Xinxing Weaving Factory: Remaining In Hong Kong By Subtraction

Transfer is not the only way to cope with rising production costs. Since the early 1980s, a large number of Hong Kong textile and clothing enterprises have moved their factories to the Pearl River Delta in the mainland due to the rapid rise in local labor, land and other prices, and continue to engage in large-scale processing and production. Liang Junyan is one of the few people who have stayed in Hong Kong until now and tried to take another path.

At present, the operating cost in Hong Kong is still much higher than that in the Pearl River Delta. The monthly salary of garment workers alone is about HK $7000, which is two or three times the salary of workers in the Pearl River Delta. However, some textile and clothing enterprises have adjusted their business strategies and rushed to the two ends of the industrial chain with the highest profits - design and brand marketing. Even in the environment of high cost operation, there is still spring. Liang Junyan has proved this.

Liang Junyan, who has more than 30 years of experience in textile and garment industry management, is not only the largest in Hong Kong Weaving Factory - Chairman of Xinxing Weaving Factory Co., Ltd. He has also served as Chairman of the Hong Kong Productivity Council, Chairman of the Hong Kong Textile Industry Federation and Honorary President of the Hong Kong Federation of Industries.

Xinxing Weaving Factory has a history of about 70 years, which is a microcosm of Hong Kong's textile industry. At the beginning of its business in the 1940s, the factory mainly processed and produced woolen sweaters for export to the Indonesian market in Southeast Asia, and later gradually expanded to Germany, Britain and other international markets.

At that time, many textile mills in Hong Kong were mostly emerging Weaving The factory is mainly engaged in export business. By the 1970s, although the number of overseas processing orders was increasing, Liang Junyan felt crisis when he took over the factory from his father. The low-end processing and production links in the supply chain could not make him feel safe.

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With the increasing manufacturing costs in Hong Kong, many Hong Kong businessmen began to shift their factories to the mainland with lower production costs in the early 1980s, and continued to adopt labor-intensive contract production to earn meager processing fees. Liang Junyan did not move to the Pearl River Delta with a large team, but chose to stay in Hong Kong to adjust his strategy. At the same time of large-scale batch processing and production, we began to try to accept some overseas orders with small quantity and high requirements, and gradually incorporated some design elements to focus on quality, design and fashion. The pure processing profit of a piece of clothing is only about 10%, but the profit reaches 50% after infiltrating into the design element. This has greatly touched Liang Junyan, and his business line has gradually changed from OEM (OEM) to ODM (design and production), gradually reducing the production quantity and correspondingly increasing the added value of the product. Although a subtraction has been made, each style has been reduced from thousands to hundreds to only 30 to 40 pieces, But the economic benefits of enterprises are getting better and better.

Liang Junyan did not stop. When he earned considerable profits from receiving European ODM orders, he was looking for new profit growth points. This time, he was not satisfied with the factory behavior, but broke into the more risky marketing. A few years ago, Liang Junyan began to test the waters of European high-end shopping malls by using the English name of his designer, Wu Junqi. Wu Junqi was recruited by Liang Junyan more than ten years ago. During her participation in European ODM orders, she constantly studied European and American design styles and consumer tastes, and formed her own design style.

"The same ready-made clothes can be sold two or three times higher than the ex factory price in chain stores, four or five times higher in boutiques, and more than ten times higher in high-end malls." Liang Junyan revealed his original intention to enter European high-end malls in an interview.

He also said frankly: to build factories is to make money one by one, but to build brands and go retail may be to spend all the money and earn it back. Due to the large investment, the money earned in the early stage of the brand is not much.

However, Liang Junyan did not regret taking this step. He thought it was a long-term investment. The sales price of the Hidy brand in the European and American markets is between two to three hundred dollars to thousands of dollars, while the price of the same level of European and American local brands is generally between ten to twenty thousand dollars to tens of thousands of dollars.

Like many garment enterprises, Liang Junyan is optimistic about the mainland market. According to his plan, as the Hidy brand gradually stabilizes in the European market, he will explore the supporting decorations, cosmetics, etc. of this brand, and use this brand to enter the high-end clothing market in the mainland.