South Australian couturier Australian Fashion Labels has grown from a dream to a global reality in just a few years and is now building on its manufacturing and sales experience in China to develop a major retail presence in the Chinese market.
Back in 2006, Australian Fashion Labels’ now Managing Director Dean Flintoft was working for an American furniture company and helping his wife, Melanie, with her Adelaide fashion store and label.
“I was spending more and more time helping Mel’s business so we came to the joint realisation that what we really wanted to do was put all our energy into a fashion business,” Dean recalls.
The company now has a stable of seven labels, with 3,500 stockists in 20 countries, its own online retailer BNKR, a team of 25 designers in Adelaide responsible for all the creative work and a total staff of 105 people.
“Initially we manufactured in Bali because we didn’t have the volume to justify manufacturing in China. Then we procured through a group in Sydney that manufactured in China but this proved difficult and added a layer of complexity and cost. Once our designs became better known and the volumes grew, we obtained a factory contact, went over to meet them and set up our own manufacturing there. China now accounts for about 85 per cent of our production, with the balance done in Adelaide and elsewhere.
“While we manufacture in China, the intellectual property resides in Adelaide with our design team. So the creative side of the company, which drives the growth, is in Australia.
“I think that’s a very important point which is sometimes lost when people get concerned about manufacturing going offshore.
Their first staff in China was a fitting and quality control team working alongside their manufacturers. At that stage Dean and Melanie visited China two to three times a year and recommend that as the absolute minimum to develop the all-important working relationships. They visit more frequently now the business there is expanding.
“We now use eight factories in the Shanghai area and are establishing a Chinese headquarters there to manage our production and our retail expansion in the China market.
“We have been retailing there for about two years and our business plan is to rapidly expand that presence once the Shanghai office is operating early in 2015, and eventually establish our own Chinese retail chain.
“Our major markets are Australia, USA and the UK but China is increasingly important to us.”
During the period while they were manufacturing in China, but before they began retailing there, the pair refined their China strategy and developed the business model which is now being implemented.
“The tipping point came when we found an absolutely perfect CEO for our China operation, Mei Ping Doery”, Mel said. “Up until then we had a plan, but recruiting Mei gave us the added confidence to commence the retail side of the business there. She ticked all the boxes and is an ideal ambassador for the company. We cannot over-emphasise the importance of the right Chinese connection.”
Dean’s advice for businesses entering the China market is to be very cautious; register your IP as soon as possible; pay everyone on time; and build personal relationships.
Dean and Melanie’s China business plan was therefore to manufacture there as soon as they had the required volumes, build relationships and goodwill first on Hong Kong and then on the mainland, and then enter the retail market – in their case expanding once they found the best possible manager.
And the future for Australian Fashion Labels in China?
“Mid-2015 we are launching a men’s range, another women’s label, and a shoe range”, Dean said.
“Shanghai will be up and operating as our hub, and our focus will be on rapid retail growth while maintaining our design integrity and quality. Our business overall doubles every year and we’ve only just dipped a toe into the Chinese market. The only way is up.”