GCIN 2006

Group Written Report

Group Members:
1) Chan Chung Ying Angel
2) Wu Shuting, Sukki

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3) Ng Ka Wai, Kery
4) Cheung Hin Ting Heidi
5) Yiu Wai Yue Tiffany
6) Lam Sin Ye (Bernice)
7) Lee cheuk Leung John
8) Tse Yiu Wai (Winnie)

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Question 1
Over the years, as Shanghai Tang goes more global than ever, it has become more
debatable if Shanghai Tang is still an intermediate luxury or has attained itself to be
true luxury. We will hence use the Semiotic Square of Consumption Values and
Semiotic Square of Veracity to determine the present positioning of Shanghai Tang
today.
Under the Semiotic Square of Consumption Value, utilitarian value and
non-existential value are placed on the left while existential value and non-utilitarian
value are placed on the right. If a product falls more on the left than right, it is
classified as intermediate luxury rather than true luxury. Firstly, utilitarian value
corresponds to the values of use and its practicality. To increase sale, Joanne Ooi
redeveloped Shanghai Tang into a fashionable and lifestyle brand. Encompassing not
only clothing with a more fashion conscious, Shanghai Tang has brought in its own
brand of home accessories and curiosities. Although its products still reflect diverse
Chinese culture elements, it is done at the significant of making its products more
wearable and not enhancing its Chineseness. The recreation of Shanghai Tang thus
expresses the subjectivity of modern life and interrogates consumer lifestyles. Clearly,
Shanghai Tang fulfils its role for being practical and functional to todays society.
As opposed to utilitarian values are existential values which correspond to
self-fulfillment and identification. Shanghai Tang helps consumers to construct selfidentity and social dependency. Especially in an international conference, the wearing
of Shanghai Tangs clothes with distinctive Chinese symbolic features allows one to
express her/his Chinese individuality. In addition, its products bring cultural
immersion and promote a sense of rootedness among the Chinese. As such, Shanghai
Tangs products are accomplishment of personal identification to ones culture- which
falls under the category of existential values.
Thirdly, products that fall under non-utilitarian values will provide pleasure and
emotional feeling. Truly, the use of carefully picked and natural silk gives one a sense
of feminine and sensual feeling. However, most of the emotional feeling is induced
from the store environment than the product itself. Shanghai Tangs retail
environments employ diverse Chinese symbols to influence consumer shopping
experience. The oriental design in the store acts as a social cue, which affect arousal
and evoke emotional effects. The feeling of pleasure is induced from the stores
environment and not the product itself, and hence Shanghai Tang does not fall under
non-utilitarian values.

Lastly, non-existential values mean the logic of calculation and interest. Innovation
cost and quality that fit with price are usually the most important aspects. Due to the
increasing cost of rental fees and low sales, several stores such as the flagship store in
Hong Kongs Pedder Street and New Yorks Madison Avenue have to relocate
themselves in a cheaper location. Even in the stores location, Shanghai Tang does not
have enough money to keep up with the competitiveness and hence it has to place
innovative economy as priority. Hence, Shanghai Tang clearly belongs to
non-existential values.
Apart from the Semiotic Square of Consumption Values, the Semiotic Square of
Veracity can be used to define whether Shanghai Tang is an intermediate or true
luxury.
The Semiotic Square of Veracity is a framework describing the difference in authentic,
ostentatious and intermediate luxury- and points out the difference between them. The
framework suggests that the intermediate luxury is a lie by pretending to be true
luxury when it is not. In particular, owners are not able to afford true luxury so they
purchase intermediate luxury as an alternative. This interpretation of intermediate
luxury, suits the positioning of Shanghai Tang. Truly, owning to its strong brand
establishment over the years, Shanghai Tangs products are definitely at the high end
with a tint of luxurious feel. However, it is more likely for people to use Shanghai
Tang product as a kind of ready-to-bring product for casual purpose than a
mysterious product for social status purpose. This is because Shanghai Tangs style
still reminds people about the styles found in Cultural Revolution- which post as one
of the greatest difficulties for Shanghai Tang to be an aspiring brand among Chinese.
Using Semiotic Square of Consumption Value, Shanghai Tang falls more on the left
hand side of the framework than right hand side. On the other hand, Semiotic Square
of Veracity states that the using of Shanghai Tang product as an alternative for true
luxury is lying. Indeed, both frameworks show that Shanghai Tang is classified as
intermediate luxury.
Question 2
Lots of brands incorporate national culture ingredients into the products. Like Armani
that uses Italian elements into its products, Shanghai Tang uses distinctive Chinese
cultural elements in designing its products.
The first national cultural ingredient is Shanghais heritage - which affects the creation
of brand image. Having the name as Paris of the East, the use of Shanghai in

Shanghai Tang gives customers the perception that China has a romantic culture. The
brand name Shanghai Tang not only promote the image of a positive, wealthy and
romantic China, but also help to eliminate negative impression of China due to past
history like Tiananmen Square incident or Cultural Revolution.
The second national cultural ingredients will be establishing self image through
bespoke service. More often than not, service will affect the brands image. In couple
with friendly service, Shanghai Tang makes use of bespoke service to build up its
image. It seems that customers love to make product that give the feeling of strictly
her/his product. Through the bespoke service, customers will be able to establish
closer relationship with the brand. At the same time, staffs of Shanghai Tang will be
able to enhance their friendly services through one to one interaction.
Another national cultural ingredient being used is the Chinese style art forms, which
affects the pattern of products, interior design, advertising graphics and logo. The
Chinese brand name - which the characters are arranged from right to left like
those in traditional China, is one of the styles that reflect Chinese classy style. It is easy
to identify Shanghai Tang as a Chinese brand given the use of Chinese characters as a
brand logo. In fact, the brand has collaborated with HK artist Chow Chun Fai to
interpret the Chinese identity and well as Rich culture concepts of the brands
beliefs and values so as to enhance its positioning in the world today.
The last cultural dimensions will be the use of Chinese elements and Chinese symbols
in designing its product. The use of Chinese fashion cultural ingredient has affected the
brands positioning on the attribute of products. Design aspects including the
well-known symbolic Cheongsam, Qipao collars and Chinese knots, as well as cuttings
evolved from Chinas Qing Dynasty. Traditional decorative patterns are also used to
demonstrate a tribute to the representative fashion, luxurious and decorative elements
of China in mid-20th century. Shanghai Tang makes use of Chinese symbols to
enhance its Chineseness in the brand. Over the centuries, China has been using
Chinese symbol in design and architecture. For example, dragon is the symbol that
implies strong power and wealth; on the national flag, the red background symbolizes
the determination of revolution. Symbolism thus becomes one of the national cultural
characteristics of China. Building an image of global luxury brand, Shanghai Tang
makes use of Chinese symbols as part of the design to position its brand. For example,
jade which symbolizes wealth and good luck in the traditional China is used in the belt
of a dress. It makes the dress more elegant and gives a superiority image to the brand.
To some extent, legends of China are also use in designing the products. For example,

the legend of The Weaving Maiden and the Cowherd is used in designing some of the
dresses so as to give a strong Chinese identity and remind people about the different
traditional festival in China. In essence, Shanghai Tang aims to reintroduce traditional
Chinese aesthetics to the customers.
Question 3
Shanghai Tang began a rapid expansion from 1997, with plans to open stores in New
York, London and other Asian cities. However, the New York flagship stores closed
only 19 months after it had opened. The sales of stores outside China did not meet
expectation. Shanghai Tang did not have a good performance in building a global
luxury brands. There are several reasons accounting for the unsatisfactory results.
The first reason will be overestimating foreign consumers interest. Consumers in
different countries have different taste and fashion sense to the products. Some of the
products of Shanghai Tang contained too many Chinese elements, which
overestimated foreign consumers interest in upscale Chinoiserie. Foreign consumers
didnt show great interest on Shanghai Tangs products and this leads to unsatisfactory
sales in some areas.
The second reason will be confusing brand style. Shanghai Tang tried to show both
pre-revolutionary and Cultural Revolution styles in one store. Furthermore, the
tongue-in-cheek and post-modern take on Chinas heritage was lost on the wealthy
foreign buyers.
The third reason will be difficulties on price justifying. It was difficult to justify the
prices for high-end Chinese trinkets in foreign Shanghai Tang stores. The reason is
that the similar alternatives in Chinatown are cheaper. Foreign consumers did not
have much knowledge on justifying the differences and hence feel that Shanghai
Tangs products are too expensive.
The last reason will be short history and lack of brand heritage. Established in 1994,
Shanghai Tang is a young brand with only twenty years history. The brand awareness
is comparatively low in the international market. Compared to other luxury brand
with decades of history, Shanghai Tangs brand heritage is too short.
Regarding the above problems, Shanghai Tang should have been differently in various
aspects as the suggestions below.

The first suggestion is establishing itself as an international brand. With the past
history of unsatisfactory sales in foreign markets, we suggest Shanghai Tang to
establish as an international brand targeting on Chinas luxury goods market. Most
Chinese premium customers value a brand in terms of international profile and
recognition. By benchmarking with international brands and frequent collaboration
with international designers and artists, it is perceived as international brand inspired
by Chinese culture, rather than retaining it at a regional level.
The second suggestion will be integration of Chinese style. Using Chinese history as
the element of style is confusing to international customers with no Chinese
background and is lack of modern twist to local Chinese customers. Therefore, by
integrating the brand with contemporary Chinese culture, such as in the form of prints
and textures, it helps to evaluate its status as an international luxury brand with
Chinese representation.
The third suggestion will be price premium. Rather than lowering its price, the brand
should retain its current price and to further emphasize it premium quality and
craftsmanship that are hugely different from similar alternatives. In order to enhance
its premium elements, premium line with tailor-made designs and personal styling
services could be added on to further justify our premium craftsmanship with
professional services.
The last suggestion will be building brand heritage. Although Shanghai Tang is a
relatively young brand with only twenty years history, it could be an advantage rather
than a disadvantage. By drawing a parallel between Shanghai Tang and Chinas newly
developed and booming economy, the brand will be perceived as China contemporary
luxury brand that is undergoing rapid expansion in the international market with both
regional and international recognition.
Question 4
Shanghai Tang, a Chinese brand which incorporates oriental elements into its product,
has been going more global than ever. More often than not, one may tend to assume
that Shanghai Tang is a luxury brand given that it is empowered with respectable
status, influential power and exquisite quality. However, Shanghai Tang has to
recreate its products to be more fashionable and several of its flagship stores are
forced to relocate due to raising cost. In addition, Shanghai Tangs clothes cost less
than those of foreign companies and the brand itself is never an aspiring brand among
the Chinese. Using the frameworks of Semiotic Square of Consumption Values,

Shanghai Tang falls more on the aspects of practicality and critical economic than
utopian and aesthetics. Thus, Shanghai Tang is actually an intermediate luxury.
Owning to its positioning, Shanghai Tang is established in Hong Kong on 1994 by
David Tang. He wanted Shanghai Tang to be a quintessentially Chinese brand within
the main stream. After 2001, the new CEO of Shanghai Tang, Le Masne, came up
with a clear positioning which is a modern, glamorous and Chinese lifestyle luxury
brand. Shanghai Tang put efforts on product, place, price and promotion to attain its
brand positioning.
Firstly, Shanghai Tangs products use fashion of the old China with fabrics and
natural tissues in order to create product with Chinese style. Moreover, the colors of
the products are sensual and dynamic. Shanghai Tang tends to collaborate with
several top designers to add value on luxury side.
Secondly, Shanghai Tang has two channels to sell its products, which are free
standing stores and shops. To target the China market, there are 30 stores in China out
of the total 45 stores. Prime retail locations remain central to its channel strategy of
maintaining access to luxury cusumers. In recent years, Shanghai Tang opened shops
in world-renown hotels (e.g Peninsula and Four Seasons) and international airport
(Hong Kong and Beijing)
Lastly, Shanghai uses promotion to establish its positioning. Like most of the luxury
brands, Shanghai Tang uses different channels such as events and pubic relationship
for promotion purpose so as to establish its positioning. The brand sponsor different
events in the regional market and use celebrities as endorsement. The brand plays
with its Chinese identity by Chinese campaign themes. For example, The ritual of
the Phoenix is the theme of spring/summer 2012.

We have chosen two luxury brand for comparison with Shanghai Tang. They are
Vivienne Tam and Louis Vuitton. Vivienne Tam is a renowned read-to-wear
intermediate luxury which add Chinese elements to their clothing. We use Vivienne
Tam as a comparison with Shanghai Tang because both of them sell ready-to-wear
with Chinese elements. We could thus compare and contrast their characteristics as
well as their marketing strategy and positioning. Louis Vuitton is an internationally
famous luxury brand and of course it is a true luxury. LV is in fact a conglomerate
which sell various luxury products like ready-to-wear, wine and handbags. Through

having a look on LV which is a very successful model for luxury brand, we can get
some insight on the inadequacy of Shanghai Tang to become a global luxury brand.
Referring to the perceptual map (Exhibit XXX), which shows the comparison
between different international luxury brands regarding their retail places in the
Chinese market and their online presence in the Chinese social media platform, it can
be seen that Shanghai Tang has a much lower Chinese retail footprint as compared to
most of the other brands, such as Ralph Lauren and Hermes, given that it has the
greatest distance from Louis Vuitton. Moreover, Shanghai Tang has a relative
mid-level of online presence, but insufficient effort could be shown comparing to
other luxury brands like Giorgio Armani.

In comparison with the brand VIVIENNE TAM and the China line under Louis
Vuitton, ShangHai Tang displaces contemporary style with Chinese elements, while
VIVIENNE TAM put forward modern designs that are inspired by the Chinese culture,
and Louis Vuitton retains its signature by integrating its monogram patterns into the

fancy designs. In terms of international profile, ShangHai Tang comparatively has low
international profile due to low international marketing effort, VIVIENNE TAM and
Louis Vuitton China line both have high international profile among the global high
end fashion stage, with Louis Vuitton China line being popular among Chinese
customers. Regrading online presence, the online store of ShangHai Tang acts as a
functional selling platform with insignificant brand information, whereas VIVIENNE
TAM has a better established website with detailed information about the brand. Louis
Vuitton CHina line contrastingly has a comprehensive tailor-made website and online
store strategically targeting at Chinese affluent customers.

We conducted the SWOT analysis (Appendix 1) to find out the direction of

improving the positioning of Shanghai Tang. For strengths, Shanghai Tang has a
distinct image of being the first Chinese luxury brand in the fashion field. It is also
known for its craftsmanship. There is constant innovation of new designs by in-store
designers team as well. In terms of weaknesses, Shanghai Tang has a low
international profile, insufficient online presence and insufficient education of brand
knowledge. On the other hand, for the opportunity in the luxury designers good
market, there is an increasing demand of luxury goods, thus a huge potential
customer base. There is a rapid growth of internet business in particular. There is also
an increasing popularity of Chinese culture among the globe. However, the major
threats in the market are the intense international competition in Hong Kong and
China. Furthermore, most Chinese demands for luxury goods take place outside
China. Whats more, increasing number of global brands are taking inspirations from
China e.g. Shang Xia that makes Shanghai Tang not that unique after all.

Appendix 1

Strengths
Distinct image of first Chinese
luxury brand in the fashion field
Craftsmanship
High/consistent quality products
Constant innovation of new
designs by in-store designers
team

Weaknesses
Low international profile
Insufficient online presence
Insufficient education of brand
knowledge
unclear target market and
direction
Weak brand heritage
Lack of brand resonance
debatable effect of made in
China

Opportunity
Increased demand of luxury
goods
Increasing growth of internet
business
Huge potential customer base
Increasing popularity of Chinese
culture among the globe
With more fusion and

Threats
International competition in
Hong Kong and China
Liability and strength of brand
under international expansion
Chinese demand for luxury
goods outside China
Increasing number of global
brand that takes inspiration

contemporary designs
Broad designing ideas inspired
by Chinese history and culture

from China e.g. Shang Xia

Enhancing International Profile

We suggest the international profile to be enhanced through collaboration, with the
objectives to introduce the modern chinese element, as well as bringing the brand to
the world stage. For instance, we recommend a collaboration of silk scarf product
with Internationally well-known Chinese Artist Zhang Da Qian, whose background
and painting techniques combine both Chinese and Western culture, which fits with
the expression of a Shanghai Tangspirit.
Sponsorship
the possible achievements through sponsorship include an effectively use of the
broadcasting medium, with the goal of showing the modern Chinese features of

products. For instance, the brand may choose to sponsor Hollywood Stars and MCs of
the Oscar Academy Award, an international event, with dresses with Chinese patterns,
or jade clutch with Chinese knots.
the presentation of brand heritage
the presentation of brand heritage is needed to improve. The Digital Marketing Effort
should be put. The directest method is to promote the heritage through the
advertisements on social media and search engine. Social media means the website
and communication platform like Weibo. Also, according to the graph of research
about Chinas search engine market share in 2012, more than ninety percentage of the
Chinese internet users use Baidu and Google China to be their usual search engine.
Showing the advertisements on those media, it is believed that the brand heritage
could be premoted to the public. The enhancement of user experience and the increase
of media exposure are also the objectivities. The tactic that are be considered is to
make a specific webpage for heritage. Shanghai Tang should upload one video per
month. The content should be the brand history, social elements and the myths. The
spirit and story is needed to add to the brand and present to the potential customer.

Question 5
Shanghai Tang has a range of product lines, including apparel, accessories, home and
fragrance. It mainly focuses on men and womens apparel in which the designs are
modern and chic with Chinese elements. The brand vision is to create the first global
Chinese lifestyle brand and it aims to position itself as a true luxury brand. However,
consumers currently position it as an intermediate luxury brand based on the analysis
in question 1. As discussed in the previous sections, low international profile with
insufficient education of brand knowledge would be the major problem at present.
Therefore, Shanghai Tang should concentrate on promoting its existing product lines
in the short run through digital platforms and traditional marketing tools, including
public relation activities and sponsorship events relevant to different targeted regional
market. It is expected that these marketing efforts could help Shanghai Tang to
generate a higher exposure and penetration in the international market.

In order to increase market coverage and further promote the brand awareness in
different targeted markets, diversification into other accessory segments would be a
good strategy in the long run. We propose that Shanghai Tang can extend into new
segments by opening its own restaurant, florist shop as well as the establishment of
the exclusive membership club. One of the primary objectives of this brand extension
is to reinforce the brand meaning and positioning of Shanghai Tang as a Chinese
lifestyle brand that is relevant to the high-end fashion market by targeting the wealthy
Chinese and non-Chinese throughout the extended product categories. Also, it is
anticipated that the diversification can help Shanghai Tang to generate more positive
feedback that benefits its original product lines.
Firstly, we recommend Shanghai Tang to open its own restaurants- ST by Shanghai
Tang, which serves classic-contemporary Chinese and Western fusion food. The
concept of fusion restaurants emphasizes on the relevancy to the brand core value of
integrating traditional Chinese culture into contemporary settings. To align with the
brand image of Shanghai Tang as a premium lifestyle brand, the restaurant will be
targeting at customers who are willing to pay a premium for high quality food and
environment. The restaurants will be opened near to the location of Shanghai Tangs
retail stores, including hotels such as Shangri-La Hotel in Shanghai, department stores
or shopping malls. In addition, the restaurants will adopt modern and stylish interior
designs, incorporating some traditional Chinese elements and decoration of Shanghai
Tangs tableware. As a high-class restaurant serving Michelin standard food, the price
of the dishes would be relatively high. In terms of products, fusion cuisines with
innovative combination, for example, foie gras fried rice and scrimp dumplings (Ha
Gau) with black truffle will be offered. The ideas of incorporating Western raw
ingredients into Chinese cuisine or vice versa correspond to the overall image of
Shanghai Tang. For promotion, the fusion food restaurants would conduct different
public relation activities, including in-store promotion such as food-tasting events and
sponsoring some lifestyle events like exhibitions. It would also invite editors from
different food and lifestyle blog, for instance, lifestyle Asia, magazine and newspaper
to try their cuisines and write editorials for the restaurant. These efforts can raise the
public awareness of the new brand extension of Shanghai Tang.
Secondly, a flower shop- The Florist by Shanghai Tang which sells mainly Chinese
breed flowers is suggested to be launched at selected markets. This concept is to
highlight the core value of Shanghai Tang of bringing an authentic Chinese lifestyle to
its customers while bringing out the liveliness of the brand. In other words, it could
help non-Chinese customers and Chinese customers overseas add the Chinese

liveliness to their homes no matter where they are. This As the cost of importing fresh
flowers every day would be relatively high, thus, we would suggest only opening up
stores in well-established markets with free-standing stores i.e. Shanghai, New York,
Paris, London, Hong Kong, Tokyo, Singapore, Zurich. The Floral Shop could be
incorporated into the freestanding stores using modern folding-screens to separate the
areas so as to save rent. Furthermore, orders could also be placed online on its
existing online store. In terms of product, instead of selling flower bundles, special
floral arrangements for home furnishing is recommended to maintain a competitive
edge and stand-out from the intense competition in the floral market. Instead of
popular flowers like Garden Rose and Peony, we would suggest selling arrangements
with breeds like Orchid, lotus, Narcissus and more. Modern pot designs can be
incorporated into traditional materials e.g. china, clay etc. to build a more premium
and unique signature identity for the floral shop .To suite the homes of Shanghai and
Hong Kong, the floral arrangements would be downsized in these two markets.
Besides selling flowers during daytime, workshops for Chinese floral arrangements
could be held there at night. This could reduce the waste of fresh flowers and bring
more profit to the company at the same time. . In order to suite the luxurious brand
image, the flowers will be priced quite high, similar to local famous florists especially
in western markets as there are few premium floral shops selling Chinese breed
flowers. For promotion, fresh flower scent in shops will serve as a natural, automatic
in-store promotion. There would be traditional print promotions on newspapers, and
luxurious lifestyle and fashion magazines i.e. Tatler magazine. Also, there would be
special discounts for floral arrangement purchases for 2 months after its launch. To
increase the awareness of such a brand extension, there would be pop-up stores The
Florist by Shanghai Tang around the city. As for online promotion, there would also
be promotions on their website, subscription e-mail, Facebook and more.
Last but not least, we would suggest Shanghai Tang to set up its own luxurious clubThe Shanghai Tang Club which targets at luxurious business travellers. This
diversification into a luxury service lines up with the brand philosophy by
emphasizing the luxurious Chinese lifestyle everywhere which is a reinforcement of
the second suggestion. By joining the club, members will enjoy the exclusive rights of
dining, sleeping, using the Chinese massage therapy services, and personal shopping
services at The Shanghai Tang Club lounge and being invited to exclusive fashion and
luxury lifestyle related events. For price, members will be asked to pay a monthly
membership amount. The memberships will be available worldwide, but the lounge
will only be set up at the Airports of the key targeted markets i.e. Shanghai, New York,
Paris, London, Hong Kong, Tokyo, Singapore, and Zurich. Integrating the first

recommendation, food and tea served at ST by Shanghai Tang will be served at the
lounge. In order to maintain the level of prestigious feeling associated with the club
and the brand, it is suggested that applications for membership are by-invitations only
by local public relations department.
With the above three diversification directions, Shanghai Tang could be perceived as a
relevant Chinese lifestyle brand, not simply a clothing label. At the same time, its profit
margin and market share will be increased worldwide, achieving a well-established
international profile.