4 Oct 2006
Diversification Delivers(HKTDC Fashion - Leather Goods & Bags, Vol 04,2006)
Sun Lick Mfy Ltd
|Sun Lick Mfy Ltd produces everything from wallets, purses, schoolbags and backpacks to jewellery boxes and pencil cases|
One of Hong Kong's leading wallet and purse manufacturers had everything it needed when it began business in 1952. "My father was working for a company that made these products," recalls Kenneth Ling, who now heads Hong Kong-based Sun Lick Mfy Ltd. "When the boss retired, he sold the factory to my father."
The fledgling firm quickly went from strength to strength, growing from fewer than 10 workers to 900 employees, a 10,500-square-metre factory in Shenzhen on the Chinese mainland and an annual output of five million pieces.
Low-cost PVC wallets and purses destined for the Middle East were the OEM/ODM company's bread-and-butter in the early days, but over the years Sun Lick has moved into the medium-priced US$1-2.50 FOB Hong Kong per item range.
Ling notes that the firm has also diversified its product lines to include schoolbags, backpacks, jewellery boxes and pencil cases for export to Europe, Canada, South America and Australia. "Today we use PVC, PU, nylon, leather and sometimes cotton," he adds.
Styles have changed just as dramatically as the raw materials over the past half century, with improved workmanship and more complicated decorative extras making for sturdier, more design-intensive products.
Major developments include such innovative additions as accordion compartments, extra credit card slots, zippered pouches, coin dividers, metal detailing and more stitching.
Indeed, one of Sun Lick's most popular ladies' models sports at least 20 credit card slots, while Ling observes that embroidery is also becoming increasingly popular.
However, he says Sun Lick prefers to stick with classic designs rather than simply follow the latest fashion trends. "Our products are more suitable for adults rather than teenagers," Ling maintains. "Our customers want styles that last and aren't too trendy."
He says that while there has been a move in recent years towards brighter colours such as violet and orange, favourite colours still tend to be darker shades such as black, brown, navy and burgundy. "But we can produce any colour a customer specifies," Ling adds.
Ladies' purses account for 90% of Sun Lick's wallet/purse production and are typically offered in rectangular and square shapes, with the rectangular version more in demand because of its bigger capacity. "Men's wallets tend to remain the same, year in and year out," Ling admits.
Sun Lick offers a rolling inventory of more than 100 wallet/purse models to cater for OEM production, which makes up 80% of its output, although it also has two brands of its own - the classic Lanto and the trendier Wave.
Business has grown at a steady 10% -20% annual pace, but Ling says 1999 stands out as the most profitable year in Sun Lick's history because mainland labour costs were low, the US dollar was strong and raw material prices were a bargain.
"But this year the increase in oil prices has pushed our raw material costs up by more than 40% and some have doubled in price," Ling sighs. "The depreciation of the US dollar has also affected us because we source our materials from Taiwan, Korea and the mainland, while mainland wages are up 30% this year."
Sun Lick looks to its long-term associations with customers - some stretching back decades - and its decision to diversify into other products as significant cushions that will help it counter its current trials.
The wallets and purses that once comprised 100% of production now account for only about 20%-30% of output, with nylon pencil cases having been added to the line-up about 15 years ago, followed by leather jewellery boxes in 1996 and nylon and polyester school bags in the last five years.
Polyester backpacks are the latest products to be manufactured by the medium-sized manufacturer, which can handle orders up to 100,000 pieces. "Times change and our customers have asked us to make these products for them," Ling says. "We feel it's important to develop new items."
WRITTEN BY ANDREA PAWLYNA
Sun Lick Mfy Ltd