BEIJING VS SHANGHAI FOR THE FASHION INDUSTRY
There is a bitter rivalry between China’s two primary cities Beijing and Shanghai. Ask any Chinese about the difference and you’ll likely get the answer that Beijing is the cultural center of China, while Shanghai is the business hub. Beijing is more laid back and Shanghai is fast paced. Beijing means ‘government’ and ‘controlled’, Shanghai means ‘international’ and ‘open’.
For any fashion brand looking to enter and operate in China it’s essential to understand the differences between Beijing and Shanghai. The cities not only differ in terms of spending and style, but also how they exert influence and control operations of the fashion industry in China.
Shanghai is the business center of China and the Mainland headquarters of almost all foreign fashion and luxury brands. Brands not headquartered in Shanghai tend to be run out of Hong Kong with often a small satellite office in Shanghai.
When it comes to administering a China-wide retail network Shanghai makes more sense as a base of operations. Being centrally located, Shanghai is the most convenient place for brand executives who travel perpetually across China to visit stores, factories, logistics centers, and Chinese partners etc. Shanghai is also more livable city in terms of restaurants, transport, weather and English language, which are important considerations for expats.
In terms of retail, Shanghai has no shortage of luxury shopping malls including Plaza 66, Shanghai IFC, and the soon to be opened Jing’an Kerry Centre. (See Shanghai’s top luxury store facades.) The major retail advantage Shanghai has over Beijing is the existence of several wide avenues cum-high street shopping areas including Huai Hai Road and Nanjing Road where international brands have opened countless flagship stores. Narrower streets such as Changle Road also offer an eclectic mix of small fashion boutiques and local designer stores.
Essentially shopping in Shanghai has more of an on-street aspect to it. For luxury brands looking to open stores in heritage style building Shanghai also provides the best opportunity. Along the Bund brands such as Dolce & Gabbana and Armani have opened beautiful stores in heritage buildings.
All media in China is mandated to be based in Beijing (where the government can keep an eye on it) and fashion media is no exception. Media companies like Conde Nast, (Vogue and GQ etc.) and Hearst (Cosmopolitan and Esquire etc.) all have their China offices in Beijing requiring many fashion and luxury brands to also establish PR offices in Beijing.
As the Chinese fashion media and a lot of entertainment industry is all based in Beijing the biggest fashion events over the last few years have all been in Beijing. See previous posts on mega events by Burberry, DVF, Louis Vuitton, Alexander McQueen and Versace as cases in point.
In North China and especially in Beijing the national and local governments have a far reach into business. Government bureaucrats are often paid mediocre salaries, but given value cards that can be used for a variety of purchases including luxury goods. There is a strong culture of giving luxury goods as business gifts in North China and this is a significant aspect of each brands turnover.
According the 2012 Huran report, Beijing has the most millionaires in all of China (Shanghai came 3rd). In line with this many brands report stronger retail sales in North China region and Beijing has its fair share of fashion and luxury brand malls (see top store facades in Beijing).
For lifestyle Beijing is very hard place to live in. Traffic is horrendous, pollution (although improving) is also horrible and it’s freezing cold in winter. Although rapidly becoming an international city, it’s much harder to exist in Beijing without speaking Mandarin.
So what does this mean for you and your brand? Below are a few FAQs on getting set up in China.
Which city is more fashionable?
One could say the general population is better dressed or even ‘fashion conscious’ in Shanghai. This grew out of an early embrace of international culture that even stems as far back as the 1930s when Shanghai was the ‘Paris of the East’. That said Shanghai fashion tends to be more mainstream and ‘logo’ driven.
Your everyday fashionista in Beijing is likely to be more avant-garde and display a much edgier fashion sense. Beijingers represent their identity through fashion rather than just trying to ‘fit in’. Much of Beijing’s fashion sensibilities have emerged out of Beijing’s collective artistic and cultural consciousness.
Where is China Fashion Week Held?
Both Beijing and Shanghai hold Fashion Weeks annually. The official China Fashion Week is in Beijing. See this WWD Tale of Two Cities article for a great insight into China’s dueling fashion weeks. More on China Fashion Week here and here.
Where are the main fashion trade fairs held?
Due to the lack of fashion buyers in China Trade shows are not a well developed way of entering the market. The two main fashion trade fairs for international brands are CHIC in Beijing and Novo Mania in Shanghai.
Where should I open my office and logistics center?
Ideally both Beijing and Shanghai. If you have to choose, go with Shanghai.
Where should I open my first store?
This depends on your overall China store strategy. It is vital to have flagship stores in both Beijing and Shanghai (and Hong Kong if you can afford it) and so both cities are equally important. If you want to role out across the whole country then you simply open stores as you find appropriate spaces regardless of the city.
How should I set up my PR?
Its best to have at least one full time PR staff in Beijing. Otherwise ensure your PR company has a presence in Beijing and fly someone from Shanghai up to Beijing regularly to maintain relationships.
Where should I set up the legal entity of the company?
Any brand attempting to do serious business in China must establish a legal business entity in Mainland China, which should be done in the same city as their China HQ (so Shanghai). To get things started in the region it’s easiest to first register a company and open bank accounts in Hong Kong which is a very straightforward process.
What about Digital and E commerce operators?
China’s big web portals like Baidu, Sina and Tencent, plus the rapidly growing Chinese social networks like (Sina) Weibo, Renren and QQ all count as media companies and are based in Beijing.
E Commerce companies tend to be split evenly between Beijing and Shanghai. China’s biggest E Commerce company is Alibaba that owns C2C site Taobao and B2C site T Mall is based in Hangzhou, a few hours south of Shanghai. The international E Commerce players like YOOX and Net a Porter are based in Shanghai.
Exceptions to the rules:
Automotive – the automotive industry being such a big part of the economy requires the close attention of the National Government. Therefore luxury auto brands tend to all be based in Beijing.
Chinese Brands. The above observations really only apply to international brands. Some of China’s biggest domestic brands such as Bosideng and Septwolves have grown out of unknown provinces such as Jiangsu and Fujian respectively.