International -- The Stars of Asia -- Managers
Peter Lau (int'l edition)
Chairman -- Giordano International -- Hong Kong
Giordano Chairman Peter Lau is the first to admit that he pales in comparison with his predecessor, the flamboyant entrepreneur and publisher Jimmy Lai. An accountant by training and by disposition, Lau, 48, describes himself as a man "of limited talents."
Fortunately for Giordano, customers disagree. Thanks to Lau's efforts to upgrade quality, simplify colors, keep up with new styles, and relentlessly cut costs, sales at the casual-wear retailer jumped 20% last year, to $400 million, while profits quadrupled, to $46 million. "We are religious about reducing waste," he says.
Now, the modest manager is pushing into Calvin Klein territory, with a racy ads featuring buff models. But Lau won't go too far. "You have to stand out," he says, "but you don't want to antagonize your customers."Return to top
A Chat with Peter Lau
Over the past few years, Peter Lau, chairman and CEO of Giordano International, has steered the Hong Kong-based retailer through economic and political storms. Now the company is on the rebound. An accountant by training, Lau recently spoke to Asia Correspondent Bruce Einhorn. Here are edited excerpts of their conversation:Q. A lot of Hong Kong retailers went out of business following the Asian crisis. But Giordano not only survived, it thrived. What was the trick?
A. The situation presented an opportunity for us after 1997. After the start of the recession, we looked at the market and saw that everybody was going to go down-market. But a lot of the down-market customers were suffering the most. So instead of joining the crowd in the down-market, we decided to target the middle market a little bit more.Q. How did you do that?
A. We raised our quality. Our workmanship had been fairly good anyway, but quality always starts with the fabric. So instead of using our traditional weight in cotton -- 170 grams -- we raised it to 210 grams. On average, that raised prices 5% to 10%. But the fabric feels better. We also stepped up the changes of our styles. We probably change every three weeks now, compared to every two months before.Q. Why?
A. You want to create a perception that you have refreshed your merchandise often enough for people to feel it is worth their while to make a trip to Giordano again.Q. How have you managed to keep costs down?
A. Find ways to reduce waste. We are very religious about reducing waste. There are a lot of administrative procedures that cost money and time.Q. Like what?
A. Petty-cash expenses. Every company has an elaborate system of monitoring petty cash. But why have an elaborate system to monitor something very petty? So we are trying to use a simplified procedure. And we are pushing things to the back office and away from the shops.
We used to deliver garments to shops every morning in boxes and plastic bags. Then the shop girls would have to open the boxes and the bags and find ways of disposing them. We deliver close to 100 boxes each morning. Imagine the energy that they have to expend to open the boxes and dispose of the garbage! By the time they are finished, they are tired. We want them to focus on customer-related work. Now the clothes arrive in reusable heavy-duty bags. That saves them another hour each morning.Q. How does the Internet fit into your cost-cutting plans?
A. We are doing away with all the fax machines in the shops. We will force everybody to be on the Internet. Faxes are an outdated mode of communication. Each person in the shops used to take a lot of time going through, and filing, faxes. We can save an hour, two hours, per shop per day. That should free them up to do customer-related things.Q. Now that you've gone upscale, have you written off your original customer base completely?
A. We have a multibrand strategy now. We opened last fall Bluestar Exchange to target the more budget market, people who are not as fashion-oriented. The clothes are 30% cheaper. Now have 13 in Hong Kong and 4 in Taiwan. The real big roll out plan is later this year. It will be bigger than Giordano in five years time.Q. Giordano founder Jimmy Lai angered the Chinese government in the mid 1990s by insulting then-Premier Li Peng in print. Ever since, Giordano has suffered setbacks in China. Can you ever recover?
A. We are going strong in China, with 300 shops. The increase from December is 30 to 40 shops.Q. But not in the prime locations, right?
A. We are in Shanghai, and we are looking into Beijing.Q. Are you interested in teaming up with a well-connected Chinese partner?
A. A lot of Chinese partners are interested in us -- for the wrong reasons. They claim that they can "solve our political problem," when I am not even sure we have one. In some countries, the systems work in mysterious ways. China is not the only country where we run into bureaucratic problems. In Asia, rule of law is not as defined. Giordano is always treading in uncertain waters. I have no problem with that. I am comfortable living in a world of uncertainty.Q. What's been the biggest influence on your management philosophy?
A. I was part of team that had to keep the bankers at bay during the bankruptcy of oil-and-gas company Dome Petroleum. That's why, when you look at Giordano balance sheet, we have no debt. I promised myself that I would never let Giordano have any debt. I'm very distrustful of bankers. They are your best friends when you have money and your worst enemy when you are broke.Return to top