William E. (Chip) Connor, chairman and CEO of William E. Connor & Associates Ltd.

William E. (Chip) Connor, chairman and CEO of William E. Connor & Associates Ltd.

Transparency and integrity are two words that crop up repeatedly in conversation with William E. (Chip) Connor, chairman and CEO of Hong Kong based global sourcing specialist William E. Connor & Associates Ltd. Indeed, these have been cornerstones of the business since it was founded 65 years ago, and continue to underpin every aspect of an operation set up to act as its clients' alter-ego.

For a company with an annual turnover of $2bn, operations in 35 locations across 20 countries, more than 1,500 employees and a portfolio of clients that includes the world's leading apparel brands and retailers, Hong Kong based sourcing specialist William E. Connor & Associates Ltd. keeps a surprisingly low profile.

Search online, and little is thrown up besides the company website, and a token overview of the business. No news, no client lists and certainly no gossip.

Yet the firm has grown faster in the last two years than at any time in its 65-year history, according to William E. (Chip) Connor, chairman and CEO.

"We don't do a great job at marketing ourselves," he laughs, adding that the company's double-digit growth is largely due to word of mouth referrals and through nurturing existing customers.

Indeed, in an industry that is just starting to wake up to the value of true partnerships across the supply chain, Connor prides itself on long-term relationships with clients such as US department store group Dillard's, with which it has been working for 42 years, and UK retailer Marks & Spencer, a client for 17 years.

The foundation of such enduring relationships is a focus on transparency and integrity - two words that crop up repeatedly. Likewise, customers are called clients - "because we serve them, we don't sell to them."

"Integrity is everything, because if you can trust us and we're totally transparent, as long as we perform you're going to stick with us for a long time."

Global business network
Connor's business network is used by around 60 of the world's leading brands and retailers to source apparel (ranging from value items to luxury products) and homewares (including furnishings, furniture, toys and stationery) by tapping into the company's global database of over 6,000 audited factories.

"We look at ourselves as the right hand of our clients. If they were to do it themselves they would try to do it just like we do it for them, but we can do it more efficiently, effectively and with a bigger global footprint."

Crucially, Connor does not hold an equity interest in any factory, and is paid only by its clients - not the vendors. The sourcing firm's earnings are generated solely from client commissions, based on the value of products delivered, with no hidden costs.

Instead, the company puts together a portfolio of options including information on markets and production, as well as details of different factories. Dedicated client teams then manage the sourcing process from product development and price negotiation through to shipment, including quality assurance and compliance.

Underpinning it all is complete openness on where and how products are made, with clients encouraged to visit the factories, consolidators and material suppliers. Full reports on order progress, factory compliance and shipment status can also be seen at a glance using Connor's TrakWizard supply chain management system.

"If you remove conflict, in other words, if you don't have a beneficial interest in a vendor, or in raw materials that might go into production, or in a service provider, and you're only compensated by your client and you rigorously enforce that, your clients are going to want to work with you," Connor emphasises. "You shouldn't be afraid of the transparency because you're not trying to hide anything."

He is also keen to shrug off any misconceptions about the company's business model. "We're a service provider, we're not a trading company. We're very client focused, we want fidelity over the long term and we will sacrifice margin to ensure that we have that fidelity.

"We don't look at our business with our partners or clients in a transactional sense, we look at it in a partnership sense; the idea being that 30, 40, 50 years from now we will continue to be their partner. We're not selling to them."

In contrast, companies who book production, take a margin from the factory and take a margin from the customer, represent "bad value," he says. "It's also conflicting because how do you perform a compliance audit of somebody who is also paying you for being able to ship the goods?"

Transparency and integrity
Transparency and integrity have been the cornerstones of the business since it was founded by Connor's father, William E. Connor Sr, in 1949.

Serving as a trade attaché in the administration of General Douglas MacArthur after World War II, he opened a purchasing office in Tokyo supplying paper and pulp to non-Japanese companies. Instead of trading, brokering or selling merchandise, the set-up enabled clients to source directly from factories, bypassing middlemen.

"An identity formulated at a very early stage was that we were going to try to operate as the alter-ego of a client," Connor explains.

"The vendor may be very sophisticated and provide design and product development, but there's still the need to oversee that, and we do it with very low margins.

"If you consider that a relationship with an average client might see a drop rate of 60-70%, which means that 60-70% of all the product development that we undertake, the samples, the materials, don't end up in an order, and 30-40% do; well we're compensated for that 30-40%. But the work that we do for the 60-70% is part of the partnership, but it's not transactional."

The relationship with Connor exists, he continues, "because there was a whole bunch of work that preceded the decision to place that order...we help you through that whole process."

Another constant is the pressure from retailers and brands for lower price and speed to market. "We're extremely competitive as far as cost is concerned," Connor explains, "because there are no other margins added to the cost of goods. We provide a global scope and we have a fast, nimble, diversified, scalable vendor base that we can draw from.

"You cannot offer that if you are centred only in one market or you have a group of suppliers to whom you are beholden. The only thing influencing our [decision] is whether they can perform for a client." He also observes: "Our clients demand results. If they don't get them, they'll go elsewhere."

Commitment to compliance
Hand-in-hand with the company's commitment to transparency is increasing demand from clients for more governance and oversight of a range of compliance issues, be they social, environmental, or unapproved subcontracting.

Connor's team acts as "the eyes and ears" of its clients worldwide, carrying out nearly 500,000 inspections a year on everything from quality to factory audits. "The vetting that we do requires having people all around the world in the factories looking to make sure," Connor explains.

"If we weren't here, our clients would have to find some other way to oversee the supply chain. You can hope that a vendor 7,000 miles away elevates information that is accurate, but if you don't have somebody going into that factory and providing QA and compliance, you will never know whether you're going to get your goods the way that you've ordered them, or whether they were produced in a way that conformed to your ethical standards."

Such is the company's commitment to compliance that it has been named as one of world's most ethical companies for three years in a row. The accolade from US business ethics think-tank the Ethisphere Institute makes Connor one of only a few Asia-based companies to receive the award - and the only sourcing company in the world to be included on the list.

In fact, the demand for specialist QA and compliance work is so strong that Connor has created a separate, standalone entity - Omega Compliance - to focus solely on this and supply chain security. Omega offers a range of specialist services, including a 'Connor standard', and a measure of its success is that its customer base has extended beyond Connor clients to include companies like Adidas and Columbia Sportswear.

Click on the following link to read the second part of this interviewINTERVIEW: William E. Connor discusses global sourcing shifts.