Maintaining Shanghai Tang’s Market Leadership
Introduction
Shganghai Tang started in 1994. It has been a pioneer in the Chinese luxury goods industry with international presence. The company’s mission is to become the global ambassador of contemporary Chinese Chic. Shanghai Tang showcases the best of Chinese heritage and craftsmanship through a unique product universe and multi-sensory shopping experience.
China’s Luxury Market
In recent years, the Chinese luxury goods sector has experienced growth. Foreign companies share a growing interest in tapping into China’s luxury market. Statistics show not only that the number of wealthy people is growing fast in China, but that their willingness to spend on big-ticket items is also on the rise, driven by an appetite for status as well as the comforts and trappings of luxury products. Asia is the largest target market for luxury brands, accounting for more sales than any other region, including Europe and the United States. According to one of the world’s leading financial group, Goldman Sachs, consumption of luxury goods in China, except private jets and luxury yachts, reached USD 6 billion in 2004, making up 12 percent of the global total consumption on the goods – up from 1 percent just five years previously. According to their findings China has turned into the third largest consumer of luxury goods in the world. Sales of luxury goods are booming across the world as the strength of the global economy helps to forge a new class of wealthy consumers in Asia, the Middle East and Eastern Europe. The above-average growth in Asia is attributable in large part to China. Goldman Sachs has predicted that China will consume about 29 percent of the world’s total luxury goods in 2015.
The Chinese Consumer
Research suggests that while the emerging middles class will continue to save heavily, they will also spend increasing amounts of money. This is consistent with trends that suggest that China’s younger generation of teenagers and twenty-somethings show less of the caution of their parents and grandparents and far more inclination to spend than save. The Chinese mainland luxury market is still in its formative stage. As Chinese consumers turn toward luxury goods as a means of rewarding themselves for their success or as a token advertising their wealth, analysts believe growth in the world’s most populous country could boost Asia’s share of world luxury sales to 60 percent.
Shanghai Tang’s Strategy
Shanghai Tang is the first and currently the only luxury brand emerging from China. It fuses the best of Chinese culture with contemporary elements of style for the globe-trotting shopper. The product offering ranges from affordable items of luxury to bespoke gown and suits, each delivering a distinct style. Shanghai Tang’s brand and store concept is founded on the nostalgia of 1930s Shanghai with its East/West glamour and vibrancy, art deco elements accent the black lacquer fixtures while Shanghai Tang’s signature lime green and fuchsia highlight the interior. Shanghai Tang attempts to establish a ‘unique’ design strategy, based on the representation and mythologizing of ‘Chineeses”, to appeal to a global market, including China. From the outset the company aimed at becoming ‘the first global luxury Chinese brand’ through a design strategy that reinterpreted the Orientalist styles associated with Shanghai in the 1930s. The flagship store opened in central Hong Kong, followed by a shop in New York, and then in other major world cities. The design strategy was based on retro and nostalgia, and was popular with expatriates and foreign visitors to Hong Kong. But some local Hong Kong Chinese found it so unacceptable as to be offensive. The development of Shanghai Tang outlets in China during the twenty-first century also reflects the more sophisticated, international and wealthy populations of mainland cities. In January, 2010, the company opened the Shanghai Tang Café restaurant bar in Shanghai’s Xintiandi area, where the Shanghai flagship store is also located. Its opening was a society event reinforcing the brand’s positioning as purveyor of the notion of ‘reinventing culture with a modern sophistication’. The company employs a diverse range of designers to create its merchandise, stores, and corporate identity. Its design team is specialist and international; several designers are featured on the company website. Despite an over ambitious expansion policy in its early years, and an incoherent design strategy, Shanghai Tang now seems to have established a successful design identity for its stores, publicity and, most important for its fashion merchandise, which has moves away from some of the earlier design clichés.
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