, piracy, le Masne de Chermont believes it is a great issue to have.

“If you are copied, it means you are famous. We’ve started to have this kind of problem now. You can design faster than the copier. They copy watches and bags, but fashion, they don’t have time,” he said.