The Rise and Fall (and Rise?) of Shanghai Tang

    The first-and-only Chinese luxury fashion brand changed owners again last year as it continues searching for a clear identity.
    Maybe the answer will not be clear until it figures out a black-and-white answer: Shanghai Tang either belongs to the East, or it belongs to the West. Photo courtesy:
    Huixin DengAuthor
      Published   in Finance

    Founded in 1994 by Sir David Tang, Shanghai Tang became popular after Maggie Cheung wore the brand’s signature qipao (旗袍)in the Wong Kar-Wai masterpiece, “In the Mood for Love.” Like the movie, which was an art cinema sensation in the West and Hong Kong itself, much of the brand’s success can be attributed to its inhabiting a space between China and the West. Now, however, the brand’s culture-fluid identity poses a real challenge to its growth.

    Sir David Tang started his business making traditional Chinese-style clothing, including velvet Tang jackets (唐装), for his upper-class friends in Hong Kong, which was still a British colony at the time. In its heyday, Shanghai Tang (上海滩) was regarded as the only Chinese luxury brand, and Tang was often associated with the social elites in the West, such as Princess Diana, Prince Andrew, and President Clinton.

    Tang opened a flagship store on New York’s Upper East Side in November 1997, but it turned out to be a mistake. Tang closed the store just two years after its grand opening due to the high rent and disappointing sales figures. In 1998, Richemont, a Swiss luxury group, started investing in Shanghai Tang, and completely took over the brand in 2008.

    Since then, Shanghai Tang has expanded to 23 stores globally, including overseas boutiques in London and Miami, but the brand continued to struggle. Even the original Shanghai Tang location in Hong Kong was closed in 2011 due to “high rents,” according to Bloomberg. In July 2017, Shanghai Tang was sold on to an Italian businessman, Alessandro Bastagli, who promised to redeem the brand with “new stores in Paris and Milan” and “expand online sales.”

    Shanghai Tang Qipao // Photo courtesy: South China Morning Post
    Shanghai Tang Qipao // Photo courtesy: South China Morning Post

    Now that it has been acquired by an Italian brand, will Shanghai Tang’s future be more promising? It depends on the brand's ability to overcome an identity crisis: where does it truly belong?

    Frankly, it is hard for a Chinese brand to build a global name in the fashion world. Chinese aesthetic values are so different from Western ones that it’s impossible to design an outfit that caters to both Chinese customers and Western customers alike. For example, a dragon symbolizes auspiciousness in Chinese culture, but it implies the opposite in Western culture. Chinese love to dress in red for weddings, but Westerners prefer white. All of these cultural differences will make it hard for Shanghai Tang designers to craft and tailor an outfit that both fits the fashion standards of a Chinese customer and a Western customer.

    Pricing is an issue, too. A Shanghai Tang qipao costs at least 600, while a cheaper alternative can easily be found on China’s leading e-commerce platform Taobao for as little as 30 RMB (5). At the mere mention of “luxury fashion brand,” Chinese customers are more likely to think of a Western, modern-style dress than an old-fashioned, traditional Chinese qipao.

    Likewise, many Western customers would only see themselves wearing Shanghai Tang’s signature outfits during special occasions, such as on Halloween or Chinese New Year, and even then they'd risk accusations of cultural appropriation. For Western celebrities, the brand’s clothes are more like collectibles than closet regulars.

    Another challenge for Shanghai Tang is whether it will be able to pick a city to transform its local presence into an international one. It is disheartening to find that the brand ultimately failed in Hong Kong and New York, both of which are cosmopolitan cities with large Chinese populations. Will Paris or Milan do any better?

    Whether Shanghai Tang’s rebranding efforts will succeed under Bastagli remains a mystery. But perhaps the answer will depend on whether Shanghai Tang can make up its mind on if it’s meant for customers in China or in Europe.

    Discover more
    Daily BriefAnalysis, news, and insights delivered to your inbox.