COMMENTARY
Across The Border
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Historic Shanghai brands club together to give their indigenous products a modern twist

Shanghai Time-Honoured Brand Association has ambitions of rejuvenating some of the city’s most-cherished business names

PUBLISHED : Wednesday, 28 June, 2017, 1:22pm
UPDATED : Wednesday, 28 June, 2017, 10:50pm

Great history sells, or so some Shanghai A-share companies are hoping, as they work out ways to capitalise on their storied brands.

According to Shao Yuling, the general secretary of the Shanghai Time-Honoured Brand Association, more than 220 local companies which own indigenous brands in business for at least half a century have joined hands to revitalise their traditional businesses, with one eye firmly on exporting.

Among the members are three A-share listed firms – Shanghai Phoenix Enterprise Group, a bicycle producer, Shanghai Jahwa United, a cosmetics and household products maker and Lao Feng Xiang, a jewellery company – who say they are relishing the chance to modernise their brands and hopefully reap the financial rewards.

“We are doing our best to help rejuvenate them, to help push further growth,” she said.

“We also keep lobbying local government officials to offer these companies incentives, ranging from finding them cheaper land, offering tax subsidies and helping them train staff in their traditional skills.”

Phoenix-branded bikes, Liu Shen-branded Florida water made by Jahwa, and Lao Feng Xiang’s gold and jewellery products were best-sellers in Shanghai and across the mainland from 1980 to the late 1990s, before they were hit with serious competition by foreign and non-local domestic rivals.

Shao says Shanghai alone can count what she claims to be 180 indigenous brands, ranging from food and clothing, to cosmetics, jewellery, and household electrical appliances, that earned national fame in the last century.

They effectively helped shape the city’s economy during those years, with it recognised as the mainland’s industrial locomotive.

Durability, good design and meticulous manufacturing prowess were the key elements that characterised the success of “Shanghai-made” products.

But as their lustre faded amid the invasion of imported products, the local government did little to help, shifting its focus from manufacturing to financial services to bolster the local economy, Shao said.

The Time-Honoured Brand Association first launched in 2005 with the ambition of rejuvenating some of the city’s most-cherished business names, and immediately it struck a chord with the older generation of Shanghai residents.

Zhang Enqi, marketing director with Shanghai Warrior Shoes, said that promoting the history of the shoe maker’s long-held skills is proving to be good marketing.

Letting people know the history reminds them of the old days and whets their buying appetite. For foreigners, old brands trigger their curiosity about China
Zhang Enqi, marketing director with Shanghai Warrior Shoes

“Letting people know the history reminds them of the old days and whets their buying appetite,” he said. “For foreigners, old brands trigger their curiosity about China.”

Shanghai unveiled its ambitions of becoming a global financial and shipping centre in 2009, but still lagged behind its domestic counterparts in terms of economic growth until 2015.

The strategy sparked criticism among some local economists, who proposed strengthening its manufacturing base to create more jobs and create more sustained growth.

In the first quarter of 2016, industrial output in Shanghai dropped 7 per cent year on year, sounding alarm bells for city officials to act, said Chen Mingbo, head of the Shanghai Commission of Economy and Information Technology.

At the beginning of this month, Chen insisted at a press briefing that Shanghai’s manufacturing industries still have great growth potential, as long as the municipality can map out a proper blueprint and effectively implement it.

Bike builder Phoenix recently secured a multi-million orders from Beijing-based bike-sharing service company Ofo, a much-needed shot in the arm for the business.

Shanghai Phoenix’s underlying profits in 2016 were 39.6 million yuan (US$5.8 million), after it made a 23.5 million yuan loss the year before.

Not finance, but Shanghai banks on manufacturing to reclaim commercial supremacy

Yu Yuefeng, managing director of its import and export division, said the company was already actively looking at ways to sell more of its bikes overseas.

“Old-fashioned, 28-inch Phoenix bikes are still well received in Africa, especially,” he said.

Jewellery company Lao Feng Xiang, too, has been looking further afield, and already has nine outlets abroad with plans to add four more in Hong Kong this year.

“We mainly aim to target Chinese people living abroad,” said Wang Ensheng, Lao Feng Xiang’s spokesman. “When they see the brand they used a long time ago, we hope it makes them feel more at home.”

Shen Ye, a Shanghai-based hedge fund manager, however, warns that depending on traditional and brand sentiment are no guarantees of success.

“The young generations have little knowledge about the brands’ history, so modern quality remains so important to ensure sales.”

He also said it could prove difficult for this group of traditionalists to gain any significant support from the local authorities, now that Shanghai appears to be favouring attracting mega industrials such as large commercial aircraft manufacturing, and technology behemoths.

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