Shanghai-based marketing expert and founder of the consulting firm Schlick & Co., Tim Schlick has an idea of what makes luxury companies successful. “Development in China has been so fast, and everything is so new. A lot of what distinguishes a luxury brand is its history. Ninety percent of luxury brands took years to get this distinction,” he said.
While many Chinese brands are quick to boast thousands of years of history and culture, the thirty years’ gap between communist takeover and the nation’s reform have interrupted many brands’ histories, and consequently, their development as national forces.
The brands that survived that bleak period, like liquor company Moutai, renowned for their baijiu, have turned into domestic must-haves. These brands flourished in the early days of the gift-giving culture inspired by the Communist Party. “Cigarettes and drinking and baijiu are synonymous with the luxury culture here. It’s not just about giving someone liquor. It’s about the social value you give someone,” said Jeffrey Tan, Starcom MediaVest Group’s China research director.
Other Chinese companies, producing cosmetics, luxury clothing, and jewelry (considered symbols of unwelcome extravagance) are having a harder time finding their footing in the Chinese market.
Shanghai Vive, a company that opened in 1903 but that shuttered its windows during the communist rule, re-opened two years ago offering skin care and clothing lines. Since its relaunch into first-tier luxury boutiques in Beijing and Shanghai, the brand is not performing as well as many had hoped. Jeffrey Tan said the company has struggled to convince retailers of its sales potential. “They had to overcome a huge obstacle in terms of distribution and visibility,” he added, “That has changed quite a bit recently but they are still perceived as a lowergrade brand.”
Other brands are attempting to establish their history by looking to the early 1900s for their stylistic choices, and looking to Chinese characteristics for inspiration, particularly Shang Xia and Shanghai Tang.
While Chinese companies are improving their exposure, most fall short of the prestige the nation has for brands like Chanel and Louis Vuitton. “The heritage is very important but it can only be regarded as a foundation,” said Gu Xiang, Shanghai Tang’s director of international business development and retail. “We need to inject innovation and create new aesthetics … otherwise we will just be producing a modern antique or a souvenir.”
Approximately 40 percent of wealthy Chinese surveyed by Hurun and Industrial Bank rated “long history” as an important characteristic for top-end brands.
photo credit: shanghai vive, shanghai tang