Shanghai Tang

1 January 2017

The lights go up, the beat of “Tainted life” fills the temple, and the parade of Chinese model begins. On display is an array of sumptuous clothing: Brocaded parkas with fur trimmed hoods, S49,000 chinchilla-lined silk coat, silk jackets topstitched in cloud patterns, tweed skirts festooned with crystals in a dragon-scale design, and cardigans embellished with jade. When the final outfit, a full-length shearling coat encrusted with Swarovski crystals, is shown, the crowd applauds de Chermont and his creative director Joanne Ooi.

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The glitzy event was a gamble for Shanghai Tang, which has had a rocky history since its launch. Birth of a Brand Shanghai Tang was founded in 1994 by British-educated David Tang in Hong Kong. It was a positioned originally as a custom-tailoring business leveraging on the talents of Shanghainese tailors. In 1996, anticipating a robust market selling Chinese souvenirs to well-heeled tourists attracted by the handover of the city of China, Tang expanded into ready-to-wear.

At precisely 6. 8pm on November 1997, a time chosen into by a feng shui (geomancy) master, Shanghai Tang opened a palatial outlet on Madison Avenue in New York just opposite Barneys, welcoming the city’s glitterati for a bash that featured roast suckling pig, lion dancers, and Fergie, the Duchess of York. It was such a hot ticket that many party goers couldn’t get in, as the NYPD, citing New York’s tough fire codes, turned them away. However, the fashion world at the time seemed mystified about whether Tang was launching a new era of global fashion or peddling assorted Chinese merchandise.

Nineteen months later, it was clear that Tang had miscalculated American’s appetite for expensive Chinese fashion, silver rice bowls, and painted lanterns. “It was not the ideal way to start a business. But unlike Europe, America is tolerant of mistakes as long as you learn. And we have learned from this huge mistake. We needed to be more modern,” concedes de Chermont. The lessons from the New York disaster were clear: To compete in the high-end fashion business, you need a continuous array of fresh collections to keep customers coming back.

Clothes must be wearable and relevant to modern lives, not costume designs. And you need to know your market before you make a big real-estate bet, particularly in the most expensive cities in the world. Shanghai Tang moved to a smaller outlet farther up Madison Avenue, and rethought its marketing strategy. Back in Hong Kong, mired in the Asian financial crisis, things weren’t going well either. By the time de Chermont was hired in 2001, revenue stagnated. The SARS hit in 2002, effectively shutting down business in Hong Kong for six months.

Shanghai Tang also lost market share to rivals including Ooi, who opened her outlet across from its flagship store on Pedder Street in Hong Kong’s Central District. China was chic, and international fashion editors loved qi pao dresses. “I thought I’d launch my own ready-to-wear line based on the idea on innovating this iconic symbol,” said 37-year-old Singapore-born Ooi, an Asian American with a law degree. “To underscore my point, I even made one qi pao out of African kente cloth and put it on my window. I thought I would eat Shanghai Tang for lunch.

However, personal problems led Ooi to seek a new life. A Brand Reborn Enter de Chermont, who met Ooi through a headhunter friend. Both realized they shared a passion for an authentic Chinese luxury brand and the need for constant innovation in the fashion industry. Ooi surveyed Shanghai Tang’s outlets and concluded, “It’s an overpriced Chinese emporium that has no credibility with local Chinese people, let alone with fashion people. Its very narrow market is high-end tourists. It’s once-in-a-lifetime destination shopping experience, a kind of fashion Disneyland.

Plus, it’s unwearable and eccentric. ” de Chermont offered her the job of marketing and creative director. Both worked on repositioning Shanghai Tang. They believed the label had to be modern and relevant. It couldn’t be kitschy. It had to be luxurious, since prestige is more important in the Asian market than creativity. They decided to focus on women’s ready-to-wear, since that was likely to be the highest profile part of the line. For a year, they launched collections that over-corrected the problem. The clothes were fashion forward but still out of touch with the market. the brand had no depth, no sincerity, no differentiation,” Ooi concedes.

Then Ooi hit on idea: each collection would reflect a China-related theme. The fall/winter 2003 collection, inspired by the traditional costumes of a Chinese minority group called the Miao, came first. It outsold the two previous collections. A strategy was born. Ooi now roams China, visiting antique markets, art galleries, museums, and historic sites, making notes, sketches, lists. She reads Chinese history and stays abreast of Chinese pop culture.

Twice a year, she defines a theme for the next season’s collection and emails the concept brief to 16 designers and consultants worldwide. It specifies the collection’s intellectual underpinnings and suggests various elements to be incorporated into the design. For example, the theme of the fall/winter 2005 collection, Beijing’s Forbidden City, had design motifs which included elements such as symbols from the emperor’s robes and embellishments fir for an imperial court. For the spring/summer 2006 collection, the theme was contemporary Chinese art.

Chinese artists were commissioned to create designs and students of China’s, most prestigious art academy created artworks based on fabrics from the collection. Ooi’s role is to gather, distill, disseminate, and synthesize sketches form designers in Paris, London, New York, and China. “I allow the designers to pollinate themselves. The trick is to make it look like it all came from the same person,” she says. Local Dream, Global Ambition As China enters the modern economic market, it has gone from being a low-cost producer to the purchaser of big name brands like Lenovo’s acquisition of IBM’s PC division.

The third phase will be for China to create its own brands, becoming a center of design and innovation, capable of launching products that can compete in quality, style, and prestige with Western offerings. “The opportunity for Shanghai Tang right now is hug,” says David Melancon, North American president of brand strategy firm FutureBrand. “They could be the first big luxury brand out of Asia. ” And in it, too. While the luxury market is already big at S168 billion a year, according to Bain & Co, and growing at 7 percent annually, it is developing even faster in China.

By end-2004, there were over 236,000 mainland millionaires, compared to zero 25 years ago. Patrizio Bertelli, CEO of Prada, estimates that China could overtake the U. S. as a market for luxury goods by 2020. The winds of fashion seem to be blowing in Shanghai Tang’s direction. “Asian fusion is the top of the style wave”, says Michael Silverstein of the Boston Consulting Group. That put Shanghai Tang in a fashion sweet spot. “What Shaghai Tang does is translate two cultures”, says de Chermont. Early signs show that the strategy is working.

Shanghai Tang’s New York store’s revenues were up 50 percent in 2005. Overall, the company grew 40 percent in 2005, mostly in Asia, home to 70 percent of its stores. And it’s profitable, though not quite yet in the U. S. This success has led to more ambitious expansion plans away from its Asian stronghold. Shanghai Tang aims to launch five stores a year worldwide. As it emerges on the world stage, though, it must pull of a delicate balancing act: It must create a look that both Chinese and international, authentic yet sophisticated enough for a global audience. Too much Asian kitsch, and its dead.

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