Interview with Mr Edward Yihua Kang

Textile and clothing is a labor intensive industry. China’s garment industry started to emerge as a significant advantage in labor force and labor cost. Ever-Glory has been in the garment manufacturing business since 1993. With its large production base, Ever-Glory has been focusing on manufacturing middle to high-grade casual, outwear, sportswear, etc. We also sell apparel to well-known brands and retailers in major markets in Europe, US and Japan. We place considerable emphasis on R&D, meaning innovative and distinctive product designs and have won a number of awards in the textile and garment industry. Ever-glory now is a leading company in China’s textile and garment industry.

The fashion industry is quickly shifting to China because of the nature of fashion, short life cycle and intense supply chain management. By contrast, production of high output, low price/added value is shifting to Southeast Asia where labor and production costs are even lower than in China. Overall, we believe China’s garment industry is becoming more competitive with sustainable growth momentum as it is increasingly involved in high value-added operating practice.

The retail market has been reporting sales declines since the global economic slowdown in 2008. Although consumers did not eliminate entirely their spending, the financial crisis has affected the consumption structure profoundly. Specifically, a part of high-end consumption is shifting to middle and low-end due to drop in consumption capacity. As a result, the sales/output of middle and low-end segment is likely to increase in this environment. To cater to new customers migrating from high-end, middle and low-end brands are expected to put more effort toward enhancing their product development and increasing the value of their product.

Well, in wholesale, Ever-glory has established 'Fashion Innovation Base', an operating philosophy that emphasizes innovative and distinctive product designs to increase margins. Also, Ever-Glory provides a 'one-stop-service' which involves all aspects of apparel production – product design and development, sourcing and sampling, quality control, manufacturing and logistics and more valuable products for our customers. To ensure that our products perfectly meet clients’ specifications, we conduct thorough R&D, prior to production, and we achieve better results by shortening the time in the supply and production chain, not by simply focusing on price.

In Retail vertical, the growth is due to our partnership with La Chapelle, a premier Shanghai-based women’s fashion retailer. Thanks to their years of success in China’s retail market, we are able to take advantage of their strategic advantages in retail. We continue to increase brand awareness and build market share by rolling out our retail concept LA GO GO and various marketing and advertising campaigns.

For wholesale domain we see Ever-Glory not only engaged in supply chain management, but also aims to provide high value-added service with our fashion innovation concepts. We find working with high value-added operations particularly difficult as it requires a substantial initial investment of capital, while many other suppliers were able to expand market with low prices. Nevertheless, we strongly believe that our efforts will pay off and we will become stronger in 1- 2 years.

In Retail, compared with international retailers that have set foot in China’s market, we are more intimate with the Chinese culture, which further strengthens our advantage. Compared with local retailers, we have unparalleled international resources (knowledge and experience of international fashion trends and effective integration of global resources of talents, raw material, sourcing network).

Yes. We have been choosing new source partners and expanding our sourcing network. We intend to cut sourcing costs while maintaining our product quality to meet our clients’ needs.

China’s garment industry faces serious overcapacity and many companies will adjust their capacity to match the demand. We believe the industry is likely to stabilize and turnaround in the second half of 2010.

Automated production brings opportunities as well as challenges to China’s garment industry. Technology provides the most effective way to reform and upgrade the traditional manufacturing industry like the textile and garment industry. Automated production can reduce reliance on human intervention, and thus can reduce human error. Ever-Glory has implemented lean production systems and utilized various gadgets and processes to reduce defect rate, and ultimately increase product efficiency.

Ever Glory has been taking various measures to ensure full compliance with environmental protection in all aspects of production - product design, material selection, technical selection and production. For example, Ever-Glory has been focusing on energy saving and reducing emissions, waste water treatment. Besides, Ever-Glory has set up a material (raw material and subsidiary materials) testing center. Due to our strict quality control and testing process, all our products met environmental requirements.