FACULTY OF ECONOMICS AND MUAMALAT
FIRST SEMESTER 2013/2014
Integrated case study
Report on china dolls
PUAN AINULASHIKIN BINTI MARZUKI
MUMTAZ BT MUSTAPA
11 OCTOBER 2013
The article of China Dolls is about the fashion designer by Haute Couture Fashions Bhd (HCF) of its history of establishment, an expanding, the problems and also the solution that were taken. They were facing problems regarding their two major clients from European fashion houses, Kiki and Houida looking into “contract manufacturer” to China because of the prices there were very competitive. Jeffrey was in a dilemma with his assumption of others clients would take the similar steps that would lead HCF had been experiencing dropping margins and profits would then be incurring losses. Jeffrey was thinking that he should also consider moving his operations to China. HCF was established by Tan family, Tan Boon Kheong in Argyll Road, Penang in the 1974. He was skilled master cutter and was ran successful small business on tailoring men’s clothing. Then, HCF was successful expand by his son, Peter Tan who was study at Europe and become the talented designer and wealth of experience was interested in creating for both men and women’s fashion. HCF started its business by getting contract manufacturing deals with European fashion houses. Peter Tan had a good networking skill for HCF’s growth with the European people where he was studied before. By the late 1970s, HCF was expanded to Butterworth that much larger (three time larger) state-of-the-art factory to cater for the growing demand because of the production capacity in Penang was not longer big enough. By expanding their business to Butterworth, HCF continued to experience growth in annual sales from RM10 million to RM100 million. Its customers and profits were also riding high. Then, it expands another two factories in Jitra, Kedah and Chieng Mai, Thailand. It looked to Thailand because the labour was very cheap, cheaper land and more competitive. In 1997, HCF was facing the problems regarding the financial crisis in Malaysia. HCF handles the crisis by closing down the factory in Penang and still able to meet the demands while it still operating the other three factories in Butterworth, Jitra and Chieng Mai. Besides that, although over the next few years HCF manage to face difficulty and still survive because of high quality clothes and high demand for the clothes continued. Furthermore, HCF needs to be very careful with the contract manufacturing structure and make sure that the designs were not crossed between the various labels that HCF was producing. The contracts were take for delivery of clothes one season ahead and HCF would sell the manufactured clothes at a contracted price. All of HCF’s clothing was manufactured under the customer’s own label and there is no its own label. Tan Boon Kheong was the founder, chairman and first managing director of HCF and he started the company as a business venture for his son, Peter. He was retired but he still retained his 19% shareholding in the company and was a director of the company. Peter Tan, current chairman was the important person behind the success of HCF. He held 25% shareholding and also the managing director of the Thailand operations. Daniel Tan, financial controller was the youngest of the Tan children and was qualified accountant from United Kingdom. He was very good person and had a good attitude which was very friendly and easy going. He also managed to face the financial crisis on 1997. Elaine Tan, sales and marketing director was the Tan’s daughter and she was very good with the customers to keep the customers from cancelling crucial contracts. Apart from that, Beverly Tan, human resource director had helped keep the employees at HCF by...