Shanghai Tang’s new cachet

IN the hands of a Frenchman, Shanghai Tang has been transformed from a Chinese cliche to a fashion destination.

Raphael le Manse de Chermont, executive chairman of Shanghai Tang

AFTER joining Shanghai Tang, Raphael le Manse de Chermont went into the men’s section of the company’s Pedder Street store, and couldn’t find anything to wear “because it was so costumey”, recalls the French-born executive chairman of Shanghai Tang since 2001. “I couldn’t go around in a velvet jacket or a silk shirt — it just wouldn’t work.”

Shanghai Tang, the Hong Kong-based concept store founded by Sir David Tang in 1994, has been owned by the Swiss luxury goods conglomerate Richemont since 1998. De Chermont has held executive positions with other Richemont stablemates such as Cartier, Piaget and Baume & Mercier and since taking the reins at Shanghai Tang he has set about transforming the business into China’s first luxury lifestyle brand, earning the moniker “le mandarin de luxe” in the French press.

When David Tang established the company, it was all about a modern twist on the Chinese fashion of the 1920s and 1930s. Shanghai Tang was known for its bright colours, mandarin collars, Chinese embroidery and cute homewares such as ashtrays and teacups bearing colourful dragons. The original store, which occupied the ground floor and basement of the heritage-listed Pedder Building, was hugely popular with the millions of visitors to Hong Kong around the time of its handover to China in 1997, who were eager to buy a clothing label that at least seemed authentic to its country of origin. Today, however, when you enter one of Shanghai Tang’s stores, it looks more like an international clothing brand with just a touch of an Asian influence.

To put it bluntly, Shanghai Tang was a souvenir brand for Westerners that the Chinese thought was a joke. But since the mainland Chinese have become the dominant force in luxury shopping, the great trick that de Chermont has conjured is to remake the business in a way that suits both Western and Chinese customers.

“We were too dependent on Western people visiting Hong Kong and we needed to transform the brand into something mainland Chinese wanted to buy,” says de Chermont. Today mainland Chinese customers make up 25 per cent of all customers and are the brand’s biggest single demographic (30 of its 45 stores are in Greater China). Asia as a whole represents 51 per cent of the brand’s customer base. Some of the original Chinese-style products still exist but occupy only a small space in the store. “We lost a few guys along the way when we changed the product, but we have gained many more and now I’m wearing Shanghai Tang every day,” says de Chermont proudly.

“When David opened in 1994 in the Pedder Building, it was a totally different demographic,” says de Chermont. “China was not open to business so he was going after Western people, not Asian people. He put together a concept which was very innovative at the time and was based on an aspirational vision of China by Western people. Since then the world has changed and the Chinese have become the first customers of luxury. What you saw at Pedder was not a brand — it was a concept store. Now we have enlarged our offer and we have toned down the Chinese cliche and celebrated the culture in a more contemporary way. Now we want to filter the Chinese culture through our design DNA and translate it into something which is relevant to the international market.” The brand, says de Chermont, is positioned as “affordable luxury” and sits alongside brands such as Kate Spade and Coach.

“We had to stop going after Westerners exclusively,” says de Chermont. “Many of the locals were offended because they thought Shanghai Tang was just an expensive Chinese emporium for Westerners. We had to work hard to rebalance the demographic, because at the end of the day this is a brand that belongs to the East. Westerners were the early adopters, but I always faced resistance from Hong Kong people and mainland Chinese who didn’t understand it.”

The company closed its Pedder Street store in 2011 (it’s now home to Abercrombie & Fitch) and opened a four-level store not far away on Duddell Street in April 2012. The new store, known as Shanghai Tang Mansion, has three levels of retail space and a bar and restaurant with an outdoor terrace on the top floor. “Pedder was like a museum and the decor was almost more important than the products,” says de Chermont.

The new store has a glass facade that allows in plenty of light — Pedder was all dark wood and mood lighting — and incorporates Chinese motifs, such as the fragrance bar shaped like a Chinese garden window and the chandelier that resembles the Chinese character for longevity. Last August, the company opened its biggest store to date in Shanghai in a former art deco theatre and is looking for a similarly large space in Beijing. “Once we have completed our hubs in Asia I want to go to Paris and I want to rebuild our London store. After that I want to start wholesaling in Europe,” says de Chermont. For the rest of the world, for the time being at least, the strategy is to service the market with ecommerce. The three biggest markets for online sales for Shanghai Tang are Britain, the US and Australia.

To steer the brand away from its Chinese costume origins, de Chermont hired the Hong Kong-born, Central Saint Martins-trained fashion designer Joseph Li in 2007 and appointed an Italian, Raffaele Borriello, who formerly worked for Tom Ford as creative director. “Everything now is toned down,” says de Chermont of the Chinese element in Shanghai Tang’s designs. “Our fits are more contemporary, suits have been slimmed down and we are really a fashion business now. Eighty-five per cent of our revenue comes from sales of apparel and accessories. People think we do a lot of business with home, but it’s only 15 per cent of our total business.”

In the early days of Shanghai Tang, its products were stamped “Made by Chinese”. Today it’s “Made in China” that is sewn into the labels of its garments. According to the company, almost all of its products are made in China. “When the brand started saying ‘made by Chinese’ it was innovative because it was at a time when people were hiding it — it was almost a shame to produce in China but today it is not that. Because we were the first to pioneer Chinese luxury, we had to convince the Chinese that we are truly international but also relevant to them. When we first entered the market, that was definitely challenging, but the younger generation has no problem with it. The Chinese will be branding China more and in more categories. They are not going to be the factory of the world for much longer.”

A new deal with the French company Inter Parfums will see Shanghai Tang launch its first fragrance this year.

Despite the role de Chermont has played in the brand’s turnaround, Shanghai Tang will be forever associated with David Tang. “He’s a friend of the firm,” says de Chermont. “I always tells him ‘people will remember you, not me’. In the Wikipedia entry for Shanghai Tang, it’s all about David Tang even though I have been running the business for 12 years. He gave us one shop and now we have 45, but it doesn’t matter — he’s the founder and he’s a genius.”