Shanghai Tang the First Global Chinese Luxury Brand

1 January 2017

The First Global Chinese Luxury Brand Table of Content Pg3: What is a luxury brand? How is it different from a regular, mass-market brand? How does one build a luxury brand? Pg4 & 5: How would you characterize Shanghai Tang’s brand image and sources of brand equity? Pg5 & 6: What are the strengths and weaknesses of the brand’s existing Personality and image? Pg7: What might have accounted for Shanghai Tang’s unsatisfactory results in building a global luxury Chinese brand? What could they or should they have done differently?

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How has Shanghai Tang positioned itself relative to other luxury brands? How might the positioning be improved? Pg10: Reference page What is a luxury brand? How is it different from a regular, mass-market brand? How does one build a luxury brand? “David Tang’s vision was to create a lifestyle brand that reintroduced Chinese aesthetics to a consumer audience”. 1 He wanted to take old and modern Chinese culture and put in a fashion line that made sense to a new audience. Shanghai Tang was geared from the beginning to be China’s first global luxury brand, but getting to that point was easier said then done.

By creating a stepping-stone to go worldwide, Tang’s vision would be the start of putting China in the spotlight for future global investments. A luxury brand is a product that is usually not essential, but is wanted because of the image that they portray. Being a luxury brand is usually associated with affluence, and carries a prestige along with its name. Luxury brands are usually produced with a higher quality of care and attention to detail. Unlike mass-market brands, luxury brands are fairly exclusive and have large price tags.

Mass-market brands are usually taken lightly and are not as lavish like the difference between a Kia and a Mercedes-Benz. When building a luxury brand from the ground up proper data needs to be gathered to insure no costly mistakes are made. By calling it a luxury brand it assumes a certain segment of the market including age, education, and income levels. This is much harder when trying to become a global brand because you’re trying to understand local tastes in other parts of the world and you’re competing with other local products and services that are used and trusted already.

Luxury brands have to be marketed properly in order to have a sustainable future, When Tang entered The New York market his fashions and other Chinese kitsch were met with confusion. The old and modern takes were lost on the wealthy American audience and it ultimately cost Tang their location. How would you characterize Shanghai Tang’s brand image and sources of brand equity? When Tang set out to build a lifestyle brand from the ground up I think he got in deeper then he could handle.

Although his brand did have some powerful backing from celebrities and a large European conglomerate it still wasn’t enough to glide into the hearts and minds of consumers around the world. Tang’s flamboyant take on old and modern didn’t hit big with American audiences and his sales in areas other then the Hong Kong flagship didn’t meet expectations. The brand value that tang was trying to build would be later realized with Raphael le Masne De Chermont altered vision of Tang’s original idea. The truth behind Shanghai Tang’s brand equity is it took a long time to mature into what it is today.

In terms of the overall value of the brand in Hong Kong it was strong, but it was sluggish in America, Japan, and Europe. Tang’s source of inspiration for his brand came from Chinese fashion from the 1920s and 30s. This is something that most people other then China wouldn’t really understand. It was very hard for him to convince others of his vision of Chinese culture and fashion to be accepted as a global brand. The true source of his brand value was cultivated out of Tang’s wealth and his ties to other wealthy companies.

Although tourist and the Chinese youth took a liking to his brand it was a harder sell to other segments of the population. Tang’s own personality was a source as well, he wanted to play broker between east and west but I don’t really think he took the time to understand that his clothing wasn’t the problem but instead how he tried to market his brand. He was chasing a wealthy market that didn’t really pay much attention to his dealings. His brand-exhibited things that the public just wasn’t educated enough about and his over the top execution didn’t stick to consumers like he thought it would.

When consumers trust a brand and find it relevant, they may select the offerings associated with that brand over those of competitors, even at a premium price. 2 What are the strengths and weaknesses of the brand’s existing personality and image? Le Masne later abandoned Shanghai Tang marketing concept of a high fashion clothing line to wealthy Americans in an effort to focus more on China. The Idea Le Masne had been to play to the strengths instead of its weakness. The image wasn’t bad overseas it was just weak and could’ve used more research before diving in again.

Even though there was a lot backing up Tangs investment he had his sights set high and couldn’t really follow through with his plans of globalizing his brand. The image and personality of Tangs may have seemed a bit pretentious and a little over the top for most middle class consumers and even some wealthy ones. Some of the weaknesses displayed in Tang’s approach have to do entirely with his head on tactics. Instead of identifying common customer needs worldwide and determining the global brand image, He set his sights on rapid growth in an intensely competitive market.

Brands are the face embodiment of a firm and Tang didn’t identify with most people, and couldn’t show both function and emotional benefits to his customers. 3 Another weakness in my view is that Tang seemed more interested in establishing a global brand name then actually going beyond that point itself. The perception of global brands can mean very different things around the world. Take McDonalds they operate in over 119 countries but each country perceives McDonalds in a different way. Weather it be a hang out for teenagers or a place that is fast and family friendly or even the value that can be gotten for very little money.

Each of these positions reflects the brand image and what it means to other countries when they see the golden arches. Shanghai Tang didn’t really try to position itself in a multitude of ways, Tang just wanted to create a new project to put his family name to. By creating a brand that he wanted to take globally he should have thought about the diverse challenges that retail can pose. Although Tang’s vision had problems it also had strengths. Shanghai Tang was and is the first global luxury brand out of China to make an impact worldwide.

The fact that tang was able to obtain the financial and symbolic backing of a European luxury conglomerate also makes Tang’s brands something to recognize especially for future Chinese firms. It should also be noted that along with the original store in Hong Kong 24 other outlets were open worldwide making the brand globally recognized. Trying to approach the wealthy around the world to see Tang’s vision wasn’t bad but rather short sighted, and in the long run affected the brands image. What might have accounted for Shanghai Tang’s unsatisfactory results in building a global luxury Chinese brand?

What could they or should they have done differently? Most luxury brands are rather small or medium sized, except for a few large luxury conglomerates such as LVMH and PPR Gucci. 4 Tang enter a very risky market that is always loosing competitors because of fierce competition. In 2011 the flagship store in Hong Kong was closed because of high rent and maybe other undisclosed issues having to deal with low profit margins. Tang seemed to run with a Top-Down approach that made a little more vulnerable to future progress then was initially anticipated.

The brand that Shanghai reflected didn’t run constantly with other countries and ultimately caused loses. The Brand identity fell short with consumers that weren’t from China and I think this was Cause by an unsure Brand. There were incongruity in presenting both pre-revolutionary and cultural revolution styles in the same store, and the tongue-in-check, post modern take on China’s heritage was ultimately lost on the wealthy American buyer. 5 Trying to convince a bunch of wealthy consumers that you should buy into us because we’re funky and out there and willing to take risks can only work some of the time.

It’s a bigger gamble then a Coke trying to extend itself to a new country. Coke is very well established and recognized brand, but Shanghai Tang’s is still low on most people’s radar. Being able to establish a brand that people can trust and want to participate in is what should have come up at more meetings. The fact remains that David Tang was no big shot CEO; He was a rich kid that wanted to paint his name on the walls wherever he went. The business/ retail world is not very forgiving when you don’t do your homework.

Having put his name on the line wasn’t enough, rather tackling a community of consumers that he might have seen at parties was what it seemed like he did. Tang could have been a little less ambitious to start with; it would have given him the room to grow instead of assuming that he had everything under control. Wealth and tourist don’t always go together but it seemed to work at the flagship store. Focusing on the Chinese upper class instead of foreign wealth in Europe and America would have made more sense, based on the population in China, there are over a million millionaires and a large market for growth opportunities.

Slow market growth outside of China and a misdirected brand hurt, but with a shuffling of positions and new leadership, Tang’s was given another fighting chance to prove itself. How has Shanghai Tang positioned itself relative to other luxury brands? How might the position be improved? Many other brands such as LVMH Moet Hennessy Louis Vuitton, Ralph Lauren, Giorgio Armani, and Hermes have all migrated to the emerging Chinese market. Since there has been a booming demand for luxury goods in the Chinese market.

Other companies such PPR SA (PP) and L’Oreal SA (OR) have also seen growth in the first half of 2012. 6 The thing is all these companies have been well established in the American and European markets for a long time, where as Shanghai Tang has not. Although it has made a mark in several countries it is struggling to maintain a foothold and has lost two stores in the process. Shanghai Tang positioned itself among all these other well-recognized brands and tried to go toe –to – toe, but they fell short in a few instances.

Tang tried to push his brand into the spotlight way to fast and began to expand before he got his feet wet. He wanted to establish his brand to consumers that had little to no knowledge of Chinese culture, even in today’s market the most we know about China is that most of our products are being assembled or manufactured there. Even Ralph Lauren came under fire for Olympic uniforms that were made in china. China is indeed an emerging economic power and presents a lot of opportunity for growth in many markets, but just the opposite way I think some markets aren’t ready for China.

David Tang wanted to be in league with all the other big players on the market, but failed to see his shortcomings. Tangs vision had to be repositioned in order to save what they already had and were able to rethink their initial focus. After a little rewiring and tweaking and under new management Tang began to see growth and was able to see the silver lining. It’s still stings that the flagship has fallen but the firm is still standing. Positioning helps consumers understand a firm’s identity and allows them to solidify an image to go with your name.

After trying and failing Tang should’ve understood that he needed to refocus is attempt at the American market, and what wealthy Americans want or perceive when they think about Chinese fashion. Tang should understand as well that luxury goods work on a different level of production time and don’t see profits as often or as soon as mass market brands. In general more needs to be researched and understood of the growing Chinese market and more has to be done in order for other countries to accept a bold new products from China.

As soon as other countries start to understand the new position that Shanghai Tang takes and can identify the brand as someone they can trust then it will attract more then the wealthiest markets and tourist.

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