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French Success

Mon, 17th Oct 2011
Macao entrepreneur sets up famous French brand of children’s clothes. (October 2011)

He left school at 13 and went to work in a factory in the morning to put food on the family table in the evening. Now he runs one of the most well-known chains of children’s clothes in France.

It boasts 150 shops across Europe, Canada and Mexico.

La Compagnie des Petits is the most famous foreign brand created by a Macao entrepreneur. It is the greatest achievement in the remarkable life of Howard Yiu Kai-kwong.

While he owns 100 percent of the firm, he keeps a low profile. All 300 employees of the company and shops are French. Set up in 1990, its headquarters in Marseilles, it has an annual turnover of over 50 million Euros.

“It is one of the most famous children’s shops in France,” said buying director Estelle Chapelin on a visit to Macao. “It has received a lot of publicity and has a very faithful clientele. We are making a major push to move up-market, with better window displays, a new logo and an improved image.”

The French firm belongs to Yiu’s holding company, Group BH, which he established in 1977. Involved in retail, manufacturing and wholesale business, it sells its products in Europe, Asia and the Middle East. It has an annual turnover of more than US$120 million during peak periods.

Learning the Hard Way

All this is a far cry from the small, low-cost housing estate in Hong Kong, where Yiu is from. He was born in 1950, one of six children of a poor family. His parents scraped a living from odd jobs, sometimes borrowing money, and not knowing where the next meal was coming from.

While he was at primary school, Yiu started to earn money, painting toys on the dining table at home. He graduated at 12 and started to work in textile factories, the mainstay of the Hong Kong economy at that time.

“I worked very hard from eight in the morning until eight at night,” he said in an interview. “Working conditions were not healthy, with dust in the air which got into our lungs. We did not wear facemasks. I started coughing, and my lungs are affected even now.

“I had to do this to look after my family. I gave 90 percent of my earnings to my mother. I continued to live with my parents, while my brothers and sisters moved out.”

Yiu worked and studied diligently, eager to master the textile business and have a life better than that given to his parents. His talents were noticed by his boss, who offered him a post as a manager in his factories in Taiwan, the Philippines or Macao.

Move to Macao

The job in the Philippines offered a salary three times as high as the amount he was earning in Hong Kong. But life there was dangerous. The salary in Taiwan was double, but the rate of success was low, so he chose Macao, moving to the city in 1970. It was close to Hong Kong and his family, and he had been before on visits with his friends. He was given a salary of 1000 patacas a month, plus board and two meals a day.

“The city was very small, and industrialisation was just beginning,” he recalled. “There were only a few factories – small ones. Hong Kong factories had quotas on their exports to the US but those in Macao did not. It was very easy to adapt. The population was small, and there was a strong feeling between people.”

Flying on his own

In 1983 he started up his own business. It grew rapidly, with output doubling both that year and the one following it. Yiu opened a factory in China. It offered cheap wages and quota-free access to the European Union – but also meant a flight of nearly 20 hours, via India or Singapore.

He also opened plants in Lille in France, Setubal in Portugal, and in Vietnam. However, due to the quota issue, he was not able to continue the plants in those countries.

Then Yiu decided on a change of strategy. Instead of producing the garments, he would contract others to do it. So he closed all of his factories and chose outside plants to make the goods and accessories. His firm would provide the materials, designs and patterns, and ensure that its specifications strictly adhered to the European Union standard.

Until 1990, Group BH only produced for foreign clients, and its products carried their brand names.

Setting up shop in France

Then, in 1990, Yiu made a strategic decision. As well as producing clothes for other people, his company also needed to establish its own brand. He chose the world’s most competitive fashion market – France.

It was a brave decision and, according to many in the industry, a foolhardy one. “When I went to the French banks, they asked me how I would do it. They said I would lose money,” he recalled. But Yiu went on to prove they were wrong about him.

His strategy for La Compagnie des Petits (LCDP) was to make a firm that was an entirely French enterprise. Yiu owned 100 percent of the company, but all of its employees, including designers and stylists, were French. He placed its headquarters in the southern port city of Marseilles.

“We decided to make clothes for children, from newborns to ten-year-olds. People love children most of all and want the best things for them. We aim at the middle range of the market,” he said. “The French are outstanding in creation. They make the best clothes in the world, while Italians are the best at making things by hand.”

When setting up the business and getting it running, Yiu spent 60 percent of his time in France. LCDP grew rapidly, and now has 150 retail shops. They cover many different countries, including France, Belgium, Luxembourg, Spain, Hong Kong and Macao, as well as Mexico, Canada, Taiwan and mainland China for the wholesale business. The majority are self-managed. In these shops, the consignee manager hires the space and pays the rent and wages, while LCDP provides the merchandise. Each evening the manager puts the receipts in the bank account of LCDP, which pays him a certain percentage. The annual turnover has now reached 50 million Euros.

The company has its largest presence in France. Its stores cover the country, from Strasbourg in the east and Nantes in the west, to Lille in the north and Antibes in the south. They have established a presence in the surrounding area of every French city that has a population of over 50,000.

Jean-Pierre Druart, chief executive of LCDP, plans to expand the brand into new markets in North Africa, Eastern Europe and the Middle East.

The BH group continues to manufacture children’s clothes for other companies, including famous European brands like Chevignon, Naf Naf and Von Dutch. Its latest client is the French company Zadig & Voltaire, with whom it signed an agreement in April this year to produce children’s wear.

The future

Yiu is not sure about the future. The younger generation in Macao does not want to be involved in the textile business, which it considers too challenging. It is easier to find a well-paid job in a casino, a hotel or elsewhere. The old workers are retiring.

The garment industry is dominated by giant conglomerates which can obtain the cheapest prices for the materials they use by making bulk purchases. They are increasingly run by accountants and financiers who have little feeling for the products and their employees, and demand only a certain return on equity.

They do not have the passion for the garments and their staff that Yiu has developed over the last 40 years. During the past four decades, Yiu has faced many difficulties in his work for the company, but he has never given up.

Charity work

Alongside working on his own business, Yiu dedicates himself to social charity work.

He is a director of Tung Sin Tong, Macao’s biggest private charity. He is also president of the Macao Association for the Mentally Handicapped. “There are many such people who need our help. I have been involved in this work for six years and want to do as much as possible.”

This non-profit association was set up in 1986 to provide education and support for people with mental-health disabilities. It has established four education and training centres, organises seminars and celebrations, and lobbies for better welfare for them.

“They are part of our society and people should not look down on them,” said Yiu. “We should respect them and give them equal treatment and enable them to live with dignity.” The four centres aim to reduce the burden on the families, enable their children to receive training, and integrate them better with the outside world. They also train them to communicate better with their families and people outside of the centres.

In addition, the association lobbies for more long-term residential places for people with mental-health issues.

LCDP’s Paris stores

La Compagnie des Petits has three branches in Paris. One of them is situated in Les Quatre Temps – one of the biggest shopping centres in the capital.

Les Quatre Temps is in La Défense, Europe’s largest purpose-built business district. Located in the west of Paris, it lies on the other side of the Seine from the historic areas for which the city is famous. La Défense has 72 glass and steel buildings, occupying 3.5 million square metres of space. Around 180,000 people go there to work every day.

These office workers are some of the key customers of La Compagnie des Petits. “They come at lunchtime and in the evenings,” said Carre Benedicte, a saleswoman in the shop. “The number of people who pass through this centre is very large. In addition to the office workers, we have tourists, residents, and foreigners, including Chinese people.”

LCDP’s store stands out amongst its competitors on the second floor of the giant shopping centre, awash with red, blue, green and other colours. It sells items for children, catering to youngsters from one month to 10 years’ old.

Luring the shoppers

The store opens from 10:00 until 20:00 every day of the week except for Sundays. “At weekends, we tend to get customers who spend less than those during the week,” said Benedicte.

“We aim at the middle range of the market. What sets us apart is our array of bright colours – full of joy. Our clothes are ones which children can wear all the time. We use very little black. We offer everything for children, including gloves and accessories. The only thing we don’t sell is a shoe range. We cater to all tastes, including classic and not so classic,” she said.

All the products are designed by the artists and staff of the company itself. The clothes are made in China, whilst the accessories are usually produced in France.

The firm plans more publicity campaigns for this year, to raise its profile.

Les Quatre Temps offers a shopping experience different to that found in the rest of the city. Rows of colourful shops line the massive mall, and a large food court dominates the fourth floor. Underground there is a metro station with a stop on the city’s suburban railway line, which brings in a large volume of traffic every day.

Traditional shoppers prefer to stay on the other side of the Seine, where they can stroll beneath the blue sky along the wide, tree-lined boulevards. Here they can sample the dozens of boutique shops and brands which have made the city famous. La Compagnie des Petits must have a presence in both markets – new and traditional.

 

By Mark O’Neill

(Issue N. 9, October 2011)