Richemont spent 19 years trying to make Shanghai Tang a luxury brand, then gave it away

David Tang founded Shanghai Tang in Hong Kong in 1994 with an ambitious vision: create the first proudly Chinese luxury brand, built on 1930s Shanghai aesthetics and the craftsmanship of tailors who had left Shanghai for Hong Kong in 1949. Richemont acquired a controlling stake in 1998 and full ownership by 2008, expanding the brand to 34 locations worldwide, from Madison Avenue to Paris to Tokyo.

The expansion repeatedly stumbled. The New York flagship on Madison Avenue closed in less than two years because sales could not justify the rent. In October 2011, the original 6,300-square-foot Hong Kong Pedder Building flagship shut after 17 years when Abercrombie & Fitch offered two-and-a-half times the rent. The brand was too dependent on Western tourists visiting Hong Kong and struggled to appeal to mainland Chinese consumers, who overwhelmingly preferred European luxury houses.

In July 2017, Richemont sold Shanghai Tang to Italian entrepreneur Alessandro Bastagli and Hong Kong private equity fund Cassia Investments for an undisclosed sum, noting 'no material impact' on its financial results. The brand changed hands again in December 2018 to Lunar Capital. Nineteen years of Richemont ownership had not produced a self-sustaining luxury business.

Richemont spent 19 years and prime locations selling Chinese heritage at luxury prices, but mainland buyers wanted European labels, so it sold at a loss in 2017.

Chinese consumers associated luxury with European heritage; a Chinese-inspired brand at luxury prices faced a perception gap that marketing could not close.

The brand's 1930s Shanghai aesthetic appealed to Western nostalgia more than to mainland Chinese consumers' self-image, creating a tourist-dependent revenue base.

Prime-location rents in New York and Hong Kong demanded sales volumes that a niche heritage brand could not sustain.

Richemont's portfolio approach — treating Shanghai Tang as a small brand to optimize — underinvested in the brand-building needed to shift consumer perception.

A luxury brand cannot be built on heritage alone when the target market associates prestige with a different origin. No amount of prime retail space sells a story consumers do not buy.

Shanghai Tang passed through two more owners after Richemont. From 2020 it became a core brand of UTAN Group and began a new expansion across Singapore, Shanghai and Beijing, positioning itself as a lifestyle brand with cafes and restaurants alongside retail.