The Gucci Killers

The fashion world at the time seemed mystified as to whether Tang was launching a new era of global fashion or peddling Chinese tchotchkes better left to Canal Street. Nineteen months later, it was clear Tang had miscalculated Americans' appetite for expensive Chinese costumery, silver rice bowls, and painted lanterns. "It was not the ideal way to start a business," concedes le Masne de Chermont. "But unlike Europe, America is tolerant of mistakes as long as you learn. And we have learned from this huge mistake. We needed to be more modern."

The lessons of the Madison Avenue meltdown were clear: To compete in the high-end fashion business, you need a continuous array of fresh merchandise to keep customers coming back. You need clothes that are wearable and relevant to modern lives, not costumey designs. And you need to know your market before you make a big real-estate bet--particularly in the most expensive cities in the world.

The company moved to a smaller space farther up Madison, and hunkered down to rethink its strategy. Back in Hong Kong, mired in the Asian financial crisis, things weren't going so well, either. By the time le Masne de Chermont was hired in 2001, revenue was stagnant. Then SARS hit in 2002, effectively shutting down business in Hong Kong for six months.

Meanwhile, rivals were starting to steal some of Shanghai Tang's cultural thunder. One of them was Ooi, who, after various jobs in the Hong Kong fashion industry, had opened her own store across from the Shanghai Tang flagship. China was chic, and international fashion editors were going wild for qi pao dresses. "I thought I'd launch my own ready-to-wear line based on the idea of innovating this iconic symbol," says Ooi, a 5-foot-6 Asian-American whose own fashion taste runs to jeans and T-shirts. "To underscore my point, I even made one qi pao out of African kente cloth and put it in my window. I thought I would eat Shanghai Tang for lunch."

That brash self-confidence is quintessential Ooi. Born in Singapore, the 37-year-old grew up in Cincinnati, the eldest child of two doctors. Her childhood, she says, was a classic tale of Chinese upbringing. "I could do anything I wanted as long as I got good grades," she says. She regularly played hooky, showing up only for exams--and generally acing them. She got kicked out of class for calling her anatomy teacher a fat cow and was suspended for accusing the orchestra conductor of raging mediocrity. "I did really obnoxious things," she says with little apparent remorse.

Still, her grades were good enough to earn her admission to Columbia. After a postgraduate stint at Smith Barney, she earned a law degree from the University of Pennsylvania with the idea of practicing corporate law. That didn't feel right, though. "I realized I didn't want to be the handmaiden to business," she says. "I wanted to be the entrepreneur. I wanted to make the creative ideas." She followed a corporate lawyer boyfriend (whom she later married) to Hong Kong in 1993 and took a job at a garment trading office. She also fell in love with Hong Kong. "It had this crazy kinetic energy of people going nonstop. It appealed to me immediately."

With the same voracious appetite for learning that had fueled her trajectory from the Midwest to the Ivy League, she also embraced her own Chinese heritage. She taught herself Mandarin and began cramming Chinese history and culture. But by October 2001, she was at a crossroads. Her marriage was faltering, and she was looking to make a clean break. "I needed to change my life," she says.

Enter le Masne de Chermont, who met Ooi through a headhunter friend. They quickly realized they shared a passion for an authentic Chinese luxury brand, but one that recognized the primary imperative of the fashion industry: constant innovation. Le Masne de Chermont asked Ooi to walk around the flagship store and write up her thoughts. Her observations were unsparing: "It's an overpriced Chinese emporium that has no credibility with local Chinese people, let alone with fashion people. Its very narrow market is high-end tourists. It's a once-in-a-lifetime destination shopping experience, a kind of fashion Disneyland. Plus, it's unwearable and eccentric." Le Masne de Chermont made her an offer.

Ooi joined the company as marketing and creative director, and the two immediately set to work reimagining what Shanghai Tang might be. It had to be modern and relevant. It couldn't be kitschy. It had to be luxurious, since prestige is even more important in the Asian market than creativity. They decided to focus on women's ready-to-wear, since that was likely to be the highest-profile part of the line. For a year, they launched collections that overcorrected the problem. The clothes were fashion forward but still out of touch with the market--rigid little suits that could have come from a Paris designer's atelier. "The brand had no depth, no sincerity, no differentiation," Ooi now concedes.

For each collection, Ooi chooses and researches a China-related theme. "I decided it was really imperative to create cultural roots for every single product," she says.