Shanghai Tang Expands in Mainland China

on April 7 2011 | in Fashion Retail | by | with No Comments

To woo wealthy Chinese consumers, Shanghai Tang plans to take advantage of its position as “the first Chinese luxury brand in the world.”

Expansion in mainland China is central to the company’s growth strategy. The Chinese luxury clothing brand expects to open 10 more stores in China on top of the 15 stores it already has.

Chinese luxury shoppers are inclined to buy western luxury goods. This has made it difficult for home-grown brands like Shanghai Tang to capture their interest.

The company is betting that tides are turning and more consumers are taking pride in home-grown brands and styles infuse with Chinese culture and symbols.

“Asia is our priority, we have the first Chinese luxury brand in the world, and our priority is China, where we have 15-16 boutiques, we’re going to open 10 new boutiques in Beijing, Shanghai and second tier cities in the next year or so. We are also going to focus on Singapore, which is the capital of Southeast Asia, we will have six boutiques this year,” said Raphael le Masne de Chermont, Executive Chairman of Shanghai Tang.

With a larger and wealthier middle class in China, and more fashion conscious than ever, Shanghai Tang expects double digit growth in revenues for the year.

The brand is focusing more on accessories especially jewelry, which has become its fastest growing segment, but handbags and scarves are also key growth drivers.

While revenues are expected to be up strongly, the company anticipates challenges from higher material costs this year. For example, the price of silk has gone up 60 percent this year while cotton prices are up by 45 percent.

Furthermore, there is “the slight appreciation of the renminbi against the European and US currency. So as a whole, the cost of production is becoming much higher so we need to absorb that. We absorb that through two ways, first through our margin but we are also balancing it with volume and at the same time the brand is upgrading so as we are going alone, doing better products we can afford to increase our price slightly,” according to Mr. le Masne de Chermont.




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