Harrods to Open in Shanghai, More UK Companies Focusing on China’s Consumer Market
London-based superstore Harrods is setting up the company’s first overseas store in Shanghai after consideration of other major international cities, including New York and Paris.
Harrods’ Managing Director Michael Ward stated that after 10 years of doing business in China, the company decided to increase their investment through a permanent establishment in response to the increasing luxury appetite and a growing middle class in China, in an interview with The Telegraph.
Ward said he believed the store would be particularly popular with younger consumers.
“If you look at all of the reports, they say, quite categorically that all of the growth in the next five years is going to come from south-east Asia. And is going to come from millennials.”
“So we’ve got to go after that. It’s very important that you follow the money.”
“We see continued growth of China, but we see a need to be a more permanent resident in China.”
Harrods’ store will be called “The Residence” and serve as a site for high-end private shoppers, providing a bar, tearoom, and event site for luxury brands. The store is set to open in 2020 and will be based in the wealthy Pudong district of Shanghai.
Harrods has mounted its efforts to attract Chinese consumers to its London store over the years. It officially accepts China UnionPay and Alipay as payment methods and has set up Chinese signage to help customers navigate their Knightsbridge store.
Harrods is also active on Chinese social media with an official WeChat account.
UK brands in China
UK brands continue to increase their investment and activity in the Chinese market. Bolstered by a growing middle class and strong consumer population, China remains one of the largest opportunities for UK brands seeking to increase their presence abroad.
British brands continue to be sought out by Chinese consumers for their association with quality and sophistication. Shanghai annually hosts the Best British Conference, where hundreds of top British brands showcase their products and services to over thirty thousand attendees.
There are various market entry models that can be employed by British companies seeking to enter China from trading though distributors, e-commerce channels, or setting up a foreign-owned entity to be in the middle of supply chain. Please contact our UK and Ireland desk for more information on appropriate China market entry considerations.
Protect your brands under Chinese laws
Many top brands have suffered from issues related to trademark infringement in China. It is critical not to forget to register the trademark under Chinese law.
The Starbucks trademark infringement case is a precedent – a local coffee store chain violated Starbucks’ trademark by nearly duplicating its name and logo. Since Starbucks only registered its trademark in Taiwan instead of mainland China, it cost time for Starbucks to win this lawsuit.
Foreign brands should always register their trademarks in China before establishing their business here. The risks arise due to the common practice of Chinese companies registering well-known logos and brand names in China prior to the original company’s market entry. Foreign cosmetic brands like Hera, Coppertone, and KIEHL’s have all suffered due to this.
Be careful to protect your brand when disclosing information to franchisees. Sign the confidentiality agreements, in which the confidentiality obligation and responsibility should be clearly stipulated in written form.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at firstname.lastname@example.org.
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