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Luxury's Chinese Puzzle: Overcoming Challenges To Tap Growing Demand

Luxury brands may be eager to capitalize on China's expected boom in demand for upscale products; all they have to do is figure out how.

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The company positions itself as the first Chinese luxury label. "We would like to be like Armani is for the Italians, to be the future ambassadors of Chinese culture, as Shanghai Tang gains strength," said chairman Raphael le Masne de Chermont. "The West needs to understand and respect China, in a friendly way. China is not like the Western view of it, but rather is eager to learn and share, and is fair in business."

Le Masne de Chermont resisted defining his brand's clientele. "I dislike the idea of core customers, as if people below or above a certain age shouldn't wear Shanghai Tang. That said, I would define them as sophisticated working and traveling people, sophisticated personalities, with standards. To be modern, we need to have younger, more fitted models, more feminine, and for men [to be] more fitted — it's impossible to be modern and baggy."

He has been at the helm of Shanghai Tang for three and a half years, and along with creative director Joanne Ooi has been behind the recent reversal in the brand's fortunes. "Our main goals are being accepted by the Chinese; they are very important consumers for us, plus being accepted outside of Asia. But that is what we've been focusing on for at least two years."

"To brand in China," Ooi added, "you must be prestigious, since that's what people respond to. You must be expensive, prestigious and international to seduce the Chinese consumer."

With that in mind, "we are producing styles that are more ‘Western,' or merely inflected with Chinese design, but not heavy-handed chinoiserie. It must be beautiful, precious, unique."

To raise Shanghai Tang's prestige in Mainland China, the brand has organized several cultural events, such as a Glenn Luchford shoot at Beijing's Forbidden City and Temple of Heaven, and it held a fashion show at the gala party concluding the FT Summit.

With its Sino-fied stylings, Shanghai Tang has long relied on tourists buying at its Hong Kong flagships. Its Western counterparts at the summit were preoccupied with a different group of tourist shoppers: the growing ranks of Mainland Chinese traveling — and shopping — overseas. However, like much of the China market, the Chinese tourist remains mostly a hopeful glimmer in the eye of Western brands. A&G's Brozzetti reported that visitors from Asia represent only a small percentage of tourist sales in the company's stores, although the units receive special orders from clients in Hong Kong, Malaysia and Indonesia.
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