International Expansion of a HK Brand

Being a the founder and creative director of the celebrated Hong Kong fashion brand “KoyoJeans”,WilliamCheung’sgrandodyssey had a humble beginning at a garment wholesaler in Sham Shui Po (the place for low-end Hong Kong garment). His business journey took off merely a decade ago but William now already has a shop named after him in Harbour City, a mall famous for its prestigious boutiques. Furthermore, William also marked the debut of a Hong Kong brand at Galeries Lafayette in Paris. Despite the vicissitudes in fashion world, William always believes that he should set sight at the ultimate goal of developing a brand with high added-value.

As Hong Kong garment manufacturing industry thrived in the 1990s, local designers have sprung up like mushrooms. Catching the tide early 1990s, William embarked on his design career at a Sham Shui Po fashion wholesaler. The proprietress thought highly of William and conferred him the clout to oversee areas like fabric, buttons, zippers and merchandising.

William later opened his boutiques at Prince Edward and Tsim Sha Tsui. In 1997, he purchased his boss’s wholesale business plus its factory at Dongguan in the mainland when she emigrated to Canada. One year later, William spent over 100,000 HK dollars to open a retail shop in Guangzhou, at the city hub of Beijing Road.

Unfortunately, William failed to grasp the opportunity to find more franchisees due to a lack of experience and he had to close his Guangzhou shop after a year-long uphill battling. William said, “Actually investors almost called every day but I failed to seize the moment. I was only interested in becoming the boss without considering things like franchising my brand or establishing a team to recruit franchisees.“

William knew by heart that wholesaling is different from branding. Wholesaling basically needs no marketing efforts at all but product quality and the grasping of particular fashion trend. The catch is retailers can reject any products at their discretion.

Branding, on the other hand, requires additional inputs like precise positioning and an unambiguous character. The merit is that established brands enjoy loyalty from retailers. The brand owners can exercise their bargaining chips to force retailers to accept the inventory even if retailers may not like individual piece of works.

William was aware that branding postulates long term commitment. He said, “It takes time before a fashion designer can harvest his success. We try to learn from our experiences, reaping the fruit of our every hard work... In a decade’s time, provided that I am still alive then, my brand should be a very popular one.”

William had his ups and downs. He cofounded a firm with a Korean designer in 1999 and the firm was widely appreciated by the Korean market. However, he suffered a setback two years later in France when he joined a “who’s next” exhibition. (He found the quality of his jeans still not good enough when compared to other brands.) Yet it is the event that widened his scope of horizon, coming across with products that are beautiful, stylish and superior in quality.

Upon returning to Hong Kong, William repeatedly    tested    the    washed    jean techniques. He brought samples from famous brands, exploring properties of their cutting and fabrics. William also paid visits to other factories to know more about production. He thought he should prepare himself by meeting international standards before he could go on with his next plan.

William inaugurated another firm in 2002 and launched the sumptuous men fashion brand two years afterwards. Since then, his production line in Dongguan was split, one on high-end and another low-end. The two production lines were managed separately under different balance sheets.

It is branding that consumes most of William’s time and energy. He endorsed the notion that creating a brand is like raising a baby, comparing the growth of a baby to the business development of his company. He believed the branding part of his business would bring his firm huge profit once it was well-established.

During the initial stage, profits from the low- end production line and wholesaling help the capital-hungry branding proceedings. Yet William had a clear vision in his blueprint. He said, “In the long run it is the brand, rather than the factory, that is most valuable. I hope that my brand is not only famous but also lucrative.” With the gradual improvement of production capacity, proportion of brand merchandises now reaches 70 per cent of the overall production volume, up from 30 per cent in 2004.

On the other hand, William was also hired by a huge mainland fashion company as a consultant. By 2005, he had already acquired comprehensive credentials over areas including production, sales, design and management. He saw new franchisees retailers as the answer to cement his success.

In 2006, William got into the France market with his Koyo Jeans. Learning from his previous mainland lesson, Koyo has secured over 50 buyers retailers. He is also the first Hong Kong designer to appear at Galeries Lafayette in Paris.

William concluded, “We all fail sometimes, but we must be able to draw the lesson from our unpleasant experiences in preparation for our future progress. I went to France for the exhibition and knew that there were better competitors. If I indulge in my past glories and refuse to see new things, I won’t be able to expose to fresh ideas which can bring about future success.” Two years later, Koyo Jeans opened its retail shop at Harbor City, marking the brand’s another step towards becoming an eminent international icon.

William realized he could not handle the expansion of his business alone. Therefore, one of his major priorities in recent years is to form an efficient management team. William has since 1997 recruited Leung Yau- Heng to oversee production. Administrative and personnel affairs now come under the jurisdiction of Grace Kwok Shuet-Lan. Grace Kwok and Jeffiny Yau Kwan-Ying, Brand Manager, joined his firm in 2001 and they are both important senior staff.

Jeffiny, one of William’s aides, said, “We are confident in him (William), a man with an acute market sense. We, the production and design team, all rely on his judgments. “ William added that he once anticipated the price of their jeans, stood at 400 HK Dollars then, would escalate to over 1000 HK dollars within two years. This prediction was materialized timely. Thus, William’s reputation as a man with a vision was shared among his fellow colleagues. His views convinced his staff and are likened by his clients.

Now his company has formulated a protocol. Taking shop display as an example, William designs the display in one of the retail shops and then the other stores can follow suit. William changes retail shop display five or six times a year. These decoration and innovation projects are undertaken by his visual merchandising department, with the supervision of regional manager and inspection team. The operation itself demonstrates the significance of teamwork for a corporation.

William now also set his sight on internet shopping. He believes that he should first build a logistic system. William said, “Even if the IT department now has only two staff, I keep telling the pair that you will head 200 people in the long run and so you must devise a system first.”

William now is in charge of both design and management, which he found very different in nature. Design and creative works involve artistic elements and boundless imagination, both craving unlimited passion.

Management means the imposition of various rules and protocols. Discipline and efficiency are the keys. Yet he can perform these two entirely dissimilar tasks at ease.

He said, “Provided that you can split your brain into two sections, one as a CEO and another as a designer, your decision will be better than other people in terms of...what I can say is that your decisions will be more sensible than others.”

William’s charismas and visions help not only his team building but also attracting franchisees, helping expand his brand financially.

William said that as a form of investment alternative, franchise requires good selection of retail partners in order to safeguard the consistency of brand. When a brand fails in a particular market, the overall damage can be devastating. So, one must reject potential franchisees in case they are not good at running a business.

An efficient sales network is the prerequisite for a successful brand. William stresses that he would prefer quality to quantity. He always chooses franchisees with solid capital and experiences for the sake of protecting brand image. This rule is especially true in mainland as some issues can be better solved by local franchisees that have local “guanxi” (connections).

William is unyielding that his network must extend to first-tier cities like Beijing, Shanghai, Guangzhou and Hong Kong. He identified Paris, New York, Tokyo and Seoul to launch his international network. First- tier cities are notorious for their huge capital investment and longer breakeven period, he admitted, but these defects are offset by their prestigious status. Once shops at these first-tier cities succeed, one can enter others second-tier cities with less difficulty.

William now spends quite a lot of its budget in marketing, sponsoring celebrities, movies stars and various fashion shows, which are important for its media exposures. He is preparing to garner more capital by listing his firm at an appropriate timing. However, William must wait before this timing comes.

He believes that the growth of his company would eventually attract venture capitals. He said, “When my franchisees use their money to open licensed shops, they are virtually voting for my branding endeavors. By the same token, marvelous branding is a key for attracting capital.”

William knows that he must first consolidate his success and overcome several recently emerged challenges. These challenges include the rocketing production cost due to the enactment of the new Labour Contract Law in 2008 in mainland and the Guangdong authorities’ new policy to dissuade the pollutant industries. Meanwhile, he has to carefully select franchisees with quality, while is improving his sales networks and logistic system. These tests will serve as yardsticks for William’s ability in becoming an excelled businessman.


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