Shang Xia: Selling High-Quality Refined Goods "Proudly Made in China"

Shang Xia is a story of a female entrepreneur whose goal is to open the Chinese luxury-goods market to products proudly made in China. It is the story of a young Chinese designer named Jiang Qiong Er who was convinced that the craft of making luxury goods, which had been deeply rooted in ancient Chinese culture, could be revived by Chinese artisans working to her modern designs. By the sheer force of her convictions, the seasoned CEO of Hermès was won over to her business plan. The story starts in 2007, when Shang Xia was first born in a small workshop in Shanghai, and continues to the present day when the brand is expanding its footprint in other cities in China and the surrounding region. Although Shang Xia has not yet turned a profit since it opened its first boutique in Shanghai in 2010, Hermès is patiently convinced that the value proposition is sound and continues to own a 90% stake in the company.

Shang Xia offers students an exciting opportunity to participate in a brand strategy that is challenging perceptions in the fast-growing personal luxury goods sector in China. The case is designed to encourage students to think about the role that country of origin plays in building brand awareness. While luxury goods are most often associated with Western brands, the case challenges students to dig deeper into leadership as a force for change. Benefiting from her education at a well-known Parisian fashion school, Jiang Qiong Er has developed a vision of reverse innovation that is unlike that of any of her contemporaries. In addition to the important role that leadership plays, students will examine the retail strategy of Shang Xia as it expands from an unknown player on the streets of Shanghai already crowded with established retail networks. As Shang Xia opens new retail spaces on the mainland and in nearby cities off mainland, students can consider in real time whether the founder’s limited resources are being best allocated to build market share. Students who are interested in the personal luxury goods sector in China will find this to be an exceptional case putting them in the shoes of an entrepreneur who shows an incredible appetite for innovation.