University of West London: TWT Co. Business Growth Plan Report

This report analyzes the business growth plan for Tung Wong Trading Co. (TWT Co.), a manufacturing firm specializing in high-quality clothing and accessories. The report delves into the company's origins, the founder's entrepreneurial journey, and the challenges faced in the competitive garment industry, including the decline of Hong Kong's manufacturing sector. It explores TWT Co.'s start-up process, business model, competitive advantages, and growth strategies, including its relationship with major fashion brands. The analysis covers the nature of the entrepreneur, the company's development to date, and the challenges of managing and running the business. The report also suggests recommendations for future growth and development, considering government support and the evolving market landscape. It provides insights into the company's evolution, from its humble beginnings to its current global presence, emphasizing the importance of strategic planning and adaptation in a dynamic business environment.

Business Growth Plan
for
Tung Wong Trading Co.
University of West London
MS60047E - Managing Small and Medium Sized
Enterprises
Academic Year 2021–2022
26/4/2021

Content
Introduction………………………………………………………………………………………………………
……………………… 3
Key
Challenges…………………………………………………………………………………………………………
………………. 4
1. The nature of the entrepreneur WAI KEUNG
CHAU…………………………………………………………... 4
2. The Tung Wong Trading Co. start-up
processes…………………………………………………………………. 5
3. The Business Concept and Competitive
Advantage…………………………………………………………….. 6
4. The Current Level of Demand and the Competitive
Environment………………………………………… 7
5. The Growth and Development of Tung Wong Trading Co. to
Date………………………………………. 8
6. The Challenges of Managing and Running Tung Wong Trading
Co............................................ 9
7. Tung Wong Trading Co. Current Growth and Development
Strategy………………………………… 10
8. Government
Support………………………………………………………………………………………………………
. 10
Conclusion…………………………………………………………………………………………………………
……………………. 11
Recommendations………………………………………………………………………………………………
…………………… 11
References…………………………………………………………………………………………………………
…………………… 12

"We provide the best for the BEST"
WAI KEUNG CHAU
Introduction
This project will concentrate on Tung Wong Trading Co. (TWT Co.), which was
established in 1977. The origins of the business, how the founder raised capital, how
he navigated the early stages, the failures and achievements, and a reflection on the
founder WAI KEUNG CHAU, his aspirations, and ambitions.
This paper would look at the founder's visionary personality and how his vision for
the business and himself has evolved over the course of his career. Furthermore, the
study will cover TWT Co.'s start-up process, business model, and any strengths in the
current competitive market, as well as the industry's level of demand. The report will
focus on the development and growth of the company so as to face the complexities
of operation. The aim is to formulate a company strategic development plan for TWT
Co., as well as look at any government assistance that could be provided to ensure the
company get through difficult moments.
TWT Co. is a manufacturing firm that specializes in making high-quality clothing and
accessories for a variety of well-known and high-end brands around the world. One of
their collaborating mates, for example, is IT in Hong Kong. These firms are on the top

position of fashion, with special needs in the field of clothing, where professional
manufacturing firms with the necessary technique are in short supply.
From the 1950s to the 1970s, the manufacturing industry in Hong Kong grew rapidly.
However, after 1987, the industry in Hong Kong has declined. With a decreasing
number of manufacturing factories in Hong Kong, the industry is projected to
continue to fall over the forecast period.
Key Challenges
The nature of the entrepreneur WAI KEUNG CHAU
To get a deeper interpretation of the kind of entrepreneur WAI KEUNG CHAU is, I
wanted to conduct primary research and reached out to Mr. CHAU via social media,
asking if he would be able to answer several of my questions about the project, I'm
working on for TWT Co. He was willing to facilitate me with answering all of my
questions during the face-to-face interview. He was professional and enthusiastic
about his company. Also, he was able to provide information and answers to my
questions in a clear and authoritative way.
Mr. Chau developed an interest for the textile industry after graduation from high
school in 1972 and worked as a garment worker for a local company in that
specialized sector for 5 years. Mr. Chau believed that his work experience qualified
him to establish a manufacturing company that specialized in making clothing for the
fashion industry, thus, TWT Co. was created in 1977. Recently, Mr. Chau was voted
to be one of the chairpersons of Guangdong Federation of Industry and Commerce.

Mr. Chau mentioned that his primary goal is to provide his family with a comfortable
lifestyle and stability. He has three children and is married. He understands that
running a profitable company will help him accomplish the goal while still fulfilling
his entrepreneurial spirit and desire to succeed. He claimed that he always wanted to
own a company and made good use of his entrepreneurial abilities. He feels that his
experience and attitude set him apart from other competitors in the field. In this case,
Mr. Chau demonstrated that not all companies have the same objectives, and that not
all small enterprises exist solely to maximize profit.
According to Baumol (1990), there are three distinct forms of entrepreneurship, which
are productive, unproductive, and destructive. When a creative idea or service leads to
economic prosperity that benefits not only the individual but the entire society, this is
referred to as productive entrepreneurship.
Mr. Chau's vision for TWT Co. obviously fits into this diverse group, as he focuses on
producing high-quality clothing and encourages sectors dedicated to making the
planet a more modern and high-end environment.
The TWT Co. start-up processes
Mr. Chau didn't have much in the way of resources and had no experience raising
money, therefore finding seed funding to finance his business would be difficult. In
1987, He wrote a simple “business plan” which cement his ideas and how he is going
to run the business and tried his best to persuade all of his friends to invest into the
company in order to raise seed capital. In fact, only 3 of his friends were willing to
help. As a result, Mr. Chau bought a small factory in Guangdong and set up his head
office in HK with HKD$600k at that time. According to Aldrich and Fiol (1994),
business plans serve as a repository of information and a monitoring mechanism for
capital sources, allowing them to better judge the risk of funding a company. Without
the “business plan”, Mr. Chau’s friends may never know what they are investing in.
Mr. Chau didn't have to worry about financing because the organization had
HKD$100k(after buying the factory and paying the rent for the head office) in its
bank account from the start. He did, however, need to put his plan into action, which
included approaching potential clients and using his network to contact companies
looking for clothing production services. Mr. Chau realized he had to recruit some
"sales" people to help him "accelerate" the company and attract corporations looking

for the services he offered. Big fashion brands were hesitant to partner with a new
company, so this was an obstacle. Indeed, TWT Co.'s first client was discovered to be
unsuitable for assisting TWT Co. in achieving its target, as the first client was a
Chinese copycat firm. They were not looking for high quality, but rather quantity. Mr.
Chau realized he had to be more ruthless and choose his customers more carefully
after this expensive error. When he was drafting his business strategy, this was one of
his main beliefs and ideals.
The Business Concept and Competitive Advantage
The number of garment factories increased to a peak in 1987, reaching 10,556, but it
only accounted for 20.9% of the total number of manufacturing factories at that time.
Similarly, the number of employees in the clothing industry reached its peak in 1986,
with a total of 299,932, accounting for 34.5% of the total number of manufacturing
employees at that time. Since then, the number of garment factories has fallen to
6,980 in 1992 (accounting for 16.6% of the total number of manufacturing factories),
and the number of employees has dropped to 186,607 (accounting for 32.7% of the
total number of manufacturing factories), a decrease of 66% and 62% respectively.
(The Development Process and Cultural Anatomy of Hong Kong's Clothing Industry)
TWT Co.'s concept is based around a desire to include high-quality designer wear for
every day, luxury clients while still being environmentally conscious. TWT Co. has
taken measures to reduce fleet pollution and reduce CO2 emissions that cannot be
avoided by reinvesting in climate-friendly measures.

Manufacturers have always adopted a more passive attitude towards corporate social
responsibility, usually only responding to relevant requests from customers. However,
nowadays, customers are increasingly encouraging manufacturers to take the initiative
to report on their own corporate social responsibility activities held in the factory.
(Clothing Industry Training Authority) It demonstrates that environmental
stewardship is a source of strategic advantage.
Mr. Chau emphasized the benefits of working with I.T on a long-term basis. It gains
TWT Co. with good reputation when cooperating with such large fashion brand.
Keeping good relationship with the CEO of I.T Mr. Sham Kar Wai is also an
advantage. Mr. Sham introduced many friends who are working in fashion industry to
Mr. Chau, and this has broadened the social network of Mr. Chau. Thus, TWT Co.
can be more well known among the fashion industry.
The Current Level of Demand and the Competitive Environment
Despite the decreasing number of manufacturing factories, the industry is highly
competitive. After the China implemented the reform and opening policy, many Hong
Kong's garment factories have moved northward to mainland China, where there is
more room for development. However, garment companies that still adhere to Hong
Kong can only reorient their development path by improving product quality,
increasing the value of export projects and developing new products, including high-
end fashion made of various mixed fibers to open up sales and continue to survive.
According to HKTDC Research, traditional markets, such as the United States, the
European Union, and Japan, have recently given textile exporters from emerging
countries, such as ASEAN and Bangladesh, preferential market entry, reducing Hong
Kong manufacturers' competitiveness. Because of raising labor costs and stricter
environmental regulations in mainland China, a growing number of Hong Kong
garment factories have moved their lower-end manufacturing to Southeast Asian

countries such as Vietnam. Their Hong Kong manufacturing activities concentrate on
advanced and high value-added products.
Businesses are constantly needed to change what they provide customers in light of
mature market trends and the growing availability of alternatives to garment
production around the world. The garment industry in Hong Kong is a big supplier to
the local apparel industry. These producers have a competitive edge in fulfilling short
notice demands from nearby textile manufacturers. Meanwhile, a large portion of
Hong Kong textile exports is destined for use in the offshore garment production of
Hong Kong firms, especially on the mainland.
TWT Co. has not found the new business climate to be a serious barrier. This is
because they have a long-term relationship with several major fashion companies, and
this is a core component of their plan to achieve an edge.
The Growth and Development of Tung Wong Trading Co. to Date
TWT Co. has grown in a variety of areas and can be measured in a variety of ways.
Mr. Chau is pleased with the results so far. Mr. Chau received a life-changing
opportunity when he formed a long-term collaboration with many well-known fashion
companies, allowing him to accelerate his business and realize his dream of financial
stability. He is a professional entrepreneur who has expertly navigated his way
through life.
Mr. Chau's goals were never solely financial in nature. He wants to do better, and as
an owner boss, his company represents his values. According to Gibb(1990), the
company would represent the owner manager's personal and family goals.
TWT Co. may be in the second step of a 'Autonomy Crisis,' where emerging systems
focused on delegation are being implemented. The organization is still basic, with a

small group of workers who are unable to make big decisions on their own and must
instead follow the owner's general instructions. The construction of systems is limited.
At all, formal strategy is cash forecasting. The main aim remains survival, and the
owner is still associated with the business.
TWT Co. Number of Employees(Head Office in HK) from 1977-2020
1977-1980 1981-1990 1991-2000 2001-2010 2011-2020
From 1 to 9 From 9 to 17 From 17 to 28 From 28 to 42 From 42 to 73
Although these estimates are remarkable in and of themselves, there is more to
remember than just the numbers. TWT Co. is constantly working with top-tier fashion
firms at the board level, and their presence is now global. The company is now very
lucrative. A corporate plan, as described by Wheelan, T.L., and Hunger, J.D. (2012),
lets companies boost their competitive standing and influences the success of
businesses and industries.
The Challenges of Managing and Running Tung Wong Trading Co.
This chapter will present the challenges that TWT Co. faces in managing and running
the company, which are divided into two categories: general challenges and specific
challenges.
General Challenges Specific Challenges
 Adapting to technology trends;
and
 Damage and unexpected
maintenance costs;

 Growing revenues - without
growing revenue, it’s difficult to
keep up with cost inflation and
stay competitive.
 Controlling costs;
 Finding and keeping long-
term clients; and
Tung Wong Trading Co. Current Growth and Development Strategy
Mr. Chau is visionary, and he has shown that he has the economical, structural,
managerial, and technical capabilities to run a profitable business with expanding
offices across HK. With that in mind, Mr. Chau plans to open regional offices outside
of Hong Kong. He's keeping an eye on the success of a few possible goals but hasn't
approached them yet. He did believe that at some stage in the future, this will be a
wise decision.
There will be some variables to consider in terms of development. First of all, its
financial factor as this would boost the rate of spending and asset acquisition. Second,

its strategic factor as the procedure must be updated so the organization would have
additional obligations. Third, its structural factor as this would boost the sum of
workers and the business's operating technology. There will be more rivalry, and Mr
Chau's organizational skills and leadership style will be critical to the company's
success. The last consideration is organizational as if more employees get active in the
industry, more professional positions would be required.
Government Support
Based on the information on GovHK, HK government nowadays has many measures
to support SMEs. Take Trade and Industry Department Funding Schemes as an
example, it assists SMEs in obtaining funding for company installations and supplies,
as well as fulfilling working capital needs; expanding overseas markets; and
improving Hong Kong enterprises' overall competitiveness in general or in particular
industries. Besides, hktdc.com has a variety of services for SMEs, including business
statistics, workshops and activities, community forums, and more.
Mr. Chau clarified that when he first proposed the idea of starting his own company in
1977, he had little or no understanding of government funding options.
Conclusion
The majority of start-up businesses struggle within the first year or several years. Mr.
Chau has found his way and is now in his decades of unbroken success, both in terms
of turnover and, more importantly, benefit. While there have been obstacles, errors,
and failures along the way, this is a true success story.
Mr. Chau's friends' investment, along with Mr. Chau's experience and managerial
skill, has clearly been invaluable. While these conditions presented TWT Co. with a

huge opportunity, it also had to win company, hire and train employees, and set up
processes and facilities.
Recommendations
Given how good TWT Co. has been and how clear and rational Mr. Chau has been
about his strategies and intentions, all of which seem to be very sensible and in line
with the course he has consistently followed for many years, it is difficult to make
concrete suggestions.
Mr. Chau, on the other hand, might be overlooking the ‘bigger image.' There may be
options to purchase a production firm with common cultures, but in a different
industry. In terms of the economy, this strategy can provide a balance. High-end
fashion is a growing market, but quick fashion or another similar sector that may not
wander too far from the core industry may be an interesting diversification.
Investing in a new geographical area may be a more interesting development prospect
for TWT Co.. France, for example, one of the major clients of TWT Co. is based in
France. Given that France is widely recognized as the Centre of top-level fashion in
the world, placing investment in France might explore more cooperation opportunities
and enhance chances to approach new potential clients. If TWT Co. enters into a share
exchange with a similarly sized French production firm, it is impossible to foresee the
financing requirements. TWT Co., on the other hand, could offer a fresh and dynamic
growth potential if it wanted to enter this market speculatively after doing extensive
research into the position and possible demand for a new entrant.
References
Gov.hk. 2021. Support for Local & Foreign Enterprises. [online] Available at:
<https://www.gov.hk/en/business/supportenterprises/localenterprises/index.htm> [Accessed
26 April 2021].