Since its establishment in 1970, textile and apparel giant Esquel Group has undergone phenomenal growth. The group's Chairman, Marjorie Yang, continues to prove wrong those who think the sun is setting on Hong Kong's textile industry by piloting the company to new heights. Bulletin Editor Malcolm Ainsworth talked with Ms Yang about her company's impressive growth, its investment in western China and its plans for the future.

Your company has expanded incredibly quickly, to what do
you attribute this?
Just as Andy Grove says, only the paranoid survive. We strongly subscribe to that theory. Because we are in a very competitive business, we have to constantly strive to improve ourselves and that has led to continuous efforts to stay ahead of the competition.

For example, in the early '80s we decided we needed to focus on quality so we started trading up with our customer base. We then realised that we needed to provide more services to our customers and started developing merchandising capabilities. Then in the '90s, we started to provide more merchandising, especially in fabrics. In our drive to get more quality we backward integrated to make fabric with a very big investment in a dye yarn mill in china. That allowed us to take over from the Japanese who used to be the main supplier of high quality fabric. Having achieved that -- meaning our own supply or production base -- we then focused on merchandising skills, especially on fabric.

I believe you've also leveraged heavily on technologies?
Since the late '70s, we've always felt there is a lot of potential to take advantage of technology. As a result, we are now competing on going to market faster. We are reducing wastage in the production process through the use of IT, and we are moving goods through the supply chain faster. I guess it is the underlying concepts of total quality management. Today, it's Andy Groves theory, but it is just a constant process to reinvent yourself and to be leaner and meaner.

How can you constantly reinvent yourself?
It's trying to make use of available tools. It could be technologies or creative skills. Today, everybody is talking about the knowledge economy and as such traditional industries do not have a future. That is not true. It's just a question of how to appropriately apply knowledge and transit to the new period.

People who look at Hong Kong companies say its garment industry doesn't have a future because they are still fixated on the past. They think that garment manufacturing only means sweatshops and cheap labour and that it has no place in an advanced economy like Hong Kong. Whereas it is not true. Hong Kong is the instigator of our global operations -- this is where we do a lot of the brainwork. The technology, planning, strategy, research ... but this is still where ideas are generated.

Have these perceptions made it difficult to find good people to keep the momentum of your expansion going?
Absolutely. I myself spend a lot of time in human resources and we have a very senior person doing nothing but HR. We spend a lot on manpower training and we have scholarships to overseas. We're also working with local universities to partly help them develop their skills so that they will be more applicable to our industry. That will make their research more practical and at the same time get the students to understand that this is no longer a sweatshop type of industry.

You've invested heavily in western china, what is the strategy behind that?
We look for the best source of cotton and in Xinjiang one breed of the cotton can be as good as that of Egypt or Peru. It was a resource that was going to waste, so we went in to revitalise the extra long staple cotton. Our customers are very demanding so we don't want any foreign matter to be in the cotton. We cannot buy the cotton and try to separate it, so we are trying to get involved in ginning to prevent foreign matter from entering the cotton.

What do you think of the Central Government's plans to promote the west?
I think Central Government has very good ideas, but the west has always had problems with implementation. Management is very thin and the senior people in these areas are very dedicated people -- I have great admiration for them. But their problem is that they are so short of good people to help them. And then they have a huge area to administer that if you send one of your guys out he doesn't come back for four days. It is so frustrating for them. I'm sympathetic to the leadership.

But I think we need to work closer with the government to ensure responsible industrialists are going out there, which will be a very important part of the development programme. We want to make sure it attracts people who have the right mindset. I think it will be very dangerous for the environment if we only attract opportunists.

Why did you decide to established Esquel Technology earlier this year?
Because we have put a lot of investments in our own IT. We were also encouraged by local factories in China to share our knowledge and management skills with SOEs in the textile area. We are teaching them a lot and people have asked, 'are you crazy? You are improving your competitors.' But it also puts the pressure on ourselves to run faster.

What are your targets for the near future?
This is a period where we are pulling all the different elements together. My plan is to practice what I was taught at MIT and Harvard Business School, and that is to apply technology and management. I will also prove my game plan in that the results are just going to grow exponentially. The next challenge is our supply chain, because we feel we still haven't got the full potential out of supply chain management. Now we will link the pieces together and that will provide another round of production growth.