Richemont held Shanghai Tang for 19 years — a Chinese luxury brand no Chinese buyer wanted

David Tang founded Shanghai Tang in Hong Kong in 1994 as a high-end tailor, then expanded it into 'China's first contemporary luxury brand' — cheongsam dresses, mandarin-collar shirts, and homeware sold in glossy boutiques. Richemont, the Swiss group behind Cartier and Montblanc, bought a majority stake in 1998, a year after Hong Kong's handover to China, and took full ownership around 2008. The bet was obvious: a billion Chinese consumers were about to get rich, and here was a luxury house with a Chinese identity already built.

The bet never paid. Shanghai Tang reached only 32 boutiques worldwide, and Richemont's own analysts conceded the brand 'has not been relevant either in terms of turnover or profit.' The 'East-meets-West' positioning was, as one analyst put it, 'rather confusing' — the aesthetic was Western enough to feel inauthentic to Chinese buyers, yet Chinese enough to read as exotic costume to Western ones. Richemont carried the operating losses for almost two decades.

On 30 June 2017, Richemont sold Shanghai Tang to Italian entrepreneur Alessandro Bastagli and a consortium of private investors. The terms were undisclosed, and Richemont stated the deal would have 'no material impact on its balance sheet, cash flow or results' — a polite admission that 19 years of ownership had produced nothing the group could measure. The irony was that China's luxury market had grown throughout: Chinese shoppers simply preferred the foreign labels Richemont already owned.

Richemont kept funding Shanghai Tang's losses for 19 years, then sold it for no material impact, proving a national brand fails if its own buyers reject it.

A 'Chinese luxury brand' had no Chinese customer: local buyers wanted the European heritage (Cartier, LV, Hermès) that signalled status, not a domestic label.

The 'East-meets-West' positioning was incoherent — too Western to be authentic for Chinese buyers, too Chinese to be taken seriously by Western ones.

Shanghai Tang was too small to matter to Richemont and too niche to scale: 32 stores in 19 years is not a luxury house, it is a curiosity.

Richemont kept funding operating losses for almost two decades rather than accepting the thesis was wrong, because the entry cost was already sunk.

A national-identity brand works only if that nation's buyers want it. Richemont bet Chinese wealth would lift a Chinese luxury brand, and watched buyers reach for the European names it already owned.

Bastagli moved production to Italy and attempted a relaunch, but Shanghai Tang never recovered its footprint. Hermès, which backed a similar experiment with the Chinese brand Shang Xia, kept going where Richemont quit — but on the same bet. Shanghai Tang survives in diminished form, a footnote to the question of whether a Chinese luxury house can exist at all.