From cottage industry beginnings, Tai Ping has been at the forefront of innovation in its rise to regional heavyweight
KENT YEH REMEMBERS running around the Tai Ping carpet factory in Tai Po on Sundays, while his father met with the late Lord Kadoorie, one of the founders. He was a small child at the time, enchanted by the colourful showroom which attracted busloads of tourists.
'Forty years ago when Tai Po was still a fishing village, the bathrooms in our showroom were very modern. They had carpets. All the tourist buses would stop so passengers could relieve themselves and also do some shopping,' said Mr Yeh, now Tai Ping Carpets International's managing director. 'It was a gimmick. Even to this day, none of our showrooms are as nice as that one was.'
Tai Ping's present Hong Kong showroom in Times Square has computers which offer various interior options. Buyers can try out different designs and colours in an on-screen environment similar to their own home. There are stock carpets on display but most of Tai Ping's business is from custom orders.
Of their work, 70 per cent is from the hospitality and commercial sectors - including hotels, institutions and convention centres - and the remainder is high-end residential.
Tai Ping began as a cottage industry in 1956, when seven seed investors each contributed HK$10,000 to build a factory and employ mainland refugees. The idea was sound - hand-knotted carpets made in communist China could not be exported to the United States. They could just as easily be made here.
But it soon became apparent that Hong Kong's workers had less patience than their northern neighbours. Tai Ping was losing staff as fast as it could train them. A move to hand-tufting - where yarn is stitched on to a backing cloth - provided the initial production breakthrough.
Anthony Yeh, Mr Yeh's father, was the young engineer who spearheaded the first revolution. He went on to invent a motorised hand gun for tufting, while building up the export markets at a time when pre-airconditioned Hong Kong had little interest in carpeting.
'To this day, most of the industry uses that [motorised] design,' the younger Mr Yeh said. 'The patent ran out after 20 years, but we are proud that the idea came from our factory.'
In 1991, Tai Ping moved its production base from Hong Kong to China, as high property and labour costs made its Tai Po location infeasible. By then, the younger Mr Yeh was in a management capacity. He had worked his way up the corporate ladder on returning to Hong Kong from the United States in 1981.
'I wasn't planning to come back to work in the business, and my father did not expect me to do so,' he said. 'But the difficulty with finding professional management in Asia is that people jump around. They were having difficulty finding people to train. Lord Kadoorie called me and made me an offer I could not refuse.'
Mr Yeh had been working in Silicon Valley as a management consultant, after leaving home to study in the US as an industrial engineer before completing an MBA.
'It would have been very difficult [for Tai Ping] to find a partner to establish continuity unless it was a family member, who had a vested interest to stay on. But I don't treat this as a family business,' he adds quickly. 'I run it as if I were running any public company.
'In a way, we were forced to go into China, which has obviously proved to be a very good thing,' Mr Yeh recalls. 'It was very exciting time in China in those days. Trying to find a partner was a hit and miss affair, and we were under pressure to move quickly. But we did not want the wrong partner. If you marry the wrong guy, it is a lifetime of suffering.'
Tai Ping set up a sound joint venture in Guangdong province, which still exists. It also invested in a majority stake in a Shandong factory, which is today the mainland's largest carpet company. There were factories set up in Thailand, Indonesia, Singapore and the Philippines to circumvent import duties.
Tai Ping today owns 99 per cent of Carpets International Thailand, after some skilful management manoeuvring turned stakes in two competing companies into one of Southeast Asia's biggest factories producing mainly machine-woven carpets.
There are subsidiaries and sales offices in the Philippines, Indonesia, the US and Europe. The group also owns the Banyan Tree, a high-end interior firm which it bought eight years ago from the founding partners.
'Our largest single market [for Tai Ping carpets] is the US, followed by Germany, the Middle East and Asia,' Mr Yeh said.
He is confident the company, which employs about 2,500 people, is firmly on track after a few troubled years. It recently announced first-half profits to June of HK$19.18 million, up 27.7 per cent from last year and a far cry from the red ink of 1998 and 1999.
'The company has been through very significant restructuring over the last three or four years partly because we diversified too much into different businesses in China,' he said. 'We have been doing a lot of work cleaning up those investments. At present we are out of everything except for carpets.'
The company is also making more use of its listing to raise capital for expansion, most recently through a rights issue in June. It has been public since 1972 but is not actively traded as most major shareholders are still part of the founding families.
Energy which had been put into investments ranging from a Shanghai cement factory to a Shenzhen bottling plant is now being put into increasing capacity and improving standards.
'During that period [eight years ago] everyone was investing into China, it was the right thing to do, just like the dotcom era,' Mr Yeh said. 'We now believe the way to grow is to develop a wider range of products and markets. We have been investing a lot in production capacity and equipment to service different sectors of the market.'
Making carpet tiles is one new area, as well as carpeting for the transport industry - including aircraft and trains. A recent coup is being nominated as a 'preferred supplier' for Avendra, a leading hospitality supplier in the US.
Tai Ping holds pride of place in Hong Kong with its products sent as official gifts for royal weddings - including the marriage of Prince Charles to the late Princess Diana - and on the occasion of Macau's handover to China.
Mr Yeh remains fascinated by the carpet business.
'For me, every day is different. I spend a lot of my time travelling and touch on every aspect of the business. Every order is different. I love to go to the factory and look at all the designs.'
At present there are no plans for either of his two sons, who are studying in the US, to take a role in the business.
'In the end, jobs will go to whoever is most qualified, that is our principle,' Mr Yeh said. 'The key is finding the right person.'