Doing the Shanghai Tang [p3]

Sales have been growing and there is huge potential for Shanghai Tang to be the China-based fashion brand to lead the country’s growing luxury market. In addition to its brand development as the global ambassador of modern China, it is geographically located to capitalize on the best-quality labor at low prices within China and Southeast Asia. It seems all signs are pointing yes, so far.

Shanghai Tang’s target customer is not age or ethnically specific.

“They are genuine individualists who enjoy wearing their cosmopolitanism and cultivation on their sleeve, as a badge of honor. Definitely, our customers are not followers. In fact, they enjoy looking different from the crowd,” Ooi explains.

But the brand still carries the image of catering mostly to high-end tourists looking for Asian chic. Will Shanghai Tang be able to continue to grow and develop longevity in brand to win the hearts and pocketbooks of Asia’s growing middle and upper classes, the main base for China’s luxury market?

Purchasers of luxury goods are mostly working professionals between the age of 20 and 40. The number of consumers in this age group in China is 11 times that of Japan. But many women in this demographic would still rather get their Shanghai Tang-inspired pieces made to their measurements for a fraction of the price in neighboring Viet Nam, or find an exact duplicate in Shenzhen, the fake Gucci capital of the world.

Shanghai Tang has not gained enough brand recognition in the U.S. for most consumers to tell the difference between their pieces and a $30 cheongsam from Chinatown. The company’s artfully produced catalogs are graced by Asia’s top models wearing featured pieces. This attracts a more modern, image-conscious buyer, rather than the older tourist consumer. But that new customer drawn in by the catalog might be very confused if they visited the Madison Avenue store, which resembles a cigar lounge and is merchandised like a sample sale.

Those attracted to Asian-fusion design may find their way to another comparable brand that is doing exactly the same thing as Shanghai Tang.

Founded in 1989, Blanc de Chine, a lesser-known, less commercial, Hong Kong-based brand also also fuses Eastern and Western designs and philosophies. Like Shanghai Tang, they sell cheongsams and home accessories in addition to their ready-to-wear line. Referred to as “Hong Kong’s best-kept secret,” Blanc de Chine has been getting its fair share of “underground” press in industry blogs and news. New York magazine described the brand as, “think Shanghai Tang with a monochrome palette.” Currently, Blanc de Chine has three boutiques located in Hong Kong, New York and Beijing. A Hong Kong store is slated to open in September of this year.

Shanghai Tang plans to open five new stores in the next 12 months, with two new stores in Hong Kong, one in downtown Beijing, one in Dubai and one in Seoul.

If Doctoroff is right, Shanghai Tang can really thrive in China. It is the one fusion luxury brand that understands the psychology of China’s growing upper-middle class and is aggressively advertising to this demographic. How Shanghai Tang expands in Western markets will provide an interesting model on adapting for market relevance from East to West.

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Joyce Hu is the Fashion Editor of NHA Magazine.