Shanghai–Asia’s City of Style

By+special+correspondent+LIU+QIONG

AT Paris Fashion Week Fall/ Winter 2014-2015 in March， Chinese celebrities fitted out in gorgeous gowns featuring Eastern fashion styles attracted much kudos. As China advances further onto the world stage， Shanghai is leading the fashion charge. U.S.-based Global Language Monitor （GLM ） listed Shanghai over Tokyo as Asias most stylish city in 2013， ranking No. 10 worldwide in fashion.

Vast Fashion Consumption Potential

Walking through Shanghais famed shopping districts， such as West Nanjing Road， Middle Huaihai Road and Xujiahui， one finds Hermès， Cartier， Tiffany& Co.， et al. With vast arrays of luxury brands， those shopping centers resemble Avenue des Champs-Elysées and 5th Avenue.

According to Zhou Ting， head of the Fortune Character Institute， luxury brands are opening Shanghai stores one after another， due to the citys market potential for high-end products. Last year， the Beijing Trends Media Group released a report on Chinas urban fashion industry， noting that Shanghai topped Chinas cities in consumer capacity for fashion products. The report was based on a survey of consumption patterns of the “new rich” in 20 cities including Shanghai， Beijing， Nanjing， Chengdu， Tianjin， Chongqing， Guangzhou， and Shenzhen. In 2012， these cities annual per capita consumption of fashion products for this target group averaged nearly RMB 50，000， accounting for 57.3 percent of annual per capita income. Shanghai took the lead， at RMB 86，132. At the same time， the citys consumption of jewelry， watches， cosmetics and electronic products also headed each category.

Recent research by Contact Lab， an Italian marketing company， shows that Shanghais luxury consumers spend for more than their counterparts in New York. The company interviewed about 1，000 in each city. On their latest pur- chases， interviewees in Shanghai spent US $1，000 per capita， whereas the figure in New York was US $500. In addition， 91 percent of interviewees in Shanghai planned to purchase luxury goods in the next six months， as compared to only 77 percent of New Yorkers.

In fact， Shanghai has a long history as a stylish city. In the 1930s， it was known as the “Paris of the Orient.” During the 1950s and 1960s， Shanghai was the center of the countrys light industry. Bicycles， watches， shirts and cameras were its pride. But this glory faded away as time passed.

Although Shanghai is synonymous with fashion， insiders claim Asias newest most stylish city still lags far behind its counterparts New York and Paris， which boast a full fashion industry chain. Ge Wenyao， president of the Shanghai International Fashion Federation （SHIFF）， says it is a pity that over the last 30 years， the most popular fashion brands in Shanghai have always been foreign. “At present， the city has only a fashion consumption culture， but its fashion industry is less developed. Its European counterpart Paris， however， is a center for fashion creation and the benchmark for judging fashion，” Ge remarked.

Revitalize Productivity

“Shanghai needs to focus on intermediate and high-end brands to expand its fashion industry and resume its position as the style center of China，” Ge said. He also noticed that， in either Paris or Milan， the stylish city has a solid base in a chain of prominent enterprises and fashion brands. Starting in the new millennium， various facilities involved in the fashion industry have been built in Shanghai， covering a wide range of fields– from leisure， sports， culture and entertainment， to media and communications， conventions and exhibitions， etc. This has given Shanghai the edge to expand its fashion industry， despite being a latecomer.

Former president of Chinas domestic cosmetics manufacturer Shanghai Jahwa Ge Wenyao is an influential figure in Shanghai is fashion circle. He not only founded Chinese herbal skincare brand Herborist， but has also left his mark on the Avenue des Champs-Elysées through Sephora， a retail chain owned by cosmetic conglomerate LVMH （Louis Vuitton Moet Hennessy）.

Through years of experience in operating a cosmetic enterprise， Ge espouses these six features for the fashion industry： R&D， design， precision manufacturing， brand operation， promotion， as well as commodity logistics and terminal sales. In Ges eyes， Chinas fashion enterprises still lag far behind when it comes to these features.

Ge submitted to the Shanghai municipal government in 2007 a report on stimulating the fashion industry. He suggested that Shanghai has several advantages in fostering a fashion industry. On the one hand， the city has an excellent foundation of professionals， international communications and fashion sense. On the other hand， Shanghai possesses time-honored brands established in the 1920s and 1930s.

Though retired， Ge is still building up Chinas local fashion brands. “The government should， first of all， encourage old and new brands to develop together. Old brands need to be revitalized， while new ones require a favorable environment for development. Meanwhile， the government could attract fashion companies from other parts of the country to open branches and even set up their headquarters in Shanghai. In this way， domestic enterprises can access the global stage from Shanghai， while local businesses become more diversified，” Ge said.

According to Gui Chenggang， president of Shanghai Warrior Shoes Co.， Ltd.， brands with a long history must do a rethink to catch up with this new era. One example is Warrior Shoes （known in Chinese as Huili）， established in 1927， which， unable to compete in flush markets， filed for bankruptcy in the 1990s. But todays youth now view these shoes as an embodiment of retro fashion and vintage chic. This trend was triggered in 2008 when a Hollywood star on a movie set wore a pair of sneakers that looked exactly like the classic Warrior style. The company seized this chance to make a return to the market. Since Warrior was among the top time-honored brands during the 2008 Beijing Olympic Games and 2010 Shanghai Expo， many tourists snapped them up as souvenirs. Moreover， Warrior has invited university students to create designs for their shoes， sparking youth interest in being sporty in a trendy way. On top of that， the company makes distinctions between its production and sales. It has OEM （original equipment manufacturer） factories in Fujian and Guangdong provinces， meaning that core techniques， branding and marketing all remain in company hands. Warrior currently has nearly 1，000 franchised stores in China. The figure is expected to surpass 2，000 in three to five years.

Business Ecosystem for the Fashion Industry

At a press conference during London Fashion Week Autumn/Winter 2014， the British Fashion Council claimed that the fashion industrys contribution in the UK stood at ？26 billion， up from ？21 billion in 2009. This indicates the U.K. fashion industrys substantial 22 percent growth over the past five years.

This rapid growth may be attributed to local leading brands. For instance， with Burberry repositioning itself as a luxury brand focusing more on young adults， its market value has surged from？2.1 billion to ？7.03 billion. In the last six years alone， shares in Burberry have risen 461 percent.

In France， fashion is a major strategic industry which generates an annual production value of €35 billion and 150，000 job opportunities. Markets for perfume and cosmetics， haute couture and highend jewelry remain firm even during an economic downturn. The business ecosystem of French fashion circles deserves much of the credit for facilitating the fashion industry. Ge Wenyao points out that Chinas fashion industry is in need of more leading local brands and a compact cluster in this field.

As chairman of the Shanghai International Fashion Federation Ge Wenyao is leading it to become more inclusive. Previous members of SHIFF were mainly involved in the clothing industry. But in the future， it plans to attract enterprises from three sectors： fashion manufacturers such as Shanghai Jahwa， Shangtex， and Erdos Group； fashion services including high-end restaurants， hotels and clubs； and companies providing services to members from the first two sectors， such as head-hunting companies， modeling agencies， private equity companies， and consulting firms.

In Ges opinion， local fashion enterprises must have a global perspective on their future development. One possibility is to set up funds via private equity companies， and then purchase domestic and overseas brands of fashion consumer goods. “Local fashion companies could also acquire international fashion brands to gain experience in business operations under global conditions，” Ge said.

Ge Wenyao is also considering setting up a committee of experts to provide SHIFF members with various services， from consultation to intermediaries. Meanwhile， SHIFF will build a number of platforms for commercial channels， PR， exhibitions and fashion shows， and financing. In addition， it will launch events and publish reports and indexes on the fashion industry to improve general conditions for the industrys development.