Critically evaluate the pathways to internationalisation taken to date
When we are inspired, we dream the seemingly impossible
Quin, Co-founder and Hope Officer
Bhutanese Textile Initiative
Bhutanese Textile Initiative is a social enterprise which draws on the weaving skills of local Bhutanese women to produce scarves which are now sold extensively in Far East markets. This case information describes the creation and growth of this venture and outlines the current trading position. As a group, your task is to critically reflect upon this process, develop a SWOT analysis of the company and suggest strategies for the next step in the internationalisation process.
Quin was born and raised in Malaysia, and moved to Hong Kong in 1998. She is a Chartered Accountant and also runs an organisation called Global Women Connect and has an active social media personality, with over 30,000 followers on Weibo (Chinese microblog).
Karma Yangchi is a young woman from a remote village in Eastern Bhutan Unschooled, due to family circumstances, she – like many other Bhutanese girls – learned the traditional art of Bhutanese weaving as a child. Karma cannot speak English, struggles with the Bhutanese national language and speaks only her village dialect fluently.
Quin meets Karma
Quin first met Karma, and her husband, Dorji, in 2003 when the former came as a tourist to the village, they exchanged gifts including a hand-woven cloth of considerable beauty and value – it took two months to make and would cost around $200. From then on, Quin and Dorji, who can speak English, exchanged emails, greetings and ideas. Quin visited Karma again in 2014 and found the family to be living in poverty. Quin resolved to help the couple; recognising that Karma had a great eye for colours and patterns she came up with an idea to buy a sewing machine so that Karma could weave simple cotton cloth and make bags, cushion covers, or pencil boxes for souvenir shops. The sewing machine would cost$200 but Karma rejected the idea; it emerged these products were too complex but Karma could produce scarves.
Founding of Bhutanese Textile Initiative
Using social media platforms such as Facebook and WeChat (Chinese Twitter), Quin posted photos of the scarves made by Karma when she brought them to her hotel room a few days later. Beautifully woven, 40 were ordered immediately; 100 within two weeks after her return to Hong Kong by contacts in Mainland China, Singapore, Malaysia, and even Dubai and USA. This prompted Karma to send a message to Quin:
Dear Ana (Sister)
I have an action plan. I will make 3,650 scarves from 25 June 2014 to 25 June 2019. Please help me sell them, thank you. Karma
Quin agreed to help but distributing100 scarves and selling 3,650 scarves are clearly two different matters. One may be luck and a hobby but the other is a business venture entailing strategies and action plan.
Make a brand.
It was agreed amongst the three that the brand should be Bhutanese Textile Initiative. Karma can only make one scarf a day so it is very labour intensive. The English name was considered to add value to the brand.
With Dorji as the interpreter, the small team got to work with a relatively clear division of responsibilities. Karma looked after production, quality control and design. She also recruited and trained some new weavers to follow Bhutanese Textile Initiative designs. Each scarf was 100% handmade with natural materials. Dorji was responsible for the incorporation of Bhutanese Textile Initiative and other legal requirements in Bhutan. He was in charge of packing and delivery of scarves. Quin took care of sales, marketing, customer services and accounting and shared money management principles and business tips to make the operation more efficient.
Explore Sales and Marketing
The first few hundred scarves were all sold at the estimated cost level, i.e., 70 HKD for a short scarf and 100 HKD for a long scarf. As the sales moved on to more than 400 scarves, thanks to two orders of 100 each, placed by two businesses – one based in Hong Kong and the other in mainland China, Quin decided that appropriate pricing must be in place in order to make the venture viable in the foreseeable future.
As such the price was set at approximately HKD 230 for the most popular scarf size and length. The price was estimated to cover labour and material costs, packaging and shipping fees, the bank transaction fees and various marketing expenses including brochures, promotional events etc.
Quin used promotional events to spread the Bhutanese Textile Initiative story; these events were held in such locations as Shanghai, Hong Kong and Kuala Lumpur etc. During the event, Quin sold scarves, ordered and collected cash and also took photos of the customers (typically friends or friends of friends) wearing the scarves. This practice evolved quickly into a campaign called “Buy a Scarf, Get to Model”. As this idea worked so well, Quin held a tea party at Sinan Mansion’s historic villa in Shanghai in 2014, drawing almost 80 models for an upcoming Scarf Fashion book for Bhutanese Textile Initiative. The party was organized through WeChat with the guests paying the cost of RMB360 each through Alipay and invited to purchase further scarves. In a somewhat different form, another party was held in the home of an international musician in Hong Kong, attracting 50 influential people to hear the story of Bhutanese Textile Initiative. The presentation was then followed by a Christmas tea party and a Jazz performance. The parties and images of the “scarf models” were posted and reposted via social media such as Wechat and Facebook. Due to lack of funds, Quin relied on social media; she set up a free Facebook marketing page for the Bhutanese Textile Initiative story and scarves.
As Bhutan is known to be a ‘happy’ country, it was suggested that Bhutanese Textile Initiative is not only a good cause but also a happy project. Indeed, it was muted that Bhutanese weavers hand make scarves with love and transferred happiness through the scarves across nations. Soon, “weaving happiness one scarf at a time” and “one scarf, one hope” became main taglines of Bhutanese Textile Initiative. By the end of 2014, approximately 1,000 scarves were sold or used as samples for promotion; 80% of the customers were from Quin’s social network; the remainder being contacts through onward posting. .
Growing Pain and Hope
When Quin agreed to sell 3650 scarves for Karma, she found herself in a dilemma. “I went all out… I think in a couple of weeks, I sold 300, 400, then I found we had some teething problems: bad quality, delivery problems… What happened? They (Karma and Dorji) all tried to hide… They didn’t say anything; they didn’t answer my email. I only had the interpreter’s (i.e., Dorji) number. They didn’t take my phone call. I didn’t know until later. I found they were just scared. When they made a mistake, they were just hiding like ostriches…Then I know, oh, dear, maybe I shouldn’t sell so fast…”
It turned out that Karma had to recruit people; she asked anyone she knew who could weave to make scarves to meet the demand. Initially, Quin had increasing problems with quality. Quin got angry. “I kept telling them you have to stop doing this… Anyway, I say let’s finish this one thousand scarves. Then let’s stop because you are not listening. You gave me things I [had to] put in my bag and I pay for. I say I’ll send them back but I never do it…The only way to stop scolding you is that I stop [selling]…I am already working full time.
It became clear that the weavers should be trained. Drawing on local expertise from an established village in Bhutan making clothes for the royal family; Quin considered hiring someone from the village to train Karma and the other weavers but had no idea how to progress this; but after a conversation with Tenzin Lekphell, the CEO of the Institute of Management Studies of Bhutan, he introduced Quin to a trainer from the village.
In 2015, Quin and the trainer offered a workshop. For the first time ever, women from the weaving communities all over Bhutan gathered in the capital city, Thimphu for a formal training workshop. The weavers were taught best practices in advanced weaving, standard operating procedures, business ethics, problem solving and teamwork. Compared to Karma, the trainer was easy to communicate with and understood local problems so, Quin asked her to be the local coordinator and they signed a one year agreement. “So having this coordinator on board, working alongside Karma…I suddenly found the confidence [again] to go out and sell scarves…I feel that we can go further.” Quin then set up a website for Bhutanese Textile Initiative.
Voluntary Support and Corporate Partnerships
While grappling with the operational issues in Bhutan, Quin continued to attract enthusiastic individual and corporate supporters, in particular in Hong Kong and Mainland China. Helen Pu, a human resource manager with the Suzhou-based subsidiary of a Swedish company, had attended Quin’s guest lecture as an MBA student in Shanghai University. Helen went to the tea party in Shanghai in 2014 and wished to help Bhutanese Textile Initiative. To her surprise, she received enthusiastic responses from her social network after she posted the Bhutanese Textile Initiative story via Wechat; she began to help and set up a Wei-Dian (micro-store) becoming a key volunteer in promoting and selling Bhutanese Textile Initiative scarves in Mainland China. In addition, Helen’s good friend, Ivy Xu, co-owner of a local coffee shop offered the second floor of the coffee shop to showcase Bhutanese Textile Initiative scarves. Quin admitted that Helen’s passion and energy in helping with the cause was a key motivator for her to continue at the time she felted frustrated with the quality and delivery of scarves and other issues.
As Helen started to play an active role in Bhutanese Textile Initiative, another volunteer emerged in Hong Kong. Leo Ho was a business executive and university lecturer; having taken early retirement from a multinational company he was at several universities in Greater China such as Hong Kong Baptist University and Tongji University in Shanghai. He heard about Quin’s initiative from an MBA student in Shanghai; so he met with her to learn about Bhutanese Textile Initiative. He became a strong supporter telling the Bhutanese Textile Initiative story whenever he was teaching MBA students and would sell a few hundred Bhutanese Textile Initiative scarves to his MBA students. “[My students] know that I am passionate about helping people… they know who I am and they know what kind of person they can trust because of the lots of things that I do.”
Quin also won corporate support in various forms. For example, Vistra Group, a Hong Kong-based professional services provider, sponsored the launch of Quin’s book titled “Weaving Rainbows in the Himalayas: The Art of Bhutanese Scarf Tying”. The book featured the project of Bhutanese Textile Initiative and used images of Quin’s friends and acquaintances wearing scarves in different styles. Swarovski also adorned the bling bling crystals onto the Bhutanese Textile Initiative scarves to be showcased for a corporate gala dinner. Perhaps the most notable case, thanks to Helen’s help, was the partnership with Suzhou-based Ruolin, a Spanish social enterprise who have been making packaging boxes for L’Oreal. Under the agreement with Bhutanese Textile Initiative, Ruolin would provide packages for the scarves sold in Mainland China.
PMQ Exhibition and Emerging Business Model
A key turning point occurred when Quin participated in a month-long exhibition at PMQ, a hub for design and creative industries in Hong Kong. The word about Bhutanese Textile Initiative spread further after Quin’s book was launched in April 2015. Unexpectedly, Quin was approached by Londie, a former MBA classmate who was coordinating the PMQ exhibitions. Londie learned about Bhutanese Textile Initiative from Quin’s Facebook and was willing to offer Quin a space of 400 square feet in August for around 30,000 HK dollars. Quin never thought about doing a PMQ exhibition given the expense; her small volunteer-based venture was not even incorporated in Hong Kong. Also she did not have the staff or experience to run such an exhibition. Nevertheless, she understood that PMQ was an attraction for both tourists and Hong Kong residents; therefore she decided to proceed – it was very successful. Bhutanese Textile Initiative had only one retail store to showcase and sell its scarves in Hong Kong before the PMQ exhibition. By the end of 2015, there were at five retail stores carrying Bhutanese Textile Initiative products including the gift shop of a five star hotel.
Establishing Retail Outlets in Hong Kong
At the time of launching her scarf book in April 2015, Quin had a chance to meet the director of operations of Asia Society in Hong Kong. She was able to sign an agreement for the gift shop of Asia Society to carry Bhutanese Textile Initiative scarves. This was the only retail store in Hong Kong prior to the PMQ exhibition. Asia Society is a member-based educational institution aiming at promoting exchanges between the East and the West and is active in supporting education-oriented projects. The Asia Society boasts many elite donors and members in Hong Kong and could potentially raise the profile of Bhutanese Textile Initiative.
During the PMQ exhibition, Quin networked further meeting Cynthia Hui, the founder-manager of Han Li, a Buddhist gift shop and volunteer for various social causes related to Buddhism. Her store carries many items for NGOs and social enterprises. The store is ranked as a top 20 store by TripAdvisor. By the end of 2015, Han Li became the largest retail outlet for Bhutanese Textile Initiative and was selling nearly 200 scarves a month. Other retailers such as the gift shops of Chi Lin Nunnery and Tao Fong Shan Christian Center also started to promote Bhutanese Textile Initiative scarves after the PMQ exhibition. Quin was able to convince the retail outlets to follow her pricing strategy. She suggested HKD 200 as a wholesale price and advised the retailers to sell at a price between HKD 330 to 360. For consignment sales, the price to the retailers was around HKD 250. Quin resisted the common practice of raising the price to HKD 600 or more on the tag of ‘HANDMADE’, as her aim was to sell as many scarves as possible to benefit the weavers. Each sale means one weaver gets a day of paid work. Cynthia from Han Li also pointed out that a hand-made scarf (like Bhutanese Textile Initiative’s) would sell at around HKD 1000 at Lane Crawford, a luxury retailer based in Hong Kong.
Emergence of a “Management Team”
Quin believed that a more important consequence of the PMQ exhibition was an emerging management team for Bhutanese Textile Initiative. In the process of preparing for the PMQ exhibition, Quin reached out to William Zhu, her former colleague in a marketing research firm. He was taking a master’s programme on NGO management and was interested in Quin’s initiative serving as one of the volunteers to help with the PMQ exhibition. William thought that Bhutanese Textile Initiative was facing a challenge of scaling up and there was a need to set some strategic targets and build a team to manage the business.
The next promising outcome was that Jon Allcock joined the team. Jon had worked as a management consultant for more than five years. Attending the exhibition of Bhutanese Textile Initiative with this wife Helen, he left his contact information and offered to help such that Jon redesigned marketing material and the website. From Jon’s perspective, the brochure and the website Quin had developed lacked clarity in terms of brand positioning and the key messages being communicated.
“[For example]…someone said it’s professional and someone said it is handmade. It can be confusing…to people we don’t know Quin or any of the volunteers. All of a sudden, there is a lack of trust.”
Jon helped to quickly redesign the website and the brochure. Helen, Jon and William all agreed that there was a need to have a core team and a structure for Bhutanese Textile Initiative to move forward. Jon commentated: “[Bhutanese Textile Initiative] is still largely a business [that] lives in Quin’s head and hard drive… As Quin walks away, the whole thing dies. That’s tricky.”
Emerging Business Model
Quin has a policy of transferring approximately two-thirds of the revenue to the Bhutanese weavers. The payment is higher than that made by souvenir shops or retailers in Bhutan but is feasible given low costs and the lack of intermediary brokers. These weavers had no income when they first came to Bhutanese Textile Initiative; many households are now elevated to ‘low income families’ from the scarf income; this is work women can undertake alongside domestic labour so presents few challenges to traditional lifestyles. Quin has decided to use the remaining revenue (after covering marketing, shipping and financial transaction costs etc.) to train the weavers and their children paying them to attend workshops as for most, it takes days to reach the workshop sites.
Bhutanese Textile Initiative has now recruited 72 weavers (including part timers). The operations have been coordinated by the weaving teacher-turned supervisor and Karma. Some weavers have embellished their signature motifs onto the scarves so that it is clear who designed and made the scarf.
Total sales revenue by the end of 2015 reached a little over HKD 660,000 growing strongly with Hong Kong and Mainland China accounting for the majority of sales. Some of the new sales channels resulting from the PQM exhibition have yet to materialize, especially with regards to the markets outside of Asia. At some point, Quin will exhaust her network of friends; she will need to explore new markets. Should she develop more corporate clients as Leo Ho once suggested? Alternatively, she will need to consider new designs or new materials for scarf or new items, such as bags, accessories for women, so as to increase the share of wallet from the existing customer base. Should she make a decision to hire a full time manager/coordinator in Bhutan so that the recruitment and training of new weavers and the management of operations could be enhanced? She would have to offer an annual salary of more than HKD 50,000. Is it time to hire a full time coordinator in Mainland China?
Quin has learned that it is easy to start a project like Bhutanese Textile Initiative but difficult to ensure its sustainability; should she consider building a core team of three – five people as Helen, Jon and William seemed to suggest, what would be the minimum business scale required to make it happen. She once discussed with Helen about the possibility of selling 5,000 scarves every month. Would this be possible in the coming years?
While relishing her experience, Quin is thinking about the challenges ahead. The operational activities of Bhutanese Textile Initiative were solely dependent upon the efforts of volunteers. Was it time to hire a full time employee, perhaps in Mainland China? How could Bhutanese Textile Initiative evolve in a sustainable manner and fulfill its social mission consistently? Would it be possible for her to run Bhutanese Textile Initiative on a full time basis in the not-so-distant future? How do these challenges map on to future internationalisation pathways? Should the firm expand to the US and Europe using distributors or support more tourism in Bhutan with local outlets or look East to China again, using distributors or opening satellite offices?