Taiwanese Fashion House Plans To Open 100 Mainland China Locations By 2020
The Business of Fashion speaks this week to Harry Wang, CEO of the Taiwanese fashion house Shiatzy Chen. Founded in 1978 by designer Wang Chen Tsai-Hsia and her husband, Shiatzy Chen currently operates stores in Hong Kong, mainland China and Paris, with annual revenue of around US$60 million. As a brand known for infusing traditional Chinese elements into its generally Western-style designs, Shiatzy Chen is now looking at more rapid expansion throughout Asia, where the brand senses greater opportunity and easier access in comparison to more mature markets like North America.
In his interview with the Business of Fashion, Shiatzy Chen CEO Wang shares some insight into his company’s vision for the next ten years, particularly in regards to its courting of China’s emerging consumer class. Wang also reserves some choice words for his competitors in the “luxury with Chinese characteristics” game. From the interview:
BoF: What’s the biggest challenge you face as a brand based in Asia?
HW: The biggest challenge is internationalising the brand and trying to expand in Europe and the States. Selling in Asia is easier for us of course, because it’s closer and the culture is similar. We talk to our design team and tell them that if we want to be internationalised we need to do something very simple, sexy, the look has to fit Western tastes. Western people still like Western design.
BoF: What about the Chinese customer? When they come to Shiatzy Chen, what are they looking for?
HW: In Taiwan and China, they buy mostly the embroidered pieces. They feel, in terms of the craftsmanship and design, that Shiatzy Chen is very good; probably one of the best, and definitely comparable to the Western brands. They feel proud to wear our designs because we produce a very limited number of the same item. For instance, the jacket you just saw, we produced roughly one hundred pieces across four sizes. We manufacture about 70,000 pieces a year in total across 100 styles.
So, you see, we produce a lot of different styles, but in a very limited quantity.
BoF: Do you think the major international luxury brands are making money in China?
HW: I think the big players like Louis Vuitton, Chanel, and Gucci are making very good money. Smaller brands like Celine and Chloe, maybe Jimmy Choo, still lose money in China.
The more mass market Chinese brands which are inspired by bigger brands also make lots of money. For example Ports 1961 makes money. They have many distribution channels; their price point is good; they are positioned well; they show at New York Fashion Week; and they spend a crazy amount of money on advertising. Chinese customers feel that Ports is a Western brand.
BoF: You’re clearly changing the way you merchandise your store here in Paris compared to the way you merchandise your store in Taiwan. Do you think that Western luxury brands are sufficiently adapting their store assortment to Asia?
HW: I don’t know about ‘successfully’, but look at Chanel. They did a Chinese collection which, at least in my opinion, probably doesn’t sell at all. It’s very different from the ‘Chinese’ that we are looking for in Asia. They make it in an old way. It’s old fashioned, it’s not contemporary.
The Chinese customer wants to buy Western things from Western brands. In the 1990s Versace was very popular in Taiwan. Everybody wanted to have one of those really flashy shirts. In China today, it’s very much like market in Taiwan in the 1990s. People want to wear something to show that they have money.
I think in the next 5 to 10 years this will change and they will start to mix and match the design from different brands. But now, you go to Plaza 66 and you see ladies wearing D&G with logos everywhere. You can tell they don’t know how to mix and match it.
BoF: What about Hermès’ Shang Xia brand, which is billed a the first Chinese luxury brand?
HW: We are in the same shopping mall as Shang Xia, so I check their store every time, and I don’t really know what they are trying to sell. The way they are packaging themselves is very mysterious. They have a little section where they have chopsticks, glassware, all these plates, some selection of Hermès ‘comfortable wear’. But they don’t have a special look, there is no identity as yet. To me, Shang Xia doesn’t represent China. People know them as a subsidiary of Hermès and that’s why the press visit.
Wang adds later that Shiatzy Chen is placing all of its eggs in the Asia basket, particularly in mainland China, with plans to open 100 stores there by 2020. That’s quite ambitious, considering the brand currently operates just 10 mainland China boutiques, with plans to open eight more by the end of the year. In all, Wang hopes to operate “100 stores in China, 50 in Taiwan, 25 in Japan, and…another 25 worldwide” by 2020. So can Harry Wang succeed in outpacing foreign-owned Chinese brands like Shanghai Tang and Shang Xia and position Shiatzy Chen as the pre-eminent Chinese-infused premium brand, not only in Asia but globally as well? It’s possible, but as Wang himself conceded, it will take years for China’s current preference for Western designs and Western brands to fade.
However, by kicking off an aggressive expansion now, and (presumably) losing some money in the mainland China market for the next several years, Wang is apparently quite confident that his brand will be well-placed to reap the rewards once that Western fashion bias does change. The problem here, though, is that dozens of other Chinese brands have the same idea.