Delman Lee, chief technology officer for TAL

Delman Lee, chief technology officer for TAL

As one of the world's leading garment manufacturers, Hong Kong-based TAL Apparel is continually looking to see how it can add value in the apparel supply chain, as chief technology officer Delman Lee tells just-style.

"It's almost like we have our own crystal ball; we have a very clear idea about which countries we should be in and what the value add of TAL is," explains Delman Lee, chief technology officer for TAL. "We feel we can add more value as a supplier in terms of product design, what we do in sustainability, what we do in the supply chain, how we look after our workforce and of course product innovation. These are essential to staying ahead of the game."

And its vision is certainly paying off, given that TAL Apparel produces one in every six dress shirts in the US, and creates clothes for some of retail's biggest brands from Banana Republic and JC Penney, to Burberry and Brooks Brothers. The company earned US$850m in revenue last year.

Rebalancing capabilities

The privately-owned manufacturer employs over 25,000 workers and produces around 56m pieces of apparel each year across a network of 11 facilities in Hong Kong, Thailand, Malaysia, China, Indonesia and Vietnam. And this is set to grow with the imminent addition of a second facility in Vietnam, a country where TAL is keen to build a larger presence to expand its operational footprint as well as improve its cost base. They also see some added benefit if the Trans-Pacific Partnership (TPP) trade deal eventually gets ratified.

"Right now we are building a textile mill in Vietnam," Lee says. "TAL was founded with a focus on spinning and weaving before we diversified into apparel manufacturing. We were actually the first spinners in Hong Kong, then we gradually moved down the value chain. We took the decision to branch out into apparel as we figured there was more value to be captured there. However, in the current climate, we see the value of having a more integrated approach and so are now opening a mill in Vietnam.

The apparel maker's decision to set up new operations in Southeast Asia also reflects the challenges faced by many low-cost consumer goods manufacturers in China as they struggle to keep up with rising wages. The company currently operates two Dongguan-based factories in the country – a pants (trousers) facility employing around 2,400 workers, and a higher-end dress shirt facility employing around 4,000. It also operates a sales office in China. 

In its quest for expansion, TAL is keen to also look outside of Asia to Africa – a region that is growing as an attractive potential destination for large volume, low cost, commodity garments amongst global brands. And it is Ethiopia, in particular, where the company is now experimenting.

"The Ethiopian government is very supportive. They have a great vision of where they want the industry to be. We met a lot of people when we were there last year and we were impressed by the improvements in infrastructure, in particular with their education system. We could see they have a really strong vision to develop and modernise the country."

Ethiopia has already proved a popular pull for many global apparel brands, including Hennes & Mauritz (H&M), Asos, George at Asda, Calzedonia, Primark and Tesco, who are all sourcing from the country. TAL client PVH is also building its sourcing business in the region, including a woven shirt factory in Ethiopia's Hawassa Industrial Park. Mark Green, executive vice president of global supply chain at PVH, has described the company's experience there as "nothing short of exceptional".

Innovative trailblazer

As well as broadening its sourcing focus, TAL Apparel is continuing to invest in design, fabric and technology innovations. 

With this in mind, it invested in virtual fitting room company Metail two years ago, and in body scanning company Size Stream – a move Lee says is "one step away from TAL's focus" but "related, on the whole, to the future of retailing fashion". He emphasises, however, that TAL is keen for apparel manufacturing to remain at its core. 

"We want to be in control of our destiny, so manufacturing apparel will remain our core focus. When we diversify, it must always be tangibly related to our core focus and the development of the apparel industry. Retailing, branding and marketing we leave to someone else."

The company has been something of a trailblazer when it comes to textile innovation, having spent millions of dollars on research to develop products such as its wrinkle-free shirts, anti-bacterial and anti-UV shirts, and stain-resistant pants. 

"We are continually focused on driving innovation in the apparel industry," Lee explains.

With innovative manufacturing inevitably comes sustainability, and TAL, not surprisingly, sees sustainability and ethics as core to the group's strategy. The firm has been on something of a three-stage journey over the last decade that began with the creation of a code of conduct and the setting of internal sustainability targets, and is now focused on ensuring sustainability makes business sense. This results in tangible cost savings such as energy reduction, and over the long term, water reduction.

"Currently, despite forecasts of scarcity, water is cheap. However, eventually there will be water scarcity issues so this is a long-term risk. But that is only one side of the story where sustainability makes sense," Lee explains.

The other side, he says, is whether the company's customers appreciate it too. "Reducing carbon footprint has an obvious benefit to the P&L and ultimately our costs. With water so cheap, efforts to reduce usage don't impact much on the P&L. We do hope our customers take the same long-term view and appreciate the right thing to do in terms of environmental sustainability."

"In apparel manufacturing, sustainability continues to be an area of considerable focus for us. We strongly believe sustainability makes sense for the people, the planet and the business. We are often asked whether our customers value the work we do in this area. The question I ask myself is ultimately whether the consumers care about it. If they care, then our customers will begin to care."