Transforming into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel
Esquel Group (Esquel) is one of the world’s leading producers of premium cotton shirts, and among the most dynamic and progressive global-scale textile and apparel manufacturers. The company, which is privately owned and in 2005 employed around 47,000 people, was established in 1978 by Yuan-Loong Yang. In 1995 his daughter, Marjorie Yang, became the group’s chairperson. Esquel is rather unique in the apparel manufacturing industry in a number of ways, the first being its vertical set up; it has capabilities that range from cotton farming, ginning, and yarn spinning, to production of fabrics, garments, and accessories, and all the way to retailing. In addition, despite operating in a traditional industry, Esquel implemented a series of supporting IT (Information Technology) and supply chain management applications to improve operational efficiencies. Under Marjorie Yang’s leadership, a strong corporate culture has been established, with uncompromising emphasis on ethical business practices, creativity, and continual improvement. Finally, in addition to its business goals of growth and financial success, Esquel always strived to contribute to the community and bring about a positive change in society.
While Esquel’s strategy had proven to be very successful, and was in-line with management’s values, competition in the apparel industry was fierce. Therefore the company had to continue seeking for new ways to maintain its leading position in the market and achieve its goals for future growth and profitability. Esquel needed to re-think the overall company direction: Should it revise its product and service offerings, and if so, how? Could its operations achieve higher cost efficiencies while still maintaining high quality products and service offerings? And how should the company react to global changes such as the expiration of textile quotas under the Multi Fiber Agreement (MFA) on January 1, 2005?
Company Founder and History:
Y.L. Yang was part of a stream of talented entrepreneurs who fled from Shanghai to Hong Kong around the communist takeover in 1949. In 1978, in response to the opening up of the Chinese economy by Deng Xiao Ping, Y.L. Yang returned to China. At that time the business, which operated out of a small corner office in the Tsimshatsui district in Hong Kong, pioneered the use of compensatory trade to export garments from China to the United States. Y.L. Yang also injected his interest in a garment factory in Penang, Malaysia, into Esquel. In addition to the garment factories, the company included a fabric trading division called CLYTEX.
The company started by servicing the low end of the market, selling TC (Terylene-Cotton), CVC (Chief Value Cotton) and cotton shirts as well as trading in other items such as pajamas, pants and jackets. The early customers included Arrow, a division of Cluett Peabody, Phillips-Van Heusen and Kmart. Over the years the customer base changed to include high-end brands and retailers such as Abercrombie & Fitch, Tommy Hilfiger, Polo Ralph Lauren, Nike, Brooks Brothers, Hugo Boss, and Nordstrom.
Esquel, which started out as a typical player in a traditional industry, gradually grew to become a larger and more modern organization. The company transformed its operations as well as its product and service offerings in many ways. Geographically, the company expanded its operations by opening manufacturing facilities outside China. In an effort to provide better service and establish more direct contact with customers, Esquel also opened several representative offices in the U.S., the U.K. and Japan. By 2005 Esquel had 47,000 employees, garment manufacturing facilities in several locations in China, as well as in Malaysia, Sri Lanka, Mauritius and Vietnam, and a network of offices servicing...