Interview with Dr. Gordon YEN
Dr. Gordon YEN
Executive Director
Fountain Set (Holdings) Limited
Executive Director
Fountain Set (Holdings) Limited
Brand customers tend to have a normalised buying pattern, when the raw material price is stable, thus helping factories to plan well on the production schedule.
With Fibre2Fashion Correspondent Cindrella Thawani, in the Face2Face interview, Dr. YEN talks about the declined market price of knitted fabric and increasing cost of labour by Chinese government.
Synopsis:
Fountain Set (Holdings) Limited, with its headquarters located in Hong Kong, is striving forward globally through its vertically integrated operations in spinning, knitting, dyeing, printing and finishing.
Its product range includes dyed yarns, sewing threads and garments.
Dr. Gordon YEN caters as the Executive Director of Fountain Set (Holdings) Limited. He joined the Group in year 1999. Moreover, he is the Vice Director General of China Knitting Industry Association; Vice Chairman of Textile Council of Hong Kong; Chairman of The Hong Kong Association of Textile Bleachers, Dyers, Printers and Finishers;
Besides, he is the son-in-law of Mr. HA Chung Fong, Founder of this Group.
Excerpts:
Can you share with us the recent change in shareholding structure of Fountain Set?
On May 10 2012, Fountain Set’s Extraordinary General Meeting (EGM) has passed the resolutions proposed in the circular dated April 24 2012, allowing the group to implement the transaction completed under a subscription agreement with Chinatex Corporation dated April 3rd 2012 and the related whitewash waiver.
Under the subscription agreement, Chinatex and Fountain Set have conditionally agreed to subscribe for and allot and issue a total of 4,09,036,000 new shares at a price of HK$1.25 per share, equivalent to approximately 34 percent of the issued share capital of Fountain Set as enlarged by the issue of such new shares.
Upon the completion of this transaction, Fountain Set’s current Chairman Mr. HA Chung Fong, his family trust and his associates will hold approximately 28.56 percent shares of the group. To this extent, Chinatex shall become the largest shareholder of Fountain Set.
The market price of the knitted fabric has declined sharply, owing to the declined prices of cotton and yarn. How do you see the upcoming market ahead? What will be its consequence on the companies?
The market should see stable with relatively low cotton and yarn price until around August this year.
When the data about the upcoming cotton harvest season is ready, the crop which to be harvested in September / October will be used for the next year round, thus by then, it will give us a more clear picture on the balance of supply and demand.
On the other hand, brand customers tend to have a normalised buying pattern when the raw material price is stable, thus helping factories to plan well on the production schedule.
For the impact of volatile cotton price on Fountain Set, the decline in the costs of cotton and cotton yarn during the last three quarters of calendar year 2011 contributed to downward pressure on market prices of knitted fabrics.
However, the prices have stabilised since the end of 2011 and the cotton yarn inventories that Fountain Set previously purchased at relatively higher prices have been mostly depleted in the first half of financial year 2012.
As a result, barring other unforeseen circumstances that could adversely impact the demand and prices for textile products, Fountain Set believes that the business environment of the textile industry could gradually improve within the next six to twelve months.
With the anticipation of further consolidation of fabric supply chain by many brands and retailers, Fountain Set is implementing more aggressive sales strategies and cost control measures to enhance its competitiveness.
What kind of imminent challenges you envisage that could confront in the textile industry?
a) Concerns over European sovereign debt:
The continuing concerns over European sovereign debt are likely to maintain pressure on liquidity in the global banking system thus increasing market cost of borrowing.
b) Increased cost of labour in China:
The minimum wages are likely to continue to increase by the Chinese government resulted in continuous pressure on the cost of labour and other labour intensive services.
c) Adjustment in fabric price due to volatility in cotton price and possible surge on fuel prices:
In addition, potential risks for the industry will stem from the continuous volatility in cotton price as well as possible surge on fuel prices, all of which are universal to Fountain Set and the major competitors and would therefore contribute towards stronger momentum for adjustment in average selling price of fabrics.
Your eco and performance series comprises innovative fabric by Fountain SetTM. Among them which product do you see has high market growth and consumption?
The “fabric by Fountain SetTM”, consolidated brand name of the Fountain Set Group’s comprehensive knitted fabric, signifies ultra comfort and convenience for wearers and focus on product quality and innovation.
Under the umbrella brand of “fabric by Fountain SetTM”, the fabrics can be divided into eco and performance series. In which, organic cotton, Better Cotton Initiative (BCI) as well as Cotton and Fair Trade Cotton, under the eco series have the highest consumption and market growth.
What kind of change do you see have been preferred onto the garment manufacturing sector in the areas of fabric?
In the areas of fabric, trend of light as well as synthetic fabric have been preferred. Light fabric has been the trend for the past few years. Moreover, there is also an increasing demand for synthetic fabric e.g. Rayon, Polyester, CVC, especially in women’s apparel due to more stable supply and pricing than cotton.
Bamboo fabric seems to be emerging in the market. What are those significant elements, which makes it worthwhile?
Bamboo fabric has great value as it is a sustainable product, owing to its fast growth, besides it does not require replanting after harvesting as well as there is no need for the poisonous pesticides and fertilizers.
Bamboo fabric can be divided into:
a) Viscose bamboo (viscose rayon from bamboo as raw material)
Benefits: It is a regenerated cellulose fiber similar to rayon from other raw materials, natural sheen and softness, better drapery, good absorbent and air permeability.
b) Original bamboo (mechanically treating bamboo and get bamboo fiber as linen)
Benefits: The feel and luster is close to linen. It is cool, good absorbency and vaporizes moisture with good air permeability and harsh feeling.
Recently you have been accredited with a ‘Green Medalist’ award. Please share us your viewpoint on the environmental protection. What important aspects should be taken into consideration?
Fountain Set believes environmental protection has great social value and great influence on our industry’s development, which motivates us to strive for better sustainable operating practices.
The “Green Medalist” award and a “3 Years + entrant” award accredited in the Hang Seng-Pearl River Delta Environmental Awards 2010/11 by the Federation of Hong Kong Industries and Hang Seng Bank was not the only award that recognizes Fountain Set’s effort and success in environmental protection.
In the WWF Low Carbon Manufacturing Programme (LCMP) 2011, Dongguan Shatin Lake Side Textiles Printing & Dyeing Co., Ltd. (“Lake Side”, a subsidiary of Fountain Set in China) was accredited a “Gold Label”, a leap from the “Certified Label” in 2010.
Fountain Set’s investment in environmental projects will not be linked directly to revenue but will continue to be towards making all of our businesses the best neighbours they can be. Fountain Set supports green production in a diversity of ways including conserving water and electricity, reducing waste in our mills and offices.
Fountain Set supports the national policy in terms of environmental protection, such as constructing an environmentally friendly industrial park and investing in the construction of a new integrated wastewater treatment plants in Dongguan, China.
In which these practices will meet the government’s latest requirement and increase the strength and orientation of the water reuse.
Which latest technology in fabric, reigns in to your kingdom?
1) Fabrics of Multi-function (or performance) in one, say 5in1, these performance include good color fastness, good appearance, wrinkle-free, low shrinkage, and stain-release. Up to present this year, Jiangyin Fuhui Textiles Limited (“Jiangyin”, a subsidiary of Fountain Set in China) has finished about 350,000 lbs of this product.
2) Cotton based Moisture management fabric by using both hydrophobic and conventional cotton yarns and construction design for quick dry or one way moisture transfer. Up to present this year, Jiangyin has finished more than 150,000 lbs of this product.
Published on: 30/05/2012
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.