Shanghai Tang Bullish on China

SHANGHAI — On the heels of taking over its Mainland China distribution after operating here for six years through a partner, Shanghai Tang is bullish about its prospects.

“I think the crisis is very beneficial to China because, one, the shuffle means China is becoming the second or third superpower — just imagine if China dropped the U.S. dollar,” explained executive director Raphael le Masne de Chermont. “Two, we are entering the Internet era, which is changing the way people will consume. Third, the world is more ecologically aware: half of China’s stimulus is green-related. China is superpolluted, but is addressing that.”

Speaking hours before a fashion show and party in a warehouse in a southern part of Shanghai, the company’s first big event in its namesake city in several years, le Masne de Chermont stressed the Mainland’s importance to the brand in terms of both business and image. “The main priority for Shanghai Tang as a brand is China, because it is the biggest luxury market. To come into the market being Chinese is an asset, but also a liability. We have to explain that it is OK to be luxury and Chinese. We must be luxurious and wearable, and come with a true creative vision of what Chinese design can mean.”

Making a distinctly Asian mark in a landscape where customers largely prefer the novelty and prestige of Western styles and brands is not Shanghai Tang’s only challenge. Another remains redefining the brand from Hong Kong as “Chinese” to Mainlanders acutely aware of the distinction, but le Masne de Chermont argued that the gap is closing.

“Conditions in China are becoming more like Hong Kong, and people in Hong Kong are looking more towards China,” he said. “We are strengthening our hub in Shanghai. Shanghai is the inspiration of the brand; Hong Kong is not our inspiration. We have drawn inspiration from all of Chinese culture, such as opera and calligraphy.”

He added that 60 percent of business here is now from Mainland Chinese consumers rather than tourists. “Visitors [to China] have not been numerous for the last 15 months, besides August 2008 [during the Summer Olympics], because of visa rules,” swine flu and political upheavals.

While Shanghai Tang’s Hong Kong business — with eight stores now — remains larger than in the Mainland, half of sales there are to visitors, and a third to Mainland tourists. “There is not much else for Westerners to buy in Hong Kong,” le Masne de Chermont suggested. “There were two stages in Hong Kong: under David Tang [the brand’s founder] more for Westerners, then we became more international. We are no longer the red cheongsam and the velvet jacket.”

Shanghai Tang assumed control of its China distribution in July, adding the country to the ranks of Hong Kong, Singapore and the U.S., while Spain, France, Germany, Malaysia and Dubai continue to be handled by distributors. The brand has 12 stores in Mainland China in four cities: Shanghai, Beijing, Guangzhou and Hangzhou, where it will open a second location soon. “The demand is from Hangzhou, everybody knows it is very entrepreneurial; our first store did well so we are going further,” said le Masne de Chermont.

The company is also planning to expand into second-tier cities, starting with Dalian and Shenyang, to open a Shanghai Tang Café in Shanghai’s tourist area Xintiandi through its former distributor Vandeaux, and is looking for “the perfect house” in Shanghai, preferably a historic villa with foot traffic, to be its flagship here.

Shanghai Tang’s current collection explores the bright colors and Art Deco designs of the Peranakan Straights Chinese, a mixed Chinese and Malayan culture in Southeast Asia. The brand is now working with Mainland nonprofit organizations Shokay and the Chinese Explorers Society to preserve and present the cultures and artistry of China’s minority ethnicities through education and microcredit; the results of that collaboration will be included in both the spring and fall 2010 collections.

“There are so many angles here we can work with,” said le Masne de Chermont. “We try to be examples in being ethical, in supporting creative communities; it can be very win-win.”