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Suraj Kundamal says Hong Kong has enabled his four-generation family business to thrive
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Business is in Suraj Kundamal’s blood. He is part of the fourth generation running Kundamal Group Hong Kong, a family business that started in India. A portrait of the company’s founder hangs in the company room, along with other photos of subsequent patriarchs.
“The business was started by my great-granddad, who opened a jewellery business in India more than a century ago,” recounts Mr Kundamal, who is Company Director.
“My grandfather came to Hong Kong in 1949, when the city was already a great trading hub. Kundamal set up in the city in the early 1950s, manufacturing and wholesaling diamonds and other precious stones, eventually branching out into other sectors, including real estate, as well as commodities trading in cement and iron ore.”
When the Chinese mainland began opening up, the family business was able to capitalise on being located at the gateway of China. “In fact, we were among the first Indian companies in China in the 1980s, when little trade was being done.”
Garments Take Off
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Kundamal, a garment supplier to major retailers in the US, has expanded to new markets in Eastern Europe and Latin America
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Twelve years ago, the family went into the garment-exporting business, which has since become its main line.
“We decided to go into apparel because it’s dynamic. We began by acquiring a company in Los Angeles, in1996.” The business took off, supplying garments for major US retailers, including Wal-Mart and JCPenney. It later added its own lines, including Zeelander (young casual wear) and Spin Jeans. Designs are done in Hong Kong with input from the company’s US offices. Manufacturing is done primarily by its joint venture factories on the mainland, as well as factories in Southeast Asia.
In 2001, the company decided to explore the emerging markets of Latin America and Eastern Europe. “It’s only prudent to diversify your risks and take advantage of different markets at different times,” Mr Kundamal says.
Mr Kundamal says he took his cue from Hong Kong’s global consumer goods exporter Li & Fung, which began seeking agreements with Latin American department stores. The region, he realised, was expanding, with a large middle class and an advanced retail sector.
In exploratory trips to the new markets, he found a thriving market. “Using services offered by the Hong Kong Trade Development Council (HKTDC) to guide us, we were able to set up points of contact. We received plenty of inquiries from Mexico. But because of the country’s anti-dumping laws against China, we could only ship products from our Southeast Asian and Indian bases.
“But there was a whole region untapped without that kind of restriction,” Mr Kundamal continues. “Chile, for example, is small but very stable, with good economic growth over the past eight to nine years. And GDP figures for Brazil and Peru show they’re growing.”
The company’s efforts in those markets have paid off. Kundamal now supplies garments for the top two or three clothing retailers in Mexico, Chile, Peru and Brazil.
“We were at the right place at the right time. You had these department stores looking for reliable Asian partners to do their quality control for them.”
Covering All Bases
Expanding its business to Latin America has also helped cushion the company during the global economic downturn. “Our clients, especially in the US, were ordering less and asking for longer payment terms. Orders were at a minimum to control over-stock, and they were buying close to the season. So we had to be flexible and adapt.”
That ability to adapt, Mr Kundamal pointed out, is one of the strengths of Hong Kong companies. He also noted that Hong Kong’s advantages – its logistics, financial services and rule of law – make the city an ideal base for enterprising businesses. “There are also Hong Kong’s intangible assets, like its dynamism, which are irreplaceable.”
The Worst is Over
Mr Kundamal says business has turned the corner since June, with clients starting to reorder. “The worst is over. We’re hoping for good Christmas sales. Everyone is planning for 2010 as a time to consolidate,” he said.
But Kundamal is also looking ahead. The company has begun venturing into the mainland and Indian markets with Chinese partners. “It’s best to have partners who understand the mainland system, who know the ins and outs.” The company will, for now, produce original equipment manufacturing products to gauge mainland consumer response to its products.
The company is also building its real estate business. “We’re already in Mumbai, and are now finding our way in the China property market, targeting second-tier cities.”
Based on the family business’ experience over the decades, he has this advice for fellow entrepreneurs: Do your research properly through exploratory trips and take advantage of resources, such as ones offered by the HKTDC to make contacts in the market. He also advises engaging expert consultants who, he says, could save you money in the long run.
Despite the continuing slowdown, Mr Kundamal believes traditional markets are still promising. “You just have to be careful not to rush or over-extend yourself. Be choosy with companies to work with, and have a filtering system.”
But Kundamal’s success, he says, would not have been possible if his grandfather had not made that key decision half a century ago to branch out in Hong Kong, where the company’s roots remain firmly tied.
“The opportunities we have had came because of where we are. Hong Kong is a gateway to China. If we had been in any other place, some opportunities may not have come our way.”
Related Link
Kundamal Group Hong Kong
