The Fourth Year - Made in China or Made in Hong Kong?
The Celltei Experience
This will be the fourth year that I have been actively running the Celltei business. Some mistakes were made and tough challenges in building a business continue to crop up. Despite my professional experience in reviewing and analyzing established businesses, entrepreneurship is never the same as described in textbooks or business magazines. Although we continue to leap forward, the risk of failing -- whether it is a personnel, cash flow, production, or customer service issue -- is a wolf that remains at the door. The business seems to have acquired a life of its own and it is hard to separate your personal life from that of the business.
Many people have helped and continued to cheer us on. Yet, some prefer to keep a watchful eye and distance. It certainly takes great endurance and perhaps blind faith to grow a business.
If our experience can be an inspiration to you (we certainly hope it doesn't dissuade you), you are welcome to check on "Designers' Story" from time to time. We will put add in our personal thoughts as time permits. We spend so much time at work nowadays that we better enjoy it!
Backward integration? Made in China or Made in Hong Kong?
After a spate of repeated production delays and a rate of defective merchandise that we had to reject from subcontracted factories, I returned to Hong Kong in August 2003 with a plan to hire my own, small production team to oversee quality control as well as develop special designs such as the Pak-o-Bird that numerous factories believed there won't be enough demand for to justify their time and effort. I figured a four to six person team would be adequate for starters.
The first person I met with was Master Kwok, a humble and soft-spoken gentleman who has slightly sunken eyes. I belive that's a result of Mr. Kwok's last job as a security guard working 12-hour graveyard shifts that began at midnight. The next two following weeks, Mr. Ng, Wai Ying, and Sister Sin joined us. With another assistant, all six of us crowded into a room measuring no bigger than 250 sq. ft. to develop our 2004 Seasons'designs, including the aforementioned Pak-o-Bird. It was frustrating and Wai Ying felt very much defeated four weeks later and we still hadn't completed any products yet.
Nevertheless, I had confidence in my new team. They have 25 to 30 years of experience between them in making upscale hangbags and luggage and all showed drive and commitment. Still, other obstacles were on the horizon: To my astonishment, although most, if not all Hong Kong companies, had moved their production companies to mainland China, we actually have to pay extra money to have machinery and any materials delivered to a Hong Kong address. Many suppliers question our decision to build a small production company in Hong Kong while everyone else is moving north. From sourcing fabrics to resolving the complicated structural issues inherent in the new designs, the slow pace was very irritating to all of us. Although the salary is half or one third of that in the golden age of Hong Kong's manufacturing in the 70's, everyone is happy that they can continue to do something they had been doing all their lives and truly loved to do. I personally wore out a brand new pair of sneakers as I continued to negotiate the streets in Samshiupoo scouting out the the desired parts and materials.
When I headed off directly from HK to Chicago for the Pet Industry Trade Show last October 5th, I brought three suitcases of incredible products. What was so amazing to me was we actually could produce merchandise as close to --if not better -- than our drawings with quality materials. Despite our relative success with Pak-o-Pets, our volume was nowhere near what the factories desired -- too many colors, too many sizes and too many modifications specified each time we put in a new production order.
Here, under my own control, not only do I have what I want but I also have the knowledge that we can make anything with any material with stellar quality. At the same time, with an improving global economy, our small rate of output in production kept getting a new completion date. I was surprised that some retail shops placed an their orders at the trade show with our December 26th delivery day. Yes, we were just too small to fit into the Chinese production army's schedule! After discussing it, the production team determined to conquer this task and have been working overtime to fulfill all back orders and special requests.
The cost of Hong Kong labor and overhead is still much higher than manufacturing in mainland China. We continue to hire these very skilled artisans who are facing no job opportunities other than as doormen or cleaning ladies. We hope some younger people will join us and pick up both the fundamental skills and new technological skills required in manufacturing. Celltei is taking a big risk for a good cause. We give pride to these forgotten artisans who, at one point, helped to build the reputations of the factories further north. We also provide encouragement along the way. We hope to be able to catch up with production by mid-2004. You can be certain that you are getting the best products from the best people. Your support to Celltei products will be the best proof that there is great satisfaction in manufacturing. I personally have worked on million dollar deals as a former investment banker, but the signing pen one receives at the signing ceremony after the completion of a huge deal is no comparison to a well-designed and superlatively made product!
Angie in 2004