For CEO, in­no­va­tion is the fab­ric of suc­cess

Global cloth­ing maker stays ahead of the pack through in­no­va­tion from tex­tiles to sup­ply chain

China Daily (Canada) - - EXPATS - By JEN­NIFER LO jen­nifer@chi­nadai­lyhk.com

You may not be aware of it, but chances are you have worn one of TAL Group’s shirts at some point. TAL man­u­fac­tures high­end shirts and pants for global la­bels in­clud­ing Banana Re­pub­lic, Brooks Broth­ers and Tommy Hil­figer. The Hong Kong-based com­pany says it makes one in ev­ery seven dress shirts sold in the United States.

“In busi­ness you re­ally have to be the best at what you do. You can’t be medi­ocre,” says CEO Roger Lee, a third-gen­er­a­tion mem­ber of the Lee fam­ily that founded the 68-year-old ap­parel group.

As the new face of the com­pany, the 42-year-old comes across as a pru­dent man.

Sit­ting in a club lounge in Hong Kong’s Mid-lev­els dis­trict, Lee re­sem­bles a banker on ca­sual Fri­day in­stead of the stereo­typ­i­cal boss of a gar­ment man­u­fac­tur­ing com­pany wear­ing jeans, a blue­and-white check shirt and an Ed­die Bauer goose down vest, which all seem to com­ple­ment his clean-cut mien.

With a back­ground in IT con­sult­ing, Lee re­ceived his de­gree in com­puter en­gi­neer­ing and an MBA in the United King­dom. Hav­ing no prior knowl­edge of ap­parel man­u­fac­tur­ing, he re­turned home hop­ing to “grow a ca­reer”.

The top job was not handed to him on a sil­ver plat­ter. He spent years at TAL’s fac­tory in Pe­nang, Malaysia, learn­ing gar­ment man­u­fac­tur­ing from scratch.

“My phi­los­o­phy as a pro­fes­sional worker is that knowl­edge is king. The more you know about some­thing, the more use­ful you will be and the less peo­ple can fool you,” he said.

Over the years TAL has moved up the tech­nol­ogy lad­der while its core busi­ness re­mains un­changed. “We are an ‘in­no­fac­turer’, or in­no­va­tive man­u­fac­turer,” Lee said.

TAL has in­vested mil­lions of dol­lars in re­search­ing sta­teof-the-art textile in­no­va­tions, from wrin­kle-free and stain­re­sis­tant pants to an­tibac­te­rial and anti-UV shirts. One of its latest tech­nolo­gies is used to make polo shirts that ab­sorb sweat so it does not show.

He said the FBI and some US po­lice agen­cies use TAL shirts be­cause the color does not fade. “When law en­force­ment agen­cies stand next to each other, they don’t want their uni­forms — af­ter be­ing washed 20 times — to be in dif­fer­ent col­ors,” he ex­plained.

“Men don’t change clothes so of­ten. If a shirt breaks down early, they sim­ply won’t come back to you but go some­where else.”

TAL’s busi­ness has also evolved to fo­cus on sup­ply chain man­age­ment.

Big data was al­ready a big part of the com­pany’s oper­a­tions long be­fore the term be­came a buzz­word. By tap­ping avail­able in­for­ma­tion, about 10 years ago TAL be­gan to help clients cut costs by re­duc­ing in­ven­tory. Its first ma­jor client was J.C. Pen­ney, a US depart­ment store gi­ant with around 1,000 out­lets at that time.

TAL helps clients re­duce on-site in­ven­tory by mon­i­tor­ing the stock in each store and plac­ing or­ders au­to­mat­i­cally through a weekly or monthly re­plen­ish­ment pro­gram. Sales data in each store are col­lected to forecast de­mand, while hol­i­days and sea­sonal pro­mo­tions are taken into ac­count.

“When they need it, we re­plen­ish it. In­stead of (or­der­ing) six months ahead of time, we de­cide two months ahead. We are def­i­nitely go­ing to be a lot more ac­cu­rate and have less ex­cess in­ven­tory,” Lee said. “The mar­ket does re­quire much quicker turn­around to­day.”

But while the com­pany is con­stantly in­no­vat­ing, TAL re­mains fo­cused on man­u­fac­tur­ing. Its con­sul­tants have in­vari­ably raised the is­sue of busi­ness diver­si­fi­ca­tion. “Ev­ery­one says, ‘Why don’t you be­come a re­tailer and have your own fash­ion la­bel?’” Lee said.

“It’s not that sim­ple. We are not de­sign­ers. We are not mar­keters. We are not good at vis­ual mer­chan­diz­ing. We are a man­u­fac­turer.”

He does not be­lieve in the com­pany do­ing too much and be­com­ing too broad-based. “My phi­los­o­phy is to be fo­cused.”

Look­ing at a vast mar­ket like the Chi­nese main­land, Lee re­mains cau­tious. Although TAL set up its first sales of­fice in Shang­hai two years ago, it has yet to re­gard the main­land as an end mar­ket.

Lee’s top con­cerns re­main China’s eco­nomic slow­down and the ex­cess in­ven­tory in many sec­tors.

“For us, we are just go­ing to be very pa­tient — there is much more to learn in a mar­ket that we don’t know. But we know it’s go­ing to be a big mar­ket for us,” he said.

“We are not as big as we need to be, but we just need to be­come a bet­ter man­u­fac­turer for (lo­cal) brands.”

In re­cent years, ris­ing wages and more strin­gent la­bor laws in China have cre­ated new chal­lenges for man­u­fac­tur­ers such as TAL, which owns two fac­to­ries in Dong­guan, south­ern China.

“It’s a strug­gle. It’s much harder now than five years ago to make money in China,” Lee said. In his view, rais­ing ef­fi­ciency is the key to sur­vival. As the Chi­nese say­ing goes, it is harder to sus­tain a busi­ness than to start a new one.

When asked if he faces any pres­sure as the third-gen­er­a­tion CEO, Lee chuck­led. “Peo­ple al­ways say the third gen­er­a­tion is the gen­er­a­tion that messes up the busi­ness. Chances of suc­cess are less than 15 per­cent.”

It was his un­cle’s fam­ily that founded TAL af­ter a boom in the textile in­dus­try in Hong Kong af­ter World War II. His fa­ther, Harry Lee, then be­came TAL’s chair­man and a well­known fig­ure in the in­dus­try.

To­day, the Lee fam­ily jointly runs the busi­ness with the found­ing fam­ily. The fact that TAL is a rel­a­tive’s busi­ness may be a re­lief for Lee as he is one step re­moved.

“I don’t have shares in the com­pany. I don’t have the pres­sure per se as a fam­ily owner. I only have pres­sure as a CEO to do the best for the com­pany, and ev­ery CEO shares the same pres­sure,” he said.

Lee’s chal­lenge is how to nav­i­gate a half-cen­tury-old com­pany through tur­bu­lent times.

TAL now gen­er­ates $850 mil­lion in rev­enue and pro­duces 50 mil­lion gar­ments a year. It has 25,000 em­ploy­ees and 11 fac­to­ries across Asia, specif­i­cally in Thai­land, Malaysia, In­done­sia and Viet­nam.

The com­pany has sur­vived dozens of set­backs, from the 1997 Asian fi­nan­cial cri­sis to the out­break of the Se­vere Acute Res­pi­ra­tory Syn­drome, or SARS, in 2003. In 2008 it had to lay off 1,000 work­ers due to a slow­down in the US mar­ket af­ter col­lapse of the fi­nan­cial ser­vices firm Lehman Broth­ers. The dras­tic staff cut is a de­ci­sion he re­grets.

“It hurt us be­cause it cost money to lay off peo­ple. Morale was low. In hind­sight, I would be pa­tient. Don’t rush to things,” he said.

“If you don’t have a lot of or­ders, it means you have ex­tra time. Don’t waste it and worry by cut­ting costs. ... In­vest more in train­ing and trav­el­ing to meet cus­tomers.”

Aside from be­ing an as­tute busi­ness ex­ec­u­tive, Lee is also a de­voted fam­ily man who bal­ances his time be­tween sports and his three daugh­ters, aged be­tween 2 and 8.

My phi­los­o­phy as a pro­fes­sional worker is that knowl­edge is king. The more you know about some­thing, the more use­ful you will be and the less peo­ple can fool you.”

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