Page 103 - Business Principles and Management

Unit 1

Focus On...

Global Innovation–Business Via the Internet

When the Lee Hung Fat Garment Factory started 35 years ago, overseas
orders usually came by messenger from one of the big Hong Kong
trading houses. Today, customers send in specifications for denim jeans
and leather jackets directly to a computer terminal on the desk of Mr.
Eddy Wong Fun-Ming, the company’s operations director. “What we
do in one day used to take five weeks in the 1970s,” says 39-year-old
Mr. Wong.
This small Hong Kong company with annual sales of $40 million is
using the Internet to completely change the way it does business. With
the click of a mouse, Mr. Wong pulls up a customer’s order on the
screen. He can see all the details—from production at his factories in
China and Bangladesh to shipping schedules to individual customers’
accounts. So can many of his staff. Each order is simultaneously sent to
any department involved in getting it filled.
Lee Hung Fat supplies apparel to about 60 companies in Europe.
Many of these customers have gone online. So the decision to wire
the company into the Internet was driven partly by customers wanting
to do e-commerce, and partly by his own desire to cut costs.
Using the Internet to communicate has saved the company on
phone bills. Before the company went online, fax and telephone calls
to customers and factories overseas cost about $10,000 a month. With
electronic mail, “you can have 50 messages to your buyer in a day and
it doesn’t really cost you anything,” says Mr. Wong, who often checks
his e-mails on the golf course using a mobile phone. He also applies
over the Internet for required documents to ship his goods. Before, he
had to send someone to the government office and apply for the
export license in person.
The company saves money in other ways, too. Before, the company
sent a mockup of a garment to buyers overseas by courier or by mail.
Now, Mr. Wong holds the item in front of a camera mounted on his
PC and flashes it over the Web. He can scan a picture of a sample and
transmit that to the customers, who can play with the cloth pattern
or the stitching and then zap back a new version. This means samples
are approved three to four times faster. Even after paying for the
costs of installing computers, Mr. Wong estimates he saves about 15
to 20 percent in costs.

Think Critically

1. How does the Internet help the Lee Hung Fat Garment Factory
remain globally competitive?
2. Are there some aspects of the business that cannot be handled
by the Internet?
3. What problems could the company encounter because of its
heavy reliance on the Internet?

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