Member Profile

Prosperity Clothing
K C Lau often wonders what he would be doing if he had listened to his heart instead of his head after he was cheated out of his year-end bonus when he was 21.

Today, KC as he likes to be called, heads a multi-million dollar clothing business that exports to the four corners of the world. But the business empire that he stitched together from a single thread of opportunity didn't begin to take shape until 1955.

That was the year that he went to work in the export department of an Indian trading company, which dealt mostly in textiles and garments. He soon picked up the fundamentals of trading and discovered that he had a passion for the rag trade.

One of the firm's main fabric suppliers was from the United States. Realising he needed to improve his language skills, Mr Lau signed up for English lessons at night school. It was here that he met some other young would-be entrepreneurs itching to start their own business.

"One of the guys said his relative owned a traditional dried food shop, which imported Chinese noodles and things like that, to sell to Taiwan," Mr Lau recollected.

His classmate explained that with business tapering off, they didn't have much work to do, and so they were looking for other lines of business to get into. Mr Lau was invited to attend a picnic with his classmate's family one weekend, and they suggested that because he knew something about the garment trade that they start up a little sideline to the dried food business.

Mr Lau was happy at his current job and didn't want to leave. Instead, he introduced a former colleague from the Indian firm that he worked for.

"He had recently married and had a new-born baby, but got fired one day when the boss found out he was getting kickbacks -- which although was not right, was quite common at the time. So I told him that I would talk to my classmate and introduce him."

His grateful colleague was given a job and for six months things were going fine. The original dried food business know as Kin Funghong got approval to change its name to Kin Funghong Textile Limited and the fledgling business looked like it was going to be a great success.

Soon after, however, the man he had introduced was caught taking kickbacks again and was fired. Still not competent enough to run the business, his classmate asked Mr Lau for help.

"The business had only been going for half a year and the person I had introduced had been fired. What could I do?" he asked. "They also persuaded me by promising a handsome bonus at the end of the year based on how much profit I made for the company."

He agreed and the 21-year-old export manager was paid HK$500 a month. He ran the business as his own, working hard and often late into the night, finding business and meeting with customers. His hard work seemed to be paying off and after 11 months he had made a profit of about HK$35,000, which for a two-man business in 1957 was a princely sum.

With Chinese New Year approaching, Mr Lau said to his classmate that their efforts had paid off and they should be getting a good year-end bonus. He agreed to talk to his brother-in-law who owned the business about the bonus. The next day, his classmate avoided the subject, but Mr Lau pressed him for an answer. Finally, after a few days, Mr Lau was told that because no contract was signed, there would be no bonus.

"I was only 21 at the time so I believed him. I was furious at what he told me. I said: 'I trusted you. You asked me to help you and I did. But now you are pulling this trick after all the work I've put into building up this business'."

After Chinese New Year, Mr Lau swore he would not return to the company. His father-in-law to be advised him that because he didn't need the money so badly, he should put the incident behind him and use the opportunity to get more experience.

"I was young, emotional and not very experienced, and what he said seemed to make sense so I stayed on," he recollected. "But two and a half years later, I found an opportunity to start my own business. Then I handed in one month's notice and left in 1960."

Having been paid HK$500 a month meant that Mr Lau did not have a great deal of cash to get his new trading business running, but with hard work and a little bit of luck managed to survive.

For many Hong Kong trading companies at the time, the Middle East was an important market, and for Mr Lau's new business, this was also true as his first customer was from Iraq. He also found customers in East Africa, then Rhodesia and Mozambique.

"At that time, Hong Kong exported very few medium or high value items and the Indian's controlled almost all of the export market because they had people in the Middle East and East Africa which were very important markets at the time," he said.

Mr Lau said he wanted to get into the U.K. market, and by having met a big U.K. customer from Cardiff at the first Indian firm where he had worked, he did manage to get some business from him. Then, in the mid-1960s, Rhodesia fighting for independence, resulted in the collapse of exports there and to East Africa.

Two years after establishing the business, Hong Kong's garment makers were put under a quota. Mr Lau said he was fortunate in the sense that having been established before 1962 meant he could obtain quota according to performance which helped to expand his business.

Even so, without the trust and support of his banker, Mr Ong, who worked for Banque Nationale pour le Commerce et l'Industrie (BNCI) at the time, Mr Lau thinks he may not have made it to where he is today.

With his foot in the door of the U.K. market, via his Cardiff customer, Mr Lau was able to win other orders from British customers, including Marks and Spencers in 1986, which demonstrated to other potential clients the quality of his garments.

His business boomed, and to reward and retain his staff, Mr Lau paid his workers a year-end bonus of two months' salary. The boom of the early 1990s, however, led to a dramatic rise in payroll costs, and undermined the competitiveness of products manufactured here. Companies were so desperate for workers that they would offer HK$500 more than they were currently being paid to come and work for them. "Salaries seemed to be going up almost every day," Mr Lau said.

This forced many manufacturers, including Mr Lau, to open a factory north of the border, though he still keeps a small factory running in Hong Kong to produce complex, higher-value knitwear.

With styling, research & design operations here in Hong Kong, and manufacturing in the Mainland, Mr Lau has managed to keep the orders flowing. The economic slowdown last year, however, started to bite. For the first time in decades, staff received one extra month's bonus pay at the end of the year instead of two.

Another worry is that come 2005, the textile quota system will be abolished and garment makers will be open to competition. Though other markets may be able to produce textiles more cheaply than China, Mr Lau said China has a lot of advantages over other countries, not least quality.

Looking to the future, he is confident that customers will still be willing to pay a fair price for good quality garments. His son, Joseph, who last year returned to Hong Kong from the U.S. to take over the reins of the family business, is also optimistic about the market.

"With the elimination of the quota system in 2005, things will be difficult. That is why we are looking at ways to make our factories more efficient and providing more value-added services to our customers," Joseph Lau said. "I think now may not be the easiest of times to take over a business, but I'm finding it very interesting and rewarding, and I feel very good opportunities lie ahead of us."
Over the years, we have helped businesses overcome adversity and thrive locally, in Mainland China and internationally.

If you want to take advantage of our network,insights and services, contact us today.