Interview with Frances Chan

Frances Chan
Chairwoman
Sunshine Group

China will remain indispensable in world textile economic system

The Chinese textile and garment industry is facing a tough competition globally. But, as the largest exporter in the world, China will remain indispensible in world textile economic system. In an exclusive interview with Wen Zhongwei, Frances Chan, chairwoman of Jiangsu, China based Sunshine Group talks about the Chinese textile and garment industry and how the industry can further prosper.

What makes Sunshine stand out among the several Chinese textile companies?

During the last five years, Chinese textile companies were facing pressure from multiple factors like high cost of production, gloomy market, etc which necessitated them to go for technical innovation and upgrading. During the 12th Five Year Plan period, Sunshine implemented product innovation oriented policy, wherein the traditional key-fact-driven method was replaced with a focus on technical research and product innovation resulting in rapid turnaround of Sunshine. Anyone who has visited Sunshine Group will agree that the Sunshine plant is similar to a miniature international textile equipment show in which there exist some of the world's most advanced textile equipment.

Currently, several companies are setting up their manufacturing facilities outside China. Does Sunshine also have any such plan?

As China's economy is intertwined with global economy, the traditional manufacturing industry in China should extend to the world market. Sunshine is planning to set up its own overseas plant to transfer low-end manufacturing, reduce production cost, and avoid tariff and currency risk in export markets.

Will you prefer moving to Southeast Asia?

The key component which determines the translocation of an enterprise is the market potential capacity as well as preferential policy, like government subsidy, etc which will just help you run fast temporarily. Though textile and garment industry is growing fast in some Southeast Asian countries, China will remain the most important market for EU and the US. China's textile and garment industry has the highest share in world exports, which means that China will remain indispensible in world textile economic system.

How do you perceive African countries for setting up overseas plant?

I have recently been to Ethiopia which offers lot of advantages for the textile industry-plenty of labour force, suitable land for cotton cultivation, and enormous demand for textiles and garments. So, I think it is worthwhile to launch a project involving the complete textile value chain from growing cotton, textile processing to garment manufacturing, as textile industry backgrounds are weak in Ethiopia and other neighbouring countries.

Now the US has launched its "Reindustrialisation" project, Germany has initiated its "Industry 4.0", and China its "Made in China 2025". How will Sunshine deal with this upcoming trend?

In view of the fading cost advantage, our traditional manufacturing industry should upgrade itself with intellectual function, modern design, high production and administration efficiency and strong service system through the integration of Internet technology and logistic system to boost prospective economic future. Hence, Sunshine Group should design and set up its general intellectual information system and its manufacturing procedure for spinning, weaving, dyeing and garment manufacturing with the integration of automatic and intellectual system. This will lead to 20-30 per cent increase in production efficiency, and meet international advanced industry needs.

Great, so according to your opinion, what kind of textile manufacturing we can expect to see in future - labour-oriented or completely automatic?

In view of 'Made in China 2025' project, I foresee fully intellectual enterprises with intellectual equipments having high production efficiency and fewer operators monitoring the production process from wool fibre to fashion woollen garment. But, I do not think a textile and garment factory with really no staff would become a reality due to multi special procedures which need to be supervised, etc. Also, I think it is perfect for an enterprise to have few technical workers monitoring lesser procedures.

How do you ensure that all your products meet international standards?

At Sunshine, the problem is resource integration and not technical design. So, we have implemented the "new barrow theory" to improve the core competence by identifying potential risk in daily operation and enhance the core advantage utilisation. In terms of product quality, our philosophy states, among other things: "There exists only qualified product (latitude). Always keep improving (longitude)." The latitude part takes care of ISO quality system on a daily basis, while the longitude part refers to improvement in purchase chain, product innovation, technical promotion, etc. The interpretation of latitude administration includes the twin-zero quality system. The first is to guarantee the zero loss of customers by detail retrospection in product manufacturing procedures and the second is zero re-accident through retrospection of product trial manufacturing, daily production, and equipment maintenance as well as staff responsibility.

Earlier during the talk you said Sunshine plant is a miniature international textile equipment show. What do you think about domestic textile machinery and equipment?

That is a great question. There are several advantages with international equipments like better utilisation of material, longer life span, higher processing accuracy and advanced intellectual operation system. If China has to move forward from being a huge textile manufacturing country to a great textile manufacturing country, I expect domestic equipments to be well designed with better quality.

What kind of government role do you foresee in domestic enterprises becoming international brands?

The Chinese textile and garment industry is facing a very tough competition globally, and therefore, I think it is important to gain government support. For example, there could be special support for some enterprises with core competitive advantage which will facilitate a national brand to move forward from 'Made in China' to "popular worldwide".

Do you see Sunshine becoming an international garment brand?

Despite Chinese companies being able to meet world class garment design and quality guarantee, most domestic consumers still love overseas brands because the Chinese national brands have little world reputation. So, Sunshine Group has forged a strategy to promote itself as a brand while continuing to offer manufacturing service for various international brands. We manufacture for more than 100 international brands from 51 countries, including Armani and Boss. We are now forming our marketing oriented team from product design to marketing operation, which will promote Sunshine as an international brand while also benefiting from offering manufacturing services to international brands. We already have 'Pompey' which is ranked among the top 10 men's suit brand in China, and we expect to promote our own garment brand in EU in next two years, subsequently extending the market to Japan and the US. We endeavour to become a leading classic and fashion garment brand in China and gradually become known in international retailing market in next 5 years. In the coming years, we will focus on brand promotion and e-commerce operations as well as quality product manufacturing and local store retailing. In future, we expect to earn equal amount of revenue from e-commerce and local store retailing.

Any recent achievement of the company that you would like to share?

Well, in 2014, Sunshine became the most valuable Chinese brand in the textile industry with brand value of ¥10.013 billion. In 2015, Sunshine was invited to design the etiquette suit for the guard of honour of People's Liberation Army of China which generated lot of praise from the government.

Tell us about Sunshine's financial performance in recent years.

Sunshine group's total sales revenue increased from ¥31.32 billion in 2011 to ¥34.697 billion in 2014. Profit before tax increased from ¥2.63 billion to ¥3.178 billion during the same period, while the value of exports was up from ¥410 million to ¥477 million.

How much do you spend on R&D?

We spend around 5 per cent of our total sales revenue in product research and technical innovation. We altered the fibre-washing procedure in 2013, constructed the R&D building in 2014, and also designed an auto spinning line. We have now set up technical research platform comprising doctoral research station, Chinese national class technology research centre, Chinese national class new textile material engineering & technology research centre and Jiangsu textile technology centre. In addition, Sunshine also has a normal seat in secretarial office of international standard textile technical committee.

What is the outcome of your R&D efforts?

So far, Sunshine has applied for 785 patents, of which 576 have been approved, which shows the huge technical progress the company has made in product innovation. This has boosted product upgrading. In fact, new product innovations with high added value such as fine nano antistatic textile product, and anti wrinkle self-clean fine spinned fabric, and the new and special designed woollen product line account for 60 per cent of whole Sunshine product lines. This has pushed Sunshine from low value-added chain to high value-added chain.

How do you attract and retain talent?

Firstly, Sunshine Group has its own special research fund which provides great opportunity and a good pay for international experts and professors. For example, Sunshine has set aside Au$ 100,000 for an Australian expert for the Cherish Merino and Fresh Merino projects. It also offers over €50,000 for technical workers coming from EU garment companies. We also pay €25,000-30,000 for a single visit of world-class designers every season. Working with international talents has obviously great benefits, and Sunshine has successfully developed multi new style fine worsted fabric which had been grouped in Chinese national product research lists with high elasticity and fine quality. Sunshine has also designed top Chinese woollen fabric by utilising super fine wool fibres which is regarded as "a great improvement in current textile dyeing and finishing procedure, especially for spinning and finishing." Secondly, we have "talent developing schemes for production and administration" in place since 2012, which consists of three components, scheme for juniors, scheme for experts, and scheme for elites. Under the scheme for juniors, we hire students from schools and cultivate them to become backbones in technical and business departments. The scheme for experts aims at cultivating potential backbones who are expected to become team directors in various departments. The last scheme is for department heads who are expected to become high-end decision makers in future. The goal of these schemes is to have 500 team leaders,500 technical backbones, 200 administrators for key group positions,100 potential middle directors and 50 advanced technology researchers by the end of 2016. Lastly, Sunshine has entered into an agreement with Donghua University to offer MBA degree. It has opened bachelor and master's degree in textile and garment with the cooperation of Suzhou University. It has also launched technical skill promotion class for existing staff.

Woollen textiles and garments are being substituted by new emerging products. How are you going to respond to gradual shrinking of woollen products' market share in the future?

Surely, world wool production has fallen to its lowest point in last few years owing to the gradually shrinking of Australian wool production which addressed the gloomy woollen product market. We also did not get enough orders from domestic market due to current domestic policy reasons. But with the help of the innovation of new fibre, new technology and new craft, now new woollen products such as fine yarn and light fabric with anti-shrinking, anti-erosion and anti flaming functions are available, which greatly diversify the product series and satisfy the want of different consumers. So, we need to adopt product innovation and modern marketing systems. Rewritten by: Rajesh Kumar Shah

Published on: 13/01/2016

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.