Clothes with a Conscience in Hongkong – Transformative Technologies in China (continued series on China)

Clothes with a Conscience

Today’s Newsletter is showing you gradual and continued changes in consumer attitudes in China. Today, we present you two new and different trends. The first will bring a Hong Kong view on “Clothes with a Conscience”, thus more attention to sustainability. The second will evaluate new market opportunities based upon an interview with Amazon China President, Doug Gurr, by McKinsey, and on “transformative” technologies changing fast the Chinese market. TextileFuture is very happy to pass on the two items to its readers for further individual evaluation


banner600x400 Combing

From zero waste to organic cotton, some of Hong Kong’s up-and-coming fashion companies help customers look and to feel good.

The white cotton is soft to touch and its high quality is ideal for polo shirts. But this isn’t a designer fabric produced by a big-name clothing manufacturer; it’s a bolt of organic fabric produced by Hong Kong-based Krop, a sustainable clothing company that works with farmers in the Chinese mainland to produce sustainably grown cotton.

Across town, in its showroom in Sheung Wan, designs are being finished for a new line of Krop shirts to be sold in Bonham Strand, a bespoke menswear store and social enterprise. Bonham Strand employs rehabilitating drug users, making custom suits under the guidance of experienced tailors who train and mentor the former addicts. When Bonham Strand founder Jong Lee saw Krop’s cottons, he was astounded. “It was some of the best shirt-fabric we’d seen,” he recalled.

Seeds for sustainability

The two companies are leaders among Hong Kong fashion companies building environmentally sustainable businesses. Krop draws experience from a sister company, which has a decades-long history in Hong Kong’s clothing manufacturing, before moving across the border. Bonham Strand, launched in 2012, aims to revive the tailoring tradition that was once at the core of Hong Kong’s economic development. Both companies share a goal of delivering more ethically sound clothing.

According to these companies, the trend towards sustainability is building in Hong Kong. “The customer is much more socially aware,” says Lee.

Krop recently launched its online store and started selling on the mainland, where green products are seen as high-status purchases and usually carry a higher price tag. Krop products are sold in eco-malls and green supermarkets on the mainland.

The China market is starting to catch up with the West, where sustainable fashion has long been a hot trend in the United Kingdom and elsewhere in Europe, says Joyce Wong, co-founder of Wan & Wong, which upcycles and recycles fabric, and works with zero-waste patterns on its clothing and accessory collections.

“Hong Kong consumers don’t have that same sensibility,” she notes. Yet local shopping habits are changing. “Over the last five years, people have put more focus on it,” says Wong.



Taking measure

Master tailors employed by Bonham Strand pass on their craft to a new generation of students learning the trade.

Much of the change in consumer thinking has been influenced by global brands. Swedish fast-fashion giant H&M positions itself as an ethical fashion supplier, pledging to use only sustainable cotton by 2020. Meanwhile, leading Japanese clothing brand Uniqlo says all hazardous emissions in its supply chain will be eradicated by 2020. With other international brands implementing similar targets, the trend has “really swayed public thinking,” says Wong.

A venture capitalist, Lee worked with luxury retailers and specialist fabric suppliers when setting up Bonham Strand. He says that he has seen first-hand how attitudes to textile waste and toxic production are changing. With diminishing resources and rising demand, sustainability is now seen as key to a fashion brand’s viability. Cutting cloth efficiently, for instance, reduces waste and saves money.

“I remember when everyone thought it was a burden to be sustainable, to run these practices, but over the last five years, it has really changed. People see how they have to adapt, how they need to reduce waste in order to survive,” he says.

Hong Kong-based Redress, a local non-governmental group that promotes textile waste reduction in the fashion industry, set up the annual EcoChic Design Award five years ago. The competition promotes sustainable design and challenges young fashion designers to create collections using minimal waste. Past winners have had the opportunity to work for mainstream fashion brands, including Esprit, while this year’s winners will design a capsule collection for Shanghai Tang. The awards have spawned an awakening among design students, says Ms Wong, who holds seminars in Hong Kong for design students. Wan & Wong was EcoChic’s Most Promising Student Award Winner in 2012.



Changing Trends

Hong Kong’s burgeoning sustainable fashion brands are partnering with larger companies looking to bolster their green credentials. Since winning in 2012, Wan & Wong has collaborated with both Hong Kong NGOs and big business. One project involved upcycling old uniforms for cosmetics giants Sa Sa International Holdings Ltd.

Redress has reported a slight drop in textiles waste going to Hong Kong landfills, suggesting that such efforts are having an impact. That’s good news for sustainable fashion start-ups. At Shoe Artistry, a local Hong Kong initiative launched in 2012 to revive another fading Hong Kong industry, business is going well. The company has produced a line of shoes sold online, and runs shoemaking workshops in Hong Kong, Singapore and Indonesia. The race is on to pass down skills from older generation cobblers to younger apprentices, says Jeff Wan, Shoe Artistry’s founder.

The cobbler’s clientele is split fairly evenly between those who come to have shoes made and those who come to make shoes. “We really see all walks of life,” says Wan. “They can be design students or accountants. What they share is being part of this new movement happening across the world; people who are eager to go back to the fundamentals of using their hands to make something useful and useable; to own something made with care. That’s almost a primitive desire.”

Desire plays an essential role in any fashion success story, and Jong Lee at Bonham Strand says it cannot be won with a sustainable story alone. “We know that people are not willing to spend more on organic or upcycled products just because. And they won’t pay for low-quality goods at extortionate prices because they are being asked to do the right thing. We call that fair trade extortion. What we see is that if there are two almost identical products, and one has a sustainability angle, then nine times out of 10 the customer will choose that better story.” 


Transformative technologies in China


Textile-Future_ITFDoug Gurr had been a global vice president at e-commerce giant Amazon for less than three years when he was asked to take on a new challenge: lead the company’s efforts in the fast growing, hypercompetitive Chinese market. In September 2014, Gurr relocated to Beijing from his home in the United Kingdom. Today, he is in charge of an operation that employs approximately 5,500 people. Gurr recently spoke with McKinsey’s James Naylor, senior expert in McKinsey’s London office.  This is the basis of this second TextileFuture Newsletter feature, showing completely advanced young consumer habits in buying by using state-of-the-art technology. This will change not only the brick and mortar store but also the supply chain.

During your entire retail career, you have championed investments in technology and innovation. Are you finding the technology in China to be different from what we see in more developed markets?

Gurr: Yes. The technology in China is phenomenal. You can see multiple ways in which the country is leapfrogging. For example, there’s not much of an established physical retail infrastructure, so people are going directly to a purely online world. They don’t go to a physical store at all— they simply look online and then purchase. If you talk to a group of Chinese women between the ages of 20 and 25 and ask them where they shop, they’ll just look at you like you’re a bit stupid. “I’ve never been to a store. Sure, I buy fresh food at stores – but for anything other than that, why would I ever go to a store?” The world in which consumers get their insight and information exclusively online is very different. Social shopping, for instance, is an enormous phenomenon in Asia.

Already, 4 of the 15 largest Internet businesses by market cap are Chinese. The pace of innovation and the quality of the mobile experience in China in many ways far outstrips what you see in the West; it’s gone down a divergent path. Again, there’s a lack of physical infrastructure, so in areas like banking China is leapfrogging—going directly from cash to pure mobile e-banking.

Another example of leapfrogging is the use of geolocation. There’s very little mapping in China, and there are many areas with no street addresses, but China has solved these logistics problems with geolocation.

You would not have thought you would see bicycle rickshaws with better point-to-point geolocation and better GPS-enabled devices than you see anywhere else in the world. It’s amazing and exciting—there’s a blend of rough, old fashioned ways of doing things coupled with technology that is way ahead in terms of the use of data informatics.

Do you think the rest of the retail world will eventually look like China? In other words, will physical retail become irrelevant everywhere? What do you think will happen to the retail value chain?

Gurr: One of the megatrends of the next five to ten years will be e-commerce moving from a primarily national to an international business. That is where a lot of the energy in China is going. It is about refining the answer to a simple question: What is a retailer for? The job of a retailer is to connect a product anywhere in the world to a customer anywhere in the world—to provide that customer with the best information to aid discoverability and guide purchase decisions—and to do it with as little friction and as quickly and cheaply as possible. No one is saying that physical retail will disappear. Physical space is a fantastic way of discovering products. But it’s also time consuming and expensive compared with a truly optimized, truly evolved digital-discovery experience. So I think there will be a role for physical stores, but I would not be too sanguine that such and such a format will necessarily survive forever.

Say more about e-commerce moving from a national to an international business. What are some things Amazon China is doing on that front?

Gurr: Our primary focus is on cross-border e-commerce. We already do a pretty good job of helping Chinese businesses sell around the world; we want to do an equally good job of helping Western and Japanese businesses meet the growing demand from Chinese consumers for high-quality, authentic international products. We know the demand is there and that many international brands would love to sell in China but find it challenging to navigate the Chinese e-commerce landscape. To that end, we have launched a number of new services. One is the Amazon Global Store. We provide translation, listing, regulatory compliance, local-language customer support, local marketing, global logistics, and so on, so that brands can launch in China with no more effort than selling in their local market.

In just six months we’ve been able to launch over three million unique products for our brands, with no cost or effort on their part—literally with the click of a button. We are rapidly expanding this and other services, and we are starting to explore partnerships with many brands—US, European, and Japanese—that are interested in the complex but compelling opportunity presented by the Chinese consumer.


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What role do you think robotics, automation, and technology in general will play in the future of the retail industry?

Gurr: It is transformative. You can take a view of retail organizations as decision-making machines. We have to make hundreds of millions, even billions, of decisions every day. How much do I price? Is this product safe? How much inventory should I hold at a particular location, at a particular store, at a particular moment of time? When should I replenish? You read a lot about whether machines are better at making decisions than people are. I think it is kind of irrelevant unless the machines are materially worse at it, which they’re not. The point of giving the decisions to machines is that you have scale. If you put human beings in the middle of every decision, you slow down. I used to work for a physical grocer, and every morning we would argue about how much bananas were going to be that week. Today, it’s unimaginable for me to spend time setting prices. Retailers need to understand a whole bunch of new tools and technologies. Of course, they are not perfect; we are at an early stage of these technologies. For example, we’ve all received those personalised marketing e-mails that aren’t quite right: “My dog died, so don’t send me e-mails promoting dog food.” Or, “I already bought a TV; please stop telling me to buy another one.” There is a lot of clunking because we have only been in this game for a few years and we are not yet very good at it. But personalisation is so powerful that even at this early stage, if you compare a machine based process with a pretty refined state-of-the-art manual process, technology wins every single time – and not by a slim margin.

I like to say that the only things people should do are things that only people can do—that is, making complex decisions that cannot be automated because they’re high uncertainty, they’re hard to reverse, there is not enough data, or they’re judgment calls. That does two things for you. First, it allows decision making at genuine scale. Second, it makes jobs more interesting for people.

My personal view is that the transformative technology of the early 21st century will be data informatics, and I think it will happen much faster than most people assume. It is a classic distinctive capability. I think in ten years’ time, in any business sector, the performance gap between an organisation that invests in data informatics and one that doesn’t will be huge. I would argue that the performance gap is already substantial, and it’s only going to get bigger.







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