1 Oct 2003
Bagging the executive market(HKTDC Fashion - Leather Goods & Bags, Vol 04,2003)
the executive market
Amigo Baggage (Guangdong) Co Ltd
Two of more than 700 styles of handbags, attaché cases, portfolios, pilot cases and computer bags manufactured by Amigo Baggage (Guangdong) Co Ltd
A catchy name change to support its increased drive into the international business bags arena three years ago has reaped rewards for 30-year-old Hong Kong company Amigo Baggage (Guangdong) Co Ltd.
"We chose Amigo because it's a name that anyone in any country can relate to, and it has a more international flair than our previous name, Yuen Fung," explains marketing manager Randy Tung.
The change of name obviously worked, as today Amigo has an annual turnover of more than US$45m and produces more than 700 styles of handbags, attaché cases, portfolios, pilot cases and computer bags for Europe, South America, the Middle East and Canada.
Amigo's friendly name is backed by a strong orange and white logo designed to create a sharp contrast to the company's largely black, leather-look business and travel bags which now account for 70% of its output.
"We started out in handbags and expanded into business and travel bags some 10 years ago," recalls Tung. "With our focused commitment to this sector, we have developed a strong reputation for medium to high-end executive bags."
However, the company manufactures bags to fit different market sectors, from budget-wise to full features at its own 500-worker factory in Dan Shui, Shenzhen, on the Chinese mainland.
More than 80% of Amigo's bags are made from PVC with other materials such as nylon, polyester and denim adding to the company's wide range of product choices. "PVC is light and durable for business bags and with today's techniques can look just as attractive as quality leather," Tung explains.
Amigo sources materials from the Chinese mainland, Taiwan and Korea. "Previously we sourced 30% of our raw materials from the mainland but quality and prices have become much more competitive, so it now accounts for half," he notes.
Traditional flat black PVC attachés remain the company's most popular items but there is still a demand for hard shell cases. "These have been replaced in many markets by softer options, but every year we still get at least two really large orders for hard shell attachés and pilot cases," says Tung. "We are now one of the few companies to continue manufacturing this specialist style."
The company's Y2030 classic PVC attaché case is its most popular model, which Tung says has sold more than four million pieces around the world. "Another favourite is Amigo's L3221 I model soft polyester attaché bag with double-flip front," he explains. "Customers like its two-buckle feature."
Traditional styles remain the most popular, says Tung, "But customers are increasingly looking for better quality and more functions, such as detachable CD wallets in computer bags and deluxe organisers."
One value-added feature is Amigo's large product hangtags. "Hangtags can add about US$1.00 to the overall price, which deters customers from ordering them, especially for lower-priced attaché," he adds. "However, by designing them in-house we make them at a fraction of this cost and they have proved highly popular with customers and consumers alike."
Amigo is now turning its attention to revamping its handbags business. "We are putting a concerted effort into moving our handbags business to more fashionable lines and will be looking at ODM opportunities," explains Tung.
The UK is Amigo's main market and the company is looking to expand in Europe. "South America is an important but very price competitive market, however buying power is rising and we can modify our models to fit market price and demand."
Tung says demand for quality has increased while prices have dropped considerably over the past years. "While we have worked hard to minimise our production costs, more than 40% of our revenue is spent on purchasing materials," he notes. "We must maintain our reputation for quality so future cost reductions will need to come from buying smarter."
While competition is increasing, especially from Hong Kong and mainland companies, Amigo maintains its leading edge through consistent quality, customer service and reliability. "We never subcontract any of our business so we can always guarantee our quality."
WRITTEN BY SANDRA JENNER
Amigo Baggage (Guangdong) Co Ltd
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