9 July 2004
Moving Up(HKTDC Fashion - Leather Goods & Bags, Vol 03,2004)
Wing Shing Enterprise Int'l Co Ltd
Mainland Handbag Mfy Ltd
Backpacks are big business for Mainland Handbag Mfy Ltd, which can produce around 100,000 bags per month at its Chinese mainland factory
Peter Chung is living proof of the wisdom of the age-old motto "make the most of what you do best". The founder and general manager of Mainland Handbag Mfy Ltd has come a long way since first learning about the bag and luggage business while working for a large trading company.
In classic Hong Kong style, Chung soon decided that he knew enough to set up shop on his own and established Mainland in 1995, initially sourcing bags and luggage from factories on the Chinese mainland for clients overseas.
Six years later, Chung recalls, he went into partnership in a production facility of his own in Shenzhen on the southern mainland. "When we went into our own factory I knew we could control everything - material quality, delivery time and, of course, costing," he explains. "It's easier to control prices that way, and we were able to reduce prices from the level we could offer when we were only trading."
The factory occupies about 20,000 square feet in one building spread over three floors, Chung explains. "We have 250 sewing machines and 350 people working there," he adds. "It's a medium-sized operation that can produce around 100,000 backpacks per month, depending on how complicated a particular design may be."
Backpacks for sale in retail outlets or used as promotional give-aways are a Mainland specialty, although the company has also produced school bags, travel bags, handbags and other items for a number of leading international brand names.
"Our customers are mainly in Europe, but also Australia, Japan, Singapore, the Middle East and South America," Chung notes, adding, "We intend to expand our business and are looking to break into the US market."
At present the company deals primarily with wholesalers, and manufactures mostly on an OEM basis, working from customers' designs.
"We are capable of generating our own designs, and we do for promotional purposes," Chung says, stressing that Mainland specialises in bags and baggage because it is familiar with these products. "If you're not familiar with a specialist area you can't offer good prices to customers."
Chung estimates about 50% of production consists of promotional items, while the rest is ultimately intended for retail sale.
Mainland concentrates on small bags, but continues to help clients source larger luggage from other factories on the mainland.
"We use nylon, polyester, transparent PVC, different kinds of PVC leather and microfibres," Chung notes, explaining that Mainland will use any material except genuine leather, which is very expensive and outside the company's product range.
"Special patterns, colours or designs are sometimes required for ladies' bags, and we use a lot of printing and embroidery."
Prices depend on the design of the bag, the cost of the materials and the size of the order: a simple wallet could cost as little as US$0.15 FOB Hong Kong each, while a larger piece of luggage could be as much as US$35.
"The largest order we've handled was for 500,000 pieces from a European customer for cooler bags that were used as promotional items for a milk powder company," Chung recalls.
He adds that whatever the order size, Mainland always tries to offer the best prices, good quality and an efficient service. "Delivery can be very fast - as little as one month - while other orders can take up to three months."
The formula obviously works, as Chung estimates that annual turnover is now about US$3m, and he has aggressive plans to extend Mainland's markets.
"We have strong relationships with customers in Europe, some of whom we have known for many years," he confides. "Our plan is to find more customers and create more new items of our own."
He says Mainland might consider developing its own brand, but notes that promotional costs are "very high" and it takes time. "We concentrate on production - how to make a good product better and cheaper," Chung concludes.
WRITTEN BY ROBERT PIERCE
Mainland Handbag Mfy Ltd
Rm 1202, 12/F,
Shun Fat Industrial Bldg,
17 Wang Hoi Rd, Kowloon Bay,
Kowloon, Hong Kong
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