4 April 2005
Wise Move(HKTDC Fashion - Leather Goods & Bags, Vol 02,2005)
Nam Hung has a monthly production capacity of two million units, 60% of which is promotional cosmetic bags for well-known brands such as Lancome, Clarins and Pantene.
Marketing manager Elster Chan says ladies' handbags were added in 2000, and the 17-year-old company scored a coup in 2001 by landing its first major order for airline vanity bags.
"The airline order was a big step forward for us and now comprises 10% of our business," explains Chan, whose two brothers also work in key posts in the company that her father established. "We hope to double that with orders from other airline customers."
Private label orders account for a "significant" share of Nam Hung's business, with the company's two designers turning out an average of 30 new designs per month.
"People want simple, modern designs," Chan maintains, adding that flower designs are very popular for cosmetic bags and handbags. "We do a lot of colourful bags because we think they look attractive."
Nam Hung is also considering re-introducing its own brand under a different name after dropping an earlier incarnation some years ago. "Our previous brand was better for sporty looks," she says. "We want one that has a younger, more fashionable image."
Chan believes fashionable designs and high quality construction have been key to the company's success, together with its reliance on a range of inexpensive materials - including 70D sponge microfibre, canvas, nylon, mesh and terrycloth sourced mainly from Korea and Taiwan.
Quality control is a priority at the firm, which maintains a ratio of one quality control officer for every 10 of the 1,100 workers at its ISO 9000- and ISO 9001-certified factory. "We do another quality control check when the product is finished," Chan says.
Nam Hung has also reduced delivery times from 45-60 days to 20-35. "We can't speed up on materials because we don't control that aspect of the business - although one of our suppliers is now delivering in 10 days instead of 30 - but we can speed up production," she maintains.
Chan says the firm can rearrange its 16 production lines to handle rush orders. "If customers want delivery faster than 20 days, we may have to send the order by air freight even though we normally send by sea," she advises. "We will lose the order if we don't do this."
Nam Hung's major export markets are Germany, Britain, the US and Poland, with the US offering the greatest potential for further growth following the elimination of quotas on nylon products this year.
But she warns customers worldwide that rising oil prices are expected to have an impact on the cost of nylon products. "Prices will be going up this year or next year," she predicts.
Chan is also keenly aware of increasing competition from mainland areas such as Fujian Province. "When we started making handbags there weren't so many competitors," she admits. "Our margin is lower now because there is more competition."
However, Chan says there may be a silver lining. "There are a lot of factories on the mainland, but the quality of their products is low so our customers are coming back," she claims. "We insist on better quality and don't try to meet their prices - we couldn't survive if we did."
Future plans for the company call for making inroads into the mainland market. "We want to introduce handbags under our own brand," Chan reveals. "We're hoping to start next year."
Nam Hung's continued growth is another goal. "We want to produce more items, attract more buyers and increase our sales," Chan says, adding that she derives a strong sense of accomplishment from a job well done. "If I find that our products are selling well, I feel satisfied."
WRITTEN BY ANDREA PAWLYNA
Nam Hung Handbags Industrial Ltd
Unit 1803, 18/F,