Lawsgroup’s journey from Hong Kong to Myanmar

Rising Chinese wages force the textile maker to move production but its CEO remains laid-back.

Before his death in 1996, the Hong Kong textile tycoon Law Ting-pong handwrote a letter of wishes in which he expressed the hope that “those who are careful at the beginning would also be careful to the end”.

Unfortunately, the lack of careful wording in the informal will sparked a court battle between his six children over his HK$1bn estate that dragged on until 2011.

Now, with the row settled, his 37-year-old grandson Bosco Law is trying to live out the exhortation to cautious living in his role as chief executive of Lawsgroup, the family’s mini-conglomerate, which spans clothes manufacturing, retail and property.

“My grandfather had a saying that we should be very conservative but also aggressive,” says Mr Law, speaking at the company’s headquarters in a busy commercial area of the Kowloon district in Hong Kong.
He explains the apparent conflict: the phrase means eschewing complicated financial products such as currency derivatives but taking an adventurous approach to expanding the core business of sewing T-shirts and knitting sweatshirts for retail customers including Gap, JC Penney and Uniqlo. “The manufacturing environment is ever changing so you always have to have a changing mindset to survive,” he says.

He declines to release any figures indicating the size of the company but as evidence of its ambitions, cites its recent expansion into Myanmar, which has attracted much attention but where few investors are willing to take the plunge.

Always searching for cheaper labour, Lawsgroup opened its first factory there last year and employs more than 2,000 people making T-shirts two hours’ drive north of Yangon, the commercial capital. “Opening a new factory is always tough,” says Mr Law. “Everything is new in Myanmar. Even if you talk to the [government’s] commerce department, they don’t really know the policy . . .  everything is a guess, everything is grey.”

Politics is a further uncertainty, with talks about forming a new government taking place between opposition leader Aung San Suu Kyi and the ruling military after her party won November’s election. “Who knows what will happen? But still, if we have a 70 per cent chance [of success] we will go for it.”

While the business is much smaller than the conglomerates built by Hong Kong tycoons such as Li Ka-shing and Lee Shau-kee, Lawsgroup’s combination of entrepreneurial endeavour and conservatism is typical of the approach that built the city’s dominant family businesses. Many started with humdrum businesses such as small-scale factories or retail stores before parlaying profits and connections into diversified business empires.

You can make decisions faster and you can follow your will and passion, but you have to take full responsibility because it’s also your money.

Lawsgroup, which employs about 20,000 people in Bangladesh, China, Hong Kong, Myanmar and Vietnam, was founded as a textile manufacturer by Law Ting-pong in 1975 in the heyday of the “made in Hong Kong” boom. Like other Hong Kong clothes makers, it soon moved into the mainland to take advantage of low wages, a huge workforce and the opening-up of China from the late 1970s.

Its expansion there took off only after 2005, when quotas on imported textiles in Canada, the EU and the US finally ended. That year, Mr Law joined the family business after studying architecture in Toronto and working for an architects’ firm and a bank.

Lawsgroup was listed in Hong Kong in 1987 and a separate property and retail arm spun off into their own listings before the main holding group was taken private in 1998.

Mr Law, who describes his management style as “firefighting” when necessary, rather than micromanaging, says his main interest is fashion. That much is clear from his quirky outfit of flowery sneakers, grey trousers and a green blazer with a robot-shaped brooch.

A laid-back figure who rarely gives interviews, Mr Law insists he was not parachuted into his job by dint of some family succession plan but he notes that running a family-owned company has advantages.
“You can make your decisions faster and you can follow your will and passion, but you have to take full responsibility because it’s also your money.” Yet, pushed on whether he feels pressure to maintain and enhance a rich legacy, as in many Chinese family-owned companies, he brushes off the question. “I run the business just like a hobby,” he says. “I’m pushing my vision and I like doing branding and marketing.”

Perhaps he does not feel the weight of family expectations so heavily because his father’s siblings run their own businesses, from Crystal Group, a leading clothing manufacturer, to the Park Hotel group and Bossini, the low-cost clothing retailer that made his grandfather famous in Hong Kong.
Mr Law’s focus is on managing Lawsgroup’s moves into new markets. With factory workers in the manufacturing heartland of Guangdong taking home more than $500 a month, Lawsgroup is expanding in countries where wages are less than half the cost, such as Myanmar, Vietnam and Bangladesh.

The death of basic manufacturing in China has long been prophesied, but Mr Law believes big producers will keep a presence there because of the scale and infrastructure advantages, as well as technical expertise.

“Most of our research and development is in China, where we do our industrial engineering and have developed our own IT system for quality control,” he says. “We do our factory line planning and training videos in China and then have the whole package sent overseas for them to follow.”
Mr Law’s responses are sometimes so relaxed it is hard to tell if he is blasé, unflappable or evasive.

Asked if he worries about his safety after his cousin Queenie Law was kidnapped for ransom last year, he says “it’s just a single case”. Is he concerned about the disappearance of five Hong Kong booksellers whose store sold works critical of China’s top leaders? “It’s just a single case”.

Like most Hong Kong businessmen with interests in mainland China, he is reluctant to be drawn into discussions about politics but his attitude might also point to a deeper self-confidence. Free from the vicissitudes and pressures of equity markets, conservative family companies such as his find it easier to endure difficult times.

On the day of the interview, Chinese stock and currency markets were again ridden with turbulence, and global investors were jittery about the prospects for the world’s second-biggest economy. Unlike some other manufacturers, Lawsgroup has not taken out hedges against renminbi volatility but Mr Law prefers to concentrate on the fundamental business.

“We’ve been doing this for 40 years. It’s a downtrend right now so we have to buckle up. I’m still confident about Hong Kong and China in the long term.”

Source: FT

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