Made in China: A Shoe Company
Rick Schawelson moved to Taiwan in 1982 and had the unique opportunity to do business in China just as it was opening up after the Cultural Revolution in 1987. At their peak his company exported 700,000 pairs of shoes per month to the likes of Walmart, Kmart, and Payless Shoes. This is his story and advice.
“I grew up in manufacturing.” Rick’s father had a business manufacturing point of sales displays in Queens, New York. “We made a lot of displays and premiums for liquor companies, such as Heineken, Bacardi, Absolut Vodka, and other brands. You’d see them in liquor stores and bars.”
The company also designed and manufactured counter displays for the cosmetic industry, showcasing makeup, lipstick, and blush.
Through the displays, their customers were able to showcase cosmetic and perfumes in a way that allowed prospective buyers to pick up, touch, and test the product. The family business exposed Rick to many manufacturing methods, as he spent his summers there.
He says “They work in all kinds of mediums including injection molding, vacuum forming, woodwork, metal work, etc. They also worked in expanded polyurethane and silk screening. They didn’t have laser cutting back then and did everything manually.”
When Rick graduated in 1982, he took a three week trip around Asia and had dinner with a man in Taiwan who had done some work for his father.
The man offered: “Why don’t you come and work at my company in Taiwan for a few months, to give you some experience before you go back and get a real job?”
What started out as a three month internship turned into two and a half years in Taiwan. Rick met and married his wife there, and they moved to Hong Kong. In Hong Kong, he happened to meet a stewardess on a Cathay flight who was married to an American in the shoe business. Her husband had a very similar background to Rick’s, and wanted to leave his current job to start his own company. Rick set up office space for them and helped write the business plan, and they became partners in their own shoe manufacturing firm.
They set up their factory in Putian city, between Fuzhou and Xiamen, in Fujian province. In those days the only other shoe factories were Chinese government factories and Taiwanese joint venture factories. Their neighbor was a factory that made Nike shoes.
“We manufactured very inexpensive women’s fashion shoes. Our market was the mass retailers, such as Kmart, Walmart, and Payless, and we targeted their customers. So a lady with fifty dollars in her pocket at the end of the month who reads the fashion magazines and sees the high end brands such as Donna Karan, would walk into a Walmart and see similar shoes retailing for $4.99 or $5.99, and purchase them. A lot of our shoes were inspired by the designs and styles from the major name brands. We would study magazines, sit in the shoe departments of Nordstroms and Macys, watch what women were buying, and make a budget version that Kmart would sell.”
This was at the cusp of China opening its doors to the Western world. American companies still weren’t buying direct from factories, but going through trading companies in Taiwan or Hong Kong. It was difficult to get visas to go into China, and no one was really sure how to buy directly from a factory. As two Americans running a factory in China, their company provided a manufacturing solution with zero communication problems. Rick’s business partner was talented at designing the shoes, and they presented a perfect transition for every one of the major retailers for factory-direct purchasing. Back then Payless Shoes, Kmart, and Walmart were the biggest importers, and the company at its peak was shipping 700,000 pairs of shoes a month.
Working in China was always a challenge, and kept you on your toes. Rick recalls a manufacturing mishap, from when they were manufacturing shoes with licensed characters for Walmart and McDonalds.
“One of our shoes was a children’s Snoopy character. We sent the parts out for embroidery, and when we received the material back, we discovered an unpleasant surprise. The embroidery quality was very good, however on the right shoe it had the picture of Snoopy with the word “SNOOPY” embroidered underneath, and the left shoe was supposed to be a mirror image of Snoopy, but they also created a mirror image of the words, and spelled out Y-P-O-O-N-S! I never would have thought of that. But, you’ve got to realize — the workers don’t speak English. It’s the same as if you had a non-Chinese speaker writing a Chinese character. They wouldn’t know if it was upside down or sideways. It’s not something you’d think of telling someone unless you’ve had that experience before.”
Rick has two lessons to share from his shoe adventures:
1. If you don’t know it can’t be done, sometimes you should just do it
“We were foreigners who were not very knowledgeable about China. We didn’t know that we couldn’t do it, so we opened a wholly foreign-owned factory in China. Don’t assume anything can’t be done.”
2. Choose your partners well
The shoe company eventually dissolved because Rick and his business partner had philosophical disagreements about how the company should be run.
“My business partner had limited knowledge of business, but was very talented in design and sales. We actually complemented each other quite well in terms of the business, but our failing was there was a disconnect in our expectations and understanding from a company structure perspective. It’s very important when starting a new business or taking on a partner that there is open communication and discussion and to get as much as you can in writing.”
Eventually Rick sold his share of the company back to his partner and left to pursue other interests.
The shoe company was only the beginning. After he left, Rick started consulting at Global Sources, the largest trade publisher in Asia, publishing factory sourcing magazines that provided a conduit between buyers and factories, decades before Alibaba. Since then, Rick has taken on the role of a general manufacturing expert, consulting in contract manufacturing, sourcing, building factories, and supply chain projects.
