What happened
Shanghai is seeking to woo international brands to set up in the city through a recently announced range of economic inducements.
Launched on April 11, the Debut in Shanghai policy includes a financial incentive of 1 million RMB ($153,846) for brands opening their first Asia store in the city.
The initiative is part of a slew of measures intended to boost consumption and propel Shanghai’s economy. Policymakers aim to attract more businesses to launch products, establish stores, and organize shows and exhibitions in Shanghai.
Between May 2018 and December 2023, the city hosted 5,840 store debuts, according to the Shanghai Municipal Commission of Commerce.
In the first four months of 2024, the city welcomed the opening of Supreme’s store, Prada’s Pradasphere II exhibition and Loewe’s Crafted World art exhibition. Also, Louis Vuitton’s Voyager Show opened today in Shanghai.
Jing Take:
Shanghai is ramping up efforts to consolidate its position as the fashion capital of China, if not Asia.
But the red carpet treatment prompted skepticism from some Chinese netizens.
“I can’t think of any brand that, in this day and age, hasn’t opened a store in Hong Kong, Tokyo or Seoul, and chooses Shanghai for its first store,” Xiaohongshu user Hanjinbuzhinian (@寒尽不知年) commented.
“No luxury brand is struggling with just 1 million RMB. Any store renovation will cost more than 10 million RMB, so who would care about this 1 million RMB reward?” Xiaohongshu user pangshushuzhijia (@胖叔叔之家) wrote.
Established brands with deep pockets facing high market entry costs may not find it as enticing as emerging international designer labels that plan to establish a presence in Shanghai, a city that boasts the sixth-highest number of high-net-worth individuals worldwide.
Moreover, Shanghai’s disposable per capita income of 80,000 RMB ($11,000) in 2023 was the country’s highest, and its per capita GDP of 180,000 RMB ($24,866) in 2022 ranks it alongside moderately developed countries.
On a broader scale, the new policy reflects the central government’s quest to support foreign enterprises in China.
Last month, the government laid out a plan to boost foreign direct investment (FDI). In 2023, FDI in China hit $33 billion, according to the State Administration of Foreign Exchange, a drop of some 80% from 2022 and a three-decade low.
Experts hope that increased competition will bolster weakening consumer demand and ultimately place China back on track to become the world’s biggest economy.
A potential launch pad to the wider Chinese market, the Debut in Shanghai policy presents a promising opportunity for international brands that seek to engage the country’s massive consumer base.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.