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16 March 2016

# China firm cut from a different cloth

If Richard Sun were to sew his company’s label into shirts and jackets he would be known the world over.
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## Contact us

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Instead he lets his clothes do the talking on the shopping racks of H&M, Zara, The Gap, Levi Straus and Next from Europe to the U.S. and Japan.

JDU, or J.D. United Manufacturing Corp., is an apparel brand very few have heard of, and yet in a very short time has grown into one of the world's largest suppliers of mainstream, mass retail fashion. Its headquarters aren't in New York, Paris or Milan, but a small satellite city near Shanghai, China.

Nine years ago Sun founded the company in Changzhou an important textile centre in China. Today he employs 26,000 people across 30 manufacturing sites from China to Southeast Asia and Africa.

In the cut throat and globally competitive apparel sector, where margins shrink by the day and employment costs are a critical factor, Sun believes investing firmly in his staff is a key to continued success. “Human touch is important,” he explains, “we're managing a lot of people, which creates labour issues.”

With rising costs in China, JDU has been staying ahead by expanding rapidly overseas, first to Cambodia and more recently to Tanzania where there's an abundance of labour. “We select each manufacturing location because there's a specific competitive advantage,” says Sun.

For example Cambodia has favourable trading terms with Europe, where clothing is imported duty free, and Tanzania now has a similar agreement with the US.

The company's international retail clients also prefer their clothing suppliers to have more than one manufacturing base -- if they can't supply from one factory then another can fulfil the order seamlessly and without delay. Fast fashion is not just about rapidly evolving trends; it's about getting goods to market quickly.

JDU has therefore been leapfrogging from one country to the next in a concerted expansion program, primarily by nurturing experienced staff to grow its operations and do the trailblazing.

> Fast fashion is not just about rapidly evolving trends; it's about getting goods to market quickly.

## Getting the company culture right

“We bring some of our mid-level management from China to Cambodia and mix them together with local recruits and then start training programmes,” details Sun. “From a human resources perspective this is similar to McDonald's. If you're opening another branch you bring in experienced employees and they mix with the newer ones.”

Now JDU is one of the largest woven apparel manufacturers in Cambodia. The jump into Africa from its Chinese then Cambodian base was the next bid by the company to stay ahead and trade with North America on favourable terms supplying Levi's, Gap, Next and C&A among others, since the US accounts for 70 per cent of it's business.

## Learn from experience

“The difficulties you face in Cambodia will be repeated in Tanzania. We can expect up to 70 per cent of the same problems. If you think it's happening in Cambodia; then it will definitely happen in Tanzania,” declares Sun.

The company now employs over 500 people in the East African nation and is looking to double the number of employees this year. Sun admits his experience in Asia has allowed them to troubleshoot effectively before moving into Africa.

In Tanzania, JDU relocated a number of key staff from their China operations, and some from the Cambodian plant, and merged the whole team again with African talent. “This ensures they're all on the same page, working together towards common goals,” explains Sun.

“Mutual respect is very important. We need to ensure they understand that they may be different culturally or have different backgrounds doesn't make one better than the other - we want them to appreciate and learn from the differences.” declares JDU's founder. “Universal value -- the appreciation of each other, whoever you are -- is very important to teach to ensure value inside the company; otherwise the operations between countries are definitely going to fail.”

It's this business mantra that has led to revenues rocketing at JDU from USD5 million to more than USD400 million within less than a decade. No small feat.

“The company is different because it's younger and more nimble than most other industry leaders; JDU also has a diversified production base,” explains Edmund Kan, senior vice president at Bank of America Corporation Commercial Banking in Hong Kong.

Investing in people for growth is one thing, but the apparel business is also capital intensive -- machines, factories and lots of raw cloth are needed to fuel this industry.

“We've supported the group's capital expenditures from overseas expansion to factory automation across all of the company's production bases,” details Kan. “We also help finance their raw material purchases, insuring factories and valuable cargo shipment by sea, as well as their currency exchanges between markets.”

“There are so many tools to enable businesses to expand into other countries; it's easier than ever before” says Sun. But the success and growth of an apparel business like JDU, Richard Sun will confess, takes commitment from a lot of people and also leveraging yourself beyond your home turf. For this company, with humble beginnings on China's eastern seaboard, this mantra has paid off.

> We've supported the group's capital expenditures from overseas expansion to factory automation across all of the company's production bases. We also help finance their raw material purchases, insuring factories and valuable cargo shipment by sea, as well as their currency exchanges between markets.

> Edmund Kan, senior vice president at Bank of America Corporation Commercial Banking in Hong Kong.

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