Purpose and significane of the research: Understanding the luxury fashion industry is a significant factor to implement a robust competitive strategy for the new firm Paparusso.This master thesis contributes to the strategic management area by researching the Chinese’s purchase incentives concerning ready-to-wear and made-to-measure clothes.Paparusso is a fashion firm that registered a business license in Shanghai,named“巴巴红瑟.”Starting from the beginning,Paparusso is a fashion firm adopting two business models.The first one is to sell ready-to-wear clothes（RTW）and the second one is that customers may have the possibility to order their size,through the made-to-measure（MTM）product and service.Literature review: The literature review contains prescriptive guidance about the strategic management field and Chinese luxury fashion market.The luxury fashion market has been expanding in China for a few years,much helped by the arising middle-class and the improved buying power of Chinese,especially Millennials that provide a tremendous contribution.Methodologies: Different tools support academic research for the thesis.Firstly,the PEST model is necessary when starting to analyze the environment.These four elements appear to be positive to set up a fashion business in Shanghai.The following tool is the Five Forces that scan the external environment as well.The first most potent force that represents a threat for Paparusso firm is the existing competitors because there are too many players in the market.Thirdly,the methodology lean startup is engaged in the thesis to support the business plan.Eric Ries defends the idea of experimentation when starting a business.Fourthly,the Value Chain is one of the main tools used in this master thesis.The first and support activities are defined to create value for customers and therefore create a competitive advantage.The more value an organization creates,the more profitable it is likely to be.Fifthly,the VRIO framework is a primary tool for creating the strategic management of the firm.VRIO stands for Value,Rarity,Imitability,and Organization.Lastly,the business SWOT analysis enables the firm to be knowledgeable about its competencies and those of the competitors to compete successfully in the market.SWOT stands for Strengths,Weaknesses,Opportunities,and Threats.Strategy formulation: The internal factors are defined as the firm strengths and weaknesses while the outside elements are translated as the opportunities and threats.It is necessary for the firm to raise a question to derive more value from the SWOT analysis,according to the firm’s situation and objectives.To address these questions,quantitative and qualitative analyses have been created.The quantitative data was obtained by an online questionnaire and analyzed via the pivot function on Excel and SPSS the one-way ANOVA.The qualitative was conducted through a face-to-face interview,and an exclusive interview has been done with the store’s director of BeA,a fashion distributor store.Findings: The analysis generated satisfying results demonstrating Chinese’s customers’ needs,interests and expectations for fashion clothing area.Therefore,Paparusso adopts the strategy Weaknesses and Opportunities（WO）in order to be more competitive and stand in the luxury fashion market in China.The generic competitive strategies are focus and differentiation,accordingly to the analysis results.Finally,following the WO strategy,Paparusso will implement its plan of action through central focuses as allocation of resources（especially on Finance and Human resources）,enhancement of capabilities（especially on Sales）,as well as primary and support activities.The master thesis is unique because the research aims to set up a competitive strategy for the new French fashion firm Paparusso in China.