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May 30, 2016

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Heir to family garment business turns to made-to-order model

WERE it not for her father, Zhang Yunlan’s life might have been totally different. Born in 1979, Zhang now heads Red Collar, one of the largest tailor-made apparel makers in the world established in 1995.

Having lived and studied in Canada for five years, and worked for less than one year at an American company in Shanghai upon her return from abroad, she could have taken a career path similar to many other overseas returnees.

All this changed when Zhang Daili, her father and founder of the Qingdao, Shandong Province-based company, came to visit her about a decade ago in Shanghai. He brought with him a new plan for his daughter’s life.

“My father wanted me to take over the family business, and asked if I agreed,” Zhang told Shanghai Daily. It wasn’t an easy choice, but Zhang accepted her father’s request out of what she said was a “sense of destiny and family obligations.” This spirit has continued to motivate her over the years, and has helped transform Red Collar into a successful company thanks in large part to its make-to-order business model.

“Ninety percent of our orders came from overseas, and we produce clothes for two million people,” said Zhang, who succeeded her father as president of the company in 2009. Red Collar has a yearly output of more than a million garments, which averages out to an astonishing 3,000 items per day.

Conventional wisdom has it that tailor-made clothing takes longer time to make. Perhaps sensing this author’s curiosity about how Red Collar manages to balance cost and efficiency, Zhang observed that at the heart of Red Collar’s success is the “smart manufacturing” process her father introduced in 2003. This process was adopted as a way to help the company break away from traditional model adopted by most ready-to-wear manufacturers.

In an age when consumers are increasingly asserting their own tastes and preferences, Zhang sees the standardized, homogenized garments churned out by mass producers falling short of market expectations.

Under her stewardship, Red Collar reported 3 billion yuan (US$458 million) in revenues in 2014, or an increase of 150 percent from the previous year. These results were achieved with virtually zero surplus inventory.

Speaking recently at a forum held by the Shanghai Overseas Returned Scholars Association, an organization of entrepreneurs, scholars and experts, Zhang explained how her company could pull off this feat.

Red Collar’s current focus is on building itself into a C2M business or, consumer-to-manufactory, whereby customer needs are essential in deciding what kind of products get made.

A key concept underlying production at Red Collar is “Magic Manufactory.” Consumers can directly place orders and even submit their own designs with preferred specifications. These designs will then be processed in a way that matches them to countless existing styles in the company’s database. Minor alterations can be made in color, size and design to suit individual tastes.

Billions of styles

“There are, without any exaggerations, billions of styles in our database. They exceed the planet’s entire population, which means we can design for anyone,” said the soft-spoken, petite businesswoman.

Her business has defied the expectations of many experienced tailors, who were once skeptical of its model for they assumed that highly personalized garments involving a great deal of manual work could hardly be produced on a mass scale.

Take the suit for example. At some traditional tailoring outfits, a Western-style suit could take up to three months to produce, but at Red Collar a suit can be produced in under a week after the order is received. According to Zhang, her tailor-made business is 10 percent costlier than an average ready-to-wear producer, but its zero excess-inventory model has given it “a sharp competitive edge shared by few.”

This model owes much to the widespread use of the Internet and big data, among other technologies.

Although Red Collar was once lauded by business columnist Wu Xiaobo as “a high-tech firm rather than an apparel maker,” this sophistication is a far cry from its relatively low-key foray in the overseas market. In New York City, the first step of Red Collar’s global outreach strategy, Zhang led a team and went door to door to advertise their products.

“We chose New York because that’s where some of the world’s most choosy and demanding customers are. If we can satisfy their needs, it’s relatively easier to meet everyone else’s,” she said.

New York, in her words, was a sort of trial case to test the market. And it worked exceedingly well. Using feedback gathered from customers, Red Collar steadily reinvented its factories to adapt to market needs.

In this process, it evolved into a platform sponsoring retail start-ups, many of which were completely new to the apparel trade but were attracted by Red Collar’s philosophy.

Last year the company bought 30 plus start-ups, and helped them overhaul their production lines to leverage the power of new technologies and smart manufacturing. The slogan “Magic Manufactory” was in fact coined by a French client and quickly endorsed by Red Collar’s management, said Zhang.

As a mother of two, Zhang remains grateful to her father for instilling in her the necessary insights and vision to manage a 3,000-employee business.

Critics of family businesses often cite the lack of outsider involvement in top management, which they believe will eventually limit development.

In her experience, Zhang was groomed to take over after her father employed several professional managers but later ruled them out as his successors. The founder of a family business has plenty of ways to guard and bequeath their wealth and hiring top executives is one among them. But more important are the values they pass on to heirs, said Zhang.




 

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