Hauter Couture Fashions (HCF) was established in the 1974 by the Tan family. Tan Boon Kheong, the patriarch of the Tan family was a skilled master cutter, trained by British master cutters in the 1950s in Penang. He ran a small business but successful business tailoring men’s clothing in Argy11 Road, Penang until his retirement in 1980. HCF started out as a family owned business with all of its shares being held by the Tan family. Peter prepared to bid for contract manufacturing deals with the European fashion houses. HCF started its first fully equipped factory in Penang in November 1974. HCF very quickly established itself as a high quality manufacturing of both men’s and women’s clothes. In July 1980, HCF opened its new factory in Butterworth. After 10 years, HCF opened two more factories in 1990 in Jitra, Kedah and 1995 in Thailand which is set up with wholly owned subsidiary Haute Couter (Thailand) Pte. Ltd to operate the Chieng Mai factory.
Issues and Problems
HCF was in a dilemma when Jeffrey Cheong received a letter from KiKi and Houida, two European Fashions House that they may be looking to China to ‘contract manufacture’ for them as the price there were very competitive. HCF is not match to China growing economy and this new development will definitely cause the downfall of HCF. Jeffrey had garnered the assistance of his senior management team to brainstorm on possible options HCF can look at.
Although acknowledging that looking into China is in inevitable, the team was divided in the approach to be taken. First proposal is to expand into China with two possible ways either setting up HCF own factory that was large enough to manufacture clothing for its existing customers or manufacture in China in a joint venture with a Chinese manufacturer. However the option for expanding to China on its own would required higher cost but HCF do not have enough money to fund this expansion. Besides that, the new factory is required 18...