Bill Watson | Coats Group | Textiles: Manufacturing, Retail & Fashion in Vietnam and Asia | **a 3-Part Series

Granger Whitelaw begins his 3 Part Series on ‘ Textiles: Manufacturing, Retail, and Fashion In Vietnam and Asia with Bill Watson of Coates Group. Bill has been living In Asia for 27 Years, From Hong Kong to Thailand, Singapore, Vietnam, and now China. Bill’s fascinating journey has seen him ride the “tip of the Wave” and he has enjoyed a great sense of learning, and success along the way. Listen In! We hope you enjoy!

Listen and subscribe to our podcasts at Spotify, Apple Podcasts, Google Podcasts, or elsewhere. Below is a transcript of the episode, edited for readability. Listen to the full episode at the link here

Granger Whitelaw: Good morning, it’s Granger Whitelaw with the Lotus talks. Thanks for joining me today. This is the first of a three-part series that I’m doing on manufacturing in Vietnam and Southeast Asia manufacturing, retail, and then fashion kind of the growth of the industry, beginning with Bill Watson at coats here to discuss manufacturing and textiles with us. Bill. Good morning.

Bil Watson: Good morning Granger. It’s great to be here.

Granger Whitelaw: It’s great to have you, my friend. How are you?

Bil Watson: I’m okay. You know, we’re all getting used to working from home and, and doing things a little bit differently over the past, eight months as a manufacturer. So it’s been, it’s been an exciting and challenging eight months.

Granger Whitelaw: Well, it must have been really, a very different set of circumstances than you’ve ever had to deal with before. Or maybe you’ve had some experience with this in you’re 22 years in Asia with SARS before, and we can get into all those details, on this remote interviewer. We’re actually remote right now and I’ve dialed on the phone and it actually sounds pretty

Bil Watson: Good. Yeah.

Granger Whitelaw: So Bill real quickly. You’re married to Diana and you have two beautiful daughters and you’re living in Vietnam now. And you have been here in Vietnam for 10 years with Coats

Bil Watson:10 plus years. Yes, you’re right. Granger. I’ve been in Asia for going on 27 years now and have, lived and worked in, I’ve worked in virtually every country. I’ve lived in several of them. I won’t go through the list, but, yeah, we came to Vietnam from Singapore in 2010, and have really grown to love Vietnam and all of the opportunity that it brings with it.

Granger Whitelaw: Absolutely. Well, now Singapore obviously is part of the ASEAN market. And then I am interested in where you’ve lived over the 27 years because this podcast is not just for Vietnam, but we do cover ASEAN and, I think it gives us, some good reference for people of the depth of your experience. So where else have you been in Asia?

Bil Watson: Or so in 1994, I came to, to Asia from America, from South Carolina and worked for a chemical manufacturer in textile manufacturer named called Milliken and company. The first stop was Korea and I lived and worked in Korea, starting in 1994 and basically to open up Asia for, Milliken’s chemical business and, myself along with a very small group of people went around to, to really introduce ourselves to the market. So, in the beginning, I was still living in America. I would take two trips a year. One trip was from January 15th to about May 15th and would buy plane tickets up and down Asia and try to meet distributors, agents and companies to, introduce them to our products and services. And then around July, I’d take another trip from July until about December the first. And we would get back. This is all pre-internet, this was really just prefax even just, you were shaking hands and seeing people. And we would just get everything that we done on our trips from three months or four months of, being in hotels and traveling and dump it out on a desk and sift through it and see what customers we could find and what opportunities we could find.

Granger Whitelaw: It’s exciting though. I mean, what a, what a great thing to do as a young man to have the opportunity I was in Korea in 88. I actually absolutely loved Korea lived in Seoul, but, but, what a great experience that must have been.

Bil Watson: It was fantastic. I think they chose me because they knew if I disappeared that nobody would know I was gone actually. So, but it was, it was really, it was, it was, it was really some of the best experience that I had met. I met people who took me under their wing and really showed me how to do business, behave myself, act, and, work, you know, in and around Asia.

Granger Whitelaw: Behave Yourself?

Bill Watson: Sometimes – Hahaa.

Granger Whitelaw: So that brought you eventually to Singapore.

Bil Watson: That brought me to, to Hong Kong, after that, and, based on myself in Hong Kong and worked a lot in Taiwan and in China, in Shandong and Guangdong provinces, and, Thailand, I guess. I spent, you know, I lived in Hong Kong, but I was over the border every week, or, you know, in the Eastern Southern parts of China and Taiwan, again, basically meeting chemical companies, large chemical companies. And I remember when I went to China just for the first time around, around 19, well for the first time going to pitch products and services to chemical companies, I went and saw this relatively small state run company called Sinopec and was able to go in and, you know, and talk to the, to the leadership at Sinopec about what this American company was doing. Of course now Sinopec has grown probably what a thousand fold and they’re, you know, they’re probably one of the biggest companies in the world, but it’s amazing to have been able to kind of be a witness to that spectacular growth that’s happened.

Granger Whitelaw: You’ve seen so much growth in the 27 years in Asia. I’m sure it’s, it’s currently the fastest growing economy in the world, right So you, you really have been here in the golden age of Asia.

Bil Watson: I have, I am a growth guy. I’m a guy that has my business background has been in growth businesses. So to have been in these countries when they were all growing has been something that I’ve learned, you know, learned how to do because I’ve experienced it and then coming to Vietnam 10 years ago, that was Hong Kong and China, and then Singapore for about 10 years. and, then here, I have just been able to been fortunate and grateful enough to experience, to experience these real, these growth trajectories of all of these Asian markets.

Granger Whitelaw: Literally in the best timing, right. Hong Kong first then Singapore, which really came after Hong Kong and now Vietnam, which is, you know, the, really the fastest emerging market in, Southeast Asia,

Bil Watson: I have been able to get on a wave starting in Korea, and that wave has just kept on moving and pushing that growth wave has kept on pushing it. And, I’m really lucky to not have, have, had to wait for another one, you know.

Granger Whitelaw: Yeah. Just stay long enough til they throw you out and go to the next one. So now you’re here 10 years in Vietnam, and really that 10 years, the last 10 years of Vietnam had been a 7% compound, annual year on your growth. Right. It’s just growing, growing, growing, growing, and, and your business with Coats. How big was that 10 years ago. And how big is it now?

Bil Watson: well, in a macro sense for Vietnam, the 7% is right, but in the textile industry, it’s, in our business, it’s been plus 10 every year. So we’ve grown some years by 15, 16%. I think we’ve grown a couple of years in single digits, eight or nine, but for the most part, it has grown it. I don’t know if I’m not, I, I’m not sure Granger that my boss will allow me to tell you exactly what it is, but I’ll give you some ballparks. All right. I’ll give you some ballparks. It’s we are, we are a North, of a hundred million dollar company here in Vietnam and,of course, Coats group around the world is, is, over a billion and a half US dollars selling primarily industrial sewing threads. We’ve sold industrial sewing threads. The company has been doing this and has been in business for 270 years. So before well, before parliament was actually was started in the UK, just right around that time. And actually Thomas Edison used – funny, you bring that up. Thomas Edison used coach threads, in his invention of the light bulb.

Granger Whitelaw: Right, yeah I read that – And I understand that every month you produce enough thread to, to reach the sun, is that right?

Bil Watson: Yeah. You’ve been on our website. Haven’t you?

Granger Whitelaw; well I do a little homework Bill.

Bill Watson: You do. actually, that’s true. In, in Vietnam, we make about a million miles of industrial sewing thread a day. So we have, and we have two facilities here, one in the North that services, the Northern part of Vietnam and Laos, and one in the South, that’s primarily for the rest of Vietnam, Southern and central in Cambodia. And about 95% of what we make actually is delivered into Vietnam. And then that gets put into things like shirts and shoes, furniture, coats, and jackets, and dresses, all kinds of apparel and footwear and accessories, and not apparel items that need a long, thin, substrate that connects things or does a job.

Granger Whitelaw: And that’s coach Phuong Phu at the Vietnam

Bil Watson: That’s right, Coats Phuong Phu was, started in 1989. I think we were probably one of the first one we were among the first, joint ventures that were established in Vietnam in 1989.

Granger Whitelaw: Right. Right. And so you were managing director of that organization up until this past year or so.

Bil Watson: That’s correct. Yeah. I was managing director of, of that, of, of, of what we call the Vietnam cluster, which includes Vietnam, Laos, Cambodia, Thailand, Malaysia, Indonesia, and then Australia &New Zealand. We have several factories, around this area. And, yes, I was the managing director of that and, and ran that business until April of this year, when I moved on to manage the China cluster and the China cluster is greater China, Japan, Korea, and Pakistan.

Granger Whitelaw: Wow. So you had about 2000 employees in Phuong Phu, correct?

Bil Watson: That’s right. W we, it, I think we started in 2010 and this is sort of interesting, and it’s a, it’s a good barometer of how the industry is moving. We had about 1,600 employees, in, in, in the South of Vietnam in 2010 making let’s call it making one X worth of goods. Now we have about 1,200 employees making five times that amount. So when you talk about productivity and you talk about efficiencies and watching and being able to sort of move from, you know, throwing people at a problem or production – to really trying to become more productive and have people doing really more value-added things than pushing things around, for example, you know, that that’s something I’ve been able to watch and experience and really learn a lot from over the past 10 years.

Granger Whitelaw: That’s due to advances in technology, obviously better training by your team, and your staff or the Vietnamese and Cambodian teams. I’m sure all of those have increased your proficiency and efficiency right. Of the manufacturing process.

Bil Watson: Yeah. It’s, it’s there are some, there are some machine and asset additions that you make to improve efficiency. Right. You know, except for, it’s really also just in terms of how, how trained, that we are, you know, what training we’re providing the people, and then the efficiencies that they, they are doing it.F example, it, 10 years ago, if you had somebody that was, whose job was to, to put a bag on something that’s just, they did. And, and it, when there was nothing to put a bag on, they stood around and we’ve just learned that things like multi-skilling of associates is so important. So when that person that was putting a bag around something before they could move to another job and do that other job, when they know, you know, when we needed them to, was, is really important.

Bil Watson: And when we actually allow people to be multi-skilled, we can actually pay them more too, because, and so that’s a win-win for everybody to be honest. the textile industry is an industry that traditionally for, for decades is, is, has, has done something called chasing the cheap needle. Okay. And chasing the cheap needle normally meant you went to the place that had the lowest labor costs. In Vietnam. it’s, there are two real things that attract people to Vietnam. That’s low relative cost and low risk. If you want the lowest cost you go to, if you want the lowest cost of labor, you go to Bangladesh, that’s the lowest labor cost. but if you want today, but if you want the low, but if you want to make sure that you can balance the risk with the cost Bangladesh might be wanting may, might be a little bit deficient in terms of things like infrastructure, ports, electricity, and, and, and I guess that’s infrastructure, but there are the roads and, and other things. So if you need to have, winter jackets delivered to, you know, to Cincinnati, Ohio for the back to school promotion on August 21st, you can’t put all your bet, your eggs in the lowest cost basket. So typically brands kind of break it up and they, and they manage that risk and cost to try to make sure that they can get the goods. They need back to the places that, you know, the consumers want to buy.

Granger Whitelaw: And this is all under the, what they call the CMT model,

Bil Watson: CMT. Yeah. So CMT is a model, right So, so that’s, that’s a basic model, but more, contractors. So more brands and contractors want to want to move away from a CMT model because it’s, it’s more profitable, right Cutting and making and packaging. basically being the manufacturing box is a thing that makes them money, but really the profits only come from your ability to be efficient and, and get a little bit more than your actual costs. Right. But what, what contractors really want and brands want is they want to be able to help be involved in the development, in the sourcing of materials, the innovation and the development of, of a shirt or a pair of athletic shorts or a pair of shoes. And the more you can push yourself into that back integration, then, then the more profitable a company can be. Right. And, and, you know,

Granger Whitelaw: Moving toward an OEM or an ODM kind of

Bil Watson: Correct. You know, big brands treated, Vietnam in the early, right as a box, you would send a container of raw materials. You would have placed your sheep labor in your, your managers from whatever country that you came from in Vietnam. You’d, you’d have a cinder block building, you’d push the container of goods in, you, take them out, follow the directions, make whatever it was, put them back in the container and send it away. Right. – Yep – And that’s not that that was profitable, but not as much as being able to develop, source and do all of that stuff from here. And frankly speaking now Vietnam is, more than capable and equipped to, take on that extra value.

Granger Whitelaw: Oh, absolutely. Well, I mean, there’s a bunch of FDI investment coming into the textile and garment industry here. Right. And it’s really shifting towards manufacturing, fabrics and raw materials. And, and you see the government supporting Vietnam with the, these new, parks, you know, the, the Textile parks.,

Bil Watson: Right. The industrial zones.

Granger Whitelaw: Yeah. Industrial zones. So there’s a lot of that investment going, and I guess, supporting these new business models that you, that you’re talking about.

Bil Watson: Yeah. There is the, so Vietnam has grown up over the past 10 years, in productivity and efficiency, and the ability to add these value-added parts of the supply chain that are necessary. So it’s, it’s really good. The one thing that Vietnam doesn’t have right now is fabric production. So you, you just said it. And, and so Vietnam, has good yarn making, for example, in cotton, except for Vietnam then has to sell the yarn to China. China makes the fabrics, then they buy the Chinese fabrics back from China and they miss out on a very valuable piece of the supply chain.

Granger Whitelaw: I thought there was fabric manufacturing here?

Bill Watson: There is fabric manufacturing made here, but I think that they’re, they’re billions of yards short of what they need. And I think the government is, as you said, is recognized that, and they have a plan in place to make sure that that’s, that can come, come back into Vietnam and they don’t have to rely on other countries too.

Granger Whitelaw: We need raw Materials – I know the raw materials are a big thing. You could get a lot of raw material from China and yeah, we need more raw materials here. I don’t know how you solve that problem?

Bil Watson: Well, the, what you do is you try to, you know, we, we have something that we refer to as a Vietnam for Vietnam, kind of a, of a goal. So we want to end COVID was a great example of this. We had a huge that the world had a huge supply shock in January when China ceased to be able to make for six weeks, whatever widgets, you know, it was, they were making. A huge supply shock for people that had, for people that had all the raw materials or the bulk of their raw material supply in China, they suffered for six or eight weeks. We couldn’t get anything. Now, now for our business, we, saw this about three years ago and we moved, I think we, we get about 80% of the raw materials that we use to produce our products from outside of China. So, so that was, that was a great foresight. I, wouldn’t say it was lucky, but maybe a little bit, but it was great foresight to, to know that, you know, to, to be able to continue producing here in Vietnam during the first quarter. Yeah. The first and second quarter of this year, when it really mattered in when, when things were really stuck in China.

Granger Whitelaw: Bill, even before that, right. You have, and now you’re running China for Coats. So this is something you, as an individual need to really figure out how to mitigate the risk of China and US import war, right? The, the, the war on China from, from the US which is the number one export for, I think for Vietnamese products certainly. And probably one of the biggest for Chinese, that’s something that you have to figure out how to diversify as well. And how do you balance that with, you know, your staffing and, and the rest of your supply chain.

Bil Watson: Well, it’s,it’s challenging. Like I said, it’s been a challenging year, not, I don’t know, excuse me. I don’t know if, anybody in the world had ever has any experience in what we just witnessed and, and been a part of over the past six months, but it’s been very challenging. Things like, in logistics and transportation, you know, instead of it being a binary air freight or sea freight, there are, there are multimodal transportation now. So air freight was super expensive, but it got us there in a week, sea freight, super, you know, relatively cheap and it gets it there in a month, but gosh, what if you need it in two weeks, right? And you don’t want to spend the air freight. So there are multimodal transportation through China now, right?! It’s training that you can get from the Eastern part of China to Europe in under a week, and then can deliver goods within two weeks and costs kind of in-between air freight and sea freight. So there are a lot of things happening right now that are, that are basically the creativity that has come with the necessity to get things, to continue moving.

Granger Whitelaw: Sure. We need to get Elonn to build a Hyperloop over here, you know, get that giant tunnel. So speaking of COVID, which had a major impact, right And I think that the manufacturers here have done a great job of, and the Government certainly of stopping – mitigating COVID as much as they possibly could. Anybody in the world really can look at Vietnam and say, they’ve been an example of what’s the right way to do it. So good recovery in manufacturing, certainly there was a downturn. And now you have the new FTA agreement, right EVFTA?

Bil Watson: Yeah. The European Vietnam

Granger Whitelaw: a HUGE Advantage for Vietnam. Is it not I, again, I’m not manufacturing, but I’d love to hear your thoughts on how that affects Vietnam.

Bil Watson: Vietnam. They eat the EVFTA is actually not the first one that Vietnam happens to be fortunate enough to be sort of at the convergence of lots of different free trade agreements. So there’s, there’s the JPA to Japan partnership. There was the Korean free trade agreement, the ASEAN free trade agreement. They have something called the RECP, which is the regional economic, partnership and the result. And then they had the CPTPP, which then when, not to get into politics too much, but it’s not around at the moment.

Granger Whitelaw: what a shame.

Bill Watson: What a shame, right – Well, so the result of all of these free trade agreements, including the EVFTA, is that Vietnam has free trade agreements with 70% of the global GDP Right now, if the CPTPP had come into force, it would have been over 90% of the global GDP would have free trade agreements with Vietnam.

Bil Watson: So it’s a huge draw. It’s a huge opportunity for, for Vietnam, not only just to make and export stuff, – but also to kind of climb up and be a real, you know, be a real factor in terms of just the global stage. Right. I think the UV, the EU Vietnam FTA is gonna add, gosh, I think 2% or 3%, you know, whole number percents to, to the GDP of the country. Annually. It’sit’s a big, it’s a big deal. Yeah.

Granger Whitelaw: Shot in the arm for sure. I would have what a great opportunity.

Bil Watson: And it goes into force immediately. Lots of what the EVF TA, is offering. Doesn’t have to wait 10 years. It actually goes into force from day one. Sure. What percentage of

Granger Whitelaw: What percentage of Textile manufacturing and export is the GDP of Vietnam

Bil Watson: It’s about, I think it’s about 22 or 23%. So out of a 250 billion GDP, let’s say nominal GDP in Vietnam. I believe that the, let’s see last year, the, I believe, it was around 32 billion in textiles and garments in 2019 and around 18 billion in footwear and accessories. So that’s, you know, that’s pushing 50 million. So roughly in roughly 20 to 25% is what it is. So it means a lot. It employs a lot of people here too.

Granger Whitelaw: Yep. Yep. So speaking of that, and I want to shift one thing, you guys make stuff, so you, you make this stuff. And part two of this three-part series, I’m going to be interviewing Carey Zesiger, who has a number of retail shops here in Vietnam. And part three, I’m interviewing Betty Tran who designs this fashion. But you know, now we get into retail, right. And the growth of retail – feeding retail, because if, well, if people aren’t buying it, who’s making it? Who are you making it for Right. So what do you think about the retail growth and in Asia and worldwide for you guys to be able to support.

Bil Watson: Wow, it’s a, I would have answered it more. I would have answered more confidently and differently, eight months ago it’s completely changed. well, I guess not change but accelerated. I think everybody recognized that online versus brick and mortar was going to be a thing, you know, a year ago, but they just didn’t realize how rapidly that it was going to, to be, to be important. So I think that, in the first half of the year, my understanding is, for example, American retail brick and mortar was, was, was down at, you know, in March and April 80%, 85%. It was, it was just unbelievable. The numbers that we’re seeing while we were seeing the online was up 500%, right? Something like that. Of course, the 500% did not offset the eight, the 85 down, but you just saw this massive spike in, in people figuring out a way to get a thing that they wanted.

Granger Whitelaw: Locked in to. You have no choice, right You gotta go online and buy what you need. You don’t have much choice.

Bil Watson: I think, I think in the future with the online acceleration, I think that there will still be brick and mortar. I think the brick and mortar might look a little bit differently in the future. It may be a lot more of fitting in trying on or limited stuff. you know, trying to keep 60% of the store from being the stock room. And I also think it gives an opportunity to small and medium businesses that, that never had before. You don’t really have to pay $10,000 a month in rent at a mall in order to advertise your product. So it’s going to, I think we’re going to see a lot more, just different design. We’re going to see a lot more innovation in, in textiles, garments, and footwear, because you’re going to allow everybody basically to compete on a, on a, on an equal stage. It’s going to be exciting!

Granger Whitelaw: More customization, right More personalized concierge. I had a guy approach me and talked to me about his shoe company that he wants to be able to manufacture shoes through the internet, size it, three-D modeling kind of stuff. Right. And then drop ship from a factory. Well, that’s a new business line for factories here. It doesn’t have, it doesn’t mean you have to go out of business, right You just pivot a little bit or open up new business lines. There are opportunities on both sides of the manufacturing side and the retail.

Bil Watson: Right. Well, a great example is men’s dress shirts. So I was at a company in the North that was, that makes men’s dress shirts, big, big, one of the biggest in the world. And they were talking about mass customization and mass customization is they said, you know, instead of making 300,000 of a certain type of shirt right now, our customers – we’ve changed our factory. So instead of having 30 people in align, making one shirt and one, everybody’s sewing, making a single component, and at the end of a line of shirt comes out, maybe we have four people that make a shirt now, and we have little pods. And what that means is if somebody orders a shirt, let’s just say on Amazon, they can pick the color. Is it French Or is it standard And they can pick the cuff. They can pick the, how the, the type of buttons they want.

Bil Watson: They can basically do some customization of that shirt. They press the button, okay. To say, I want it from Amazon. That order goes to a factory in Vietnam. They make the shirt and they ship it back and somebody gets it in less than a week in America made in Vietnam one piece. Right. And what it does for the converters, the contractors is instead of having to force themselves to make this thing for the lowest possible price – let’s say that they, you know, they, they finally get somebody to say, they’re going to make it for her for $5 a piece. Well, they can make a million at $5 a piece and they can make a very small profit, or maybe they can make, 200,000 at $40 a piece. Right. Right. So that benefits them because they make a better profit. It benefits the consumers because they’re getting something that’s really more customized that they want. Again, there’s a lot of opportunities here.

Granger Whitelaw: Exactly. Yeah. It’s, it’s interesting. You know, it never ceases to amaze me that in crisis, it creates opportunity. People adapt, you know, how brilliant people are and creative people are, and, and industries get scared. You know, that it’s gonna wipe out, you know, the music industry, but then the music industry shifts and, you know, Apple becomes the biggest, you know, thing online ever. Right. It’s just, it’s always incredible to me. So, and, and to listen to guys like you, who know their businesses and, and I can really learn from, it’s always a pleasure. So I appreciate it.

Bil Watson: Yeah, through, through crisis comes opportunity. I remember in February when, when we were, you know, COVID has been a very big, a big thing for manufacturing because, the risk is if one person gets infected in a factory, you have to shut your entire operation down. Right. Right. It’s, i so it’s important. So we have been working at coats really. How do you bring in a thousand people into a factory every day, but nobody gets within six feet of each other for the entire day in every department? How do you keep people hand sanitized and how do you keep people’s basically protecting themselves and protecting others. So it’s been a whole redo on, on how factories are laid out, right Including like one-way lanes, how you, how you sanitize paperwork when it passes from one peep, from one person to another.

Bil Watson: So it’s been a, it’s been a huge challenge. And I remember in February when I was talking to my CEO and reporting to him and saying, Hey, you know, we’re, we’re so proud of what we’ve done. And we’ve, we’ve, you know, we started to put in all of these, these things to mitigate the COVID risk. And he said, he said, great Bill. He said, gosh, but have you really thought about the opportunity You’re, you’re, managing the risk, but you guys have to think about the opportunity. This is presenting itself. And from that day, we started thinking about, you know, what is the opportunity where the opportunity in Vietnam was hundreds of millions of face, face protection, basically face masks and face masks and PPE has been something that coats have been supporting globally, but in Vietnam from very early, how to help the contractors pivot from making a tee shirt to a full, you know, medical gown sure.

Granger Whitelaw: Level one gown. Yeah, for sure.

Bil Watson: Right. So it’s been really interesting. And I think that if, if people are willing to look not only at the risk, but also at the opportunity, there’s a lot of upside.

Granger Whitelaw: Yeah, yeah, absolutely. Yeah, no, but it’s interesting what happened to PPE here Obviously the, the emergence of Kobe had had a lot of people shift because their, their, their fashion design stopped. I know a bunch of guys who then got into PPE, but now it’s kind of shifted back a little bit. Right. So you gotta, you really gotta stay fluid these days. That’s one thing that we all learn.

Bil Watson: You do. We actually coached some just to put a plug in for coats. We actually did a series of, webinars, in, April, May and June where we, taught people how to pivot from making, basically regular textiles to medical-related textiles and PPE. And if you go on the coats website, you can find those webinars and information about how to, you know, how to, how to move from manufacturing, something traditional to something that, may be in much higher demand, right now.

Granger Whitelaw: Yeah. It has to be tested for a water resistance and seepage and, and get it CE certification, FDA certification. That’s a higher level of manufacturing.

Bil Watson: So some do some, do some, do many, many don’t, but some do, depending upon what, you know, kind of where you’re selling into, if you’re selling into clean rooms and you’re sewing into, you know, hospital environments, there may be some additional requirements. But I think on our website that, that we would, actually refer you to the regulations that you would have to, you’d have to abide by too.

Granger Whitelaw: That’s great. That’s really nice that you did that for the other manufacturers. You support what a great idea. So five years from now, where do you see APAC? Where do you see Asia and the global market with manufacturing, given you have political risk. Now you have this potential of SARS or COVID coming back. Or Mutating – I mean, where are you, where do you see, growing versus other places in the world?

Bil Watson: Well, you know, so people talk about costs going up, right, and costs going up in a gosh, our costs are going up. And so, you know, the business is going to migrate away from here, away from there. And I think that right now, just for Vietnam and Southeast Asia, there’s, it’s really all about relative costs. Costs in Vietnam are going up, but they are in Malaysia. They are in Thailand, they are in Bangladesh. They are so basically as your costs go up there, you’re the competitor countries that let’s call their costs are also going up. So this is really a battle about efficiencies as well. I gave you.

Granger Whitelaw: And Africa?

Bill Watson: Africa is making a pitch for it. Again, the infrastructure and efficiency of workers are really kind of the things that kind of break the back of that at the moment. But there are a couple of, large industrial parks in, countries right now that, that, textile manufacturers have gone to, to, to kind of practice and to, to see, you know, how it works and to get, I guess, get to kind of put a stake in the ground.

Bil Watson: But if you think about, again, if you think about China though, and footwear, here’s my last little piece of useless trivia. All right. the, you know, how many, how many pair of shoes are made in the world Granger? About 22 or 23 billion pair of shoes are made per year, right

Granger Whitelaw: You guys make about 500 million of them, right?

Bil Watson: We, we provide thread for, for, for, well over a, I would say a billion, a billion and a half a year, and maybe more, but it, it, these are all kinds of shoes, shoes that are plastic and shoes that are sewn. So, so, China makes about 15 or 16 billion pair of those shoes per year out of the 23 billion. The number two is India. They make about two and a half. Number three is Vietnam, which makes about one and a half. So, so, if you think about it, you know, we talked about, about what’s the next China, you know, who’s going to be the next China. Well, at the end of our discussion, we realize – Well China is going to be The next China, you can’t move 16. You can’t move billions of payers out when the number two player is 2 billion for it. So for every 1% of 16 billion that is migrated, which is 160 million, if you migrated 1% of China to Vietnam, it would make the shoe industry increased by 10% here. Right. So it’s really about how much can people swallow, right So China’s gonna make shoes for a while, right?

Granger Whitelaw: I don’t even know if the ports can sustain that here. I mean, you don’t have enough infrastructure really to grow that much bigger, too fast, too quickly, in Vietnam and in some of these other Countries.

Bil Watson: Well, that’s true. I think, I think that the number of container units that Vietnam does, per year, is a little bit less than just what Shanghai does per year. So, yeah, so there’s a huge, I think, again, the opportunities, if you’re willing to be here, the opportunities are, are endless. And, you know, if you, if you have, if you have the courage just to be here and to be in the opportunity,

Granger Whitelaw: Well, I tell you, you’ve followed the wave of opportunity from Korea at here and and I don’t know anywhere else, either of us would like to be right now. It is a great country. It’s certainly growing the Government’s very supportive and we’re safe and healthy. How lucky are we Bill Right?

Bil Watson: We are, we should all be very because I’m with all of the political unrest in all, in many countries around the world. I think that there’s a lot of stability here and we get a lot of support. The Government loves business here, and they love health and safety too. They proven that over the past six months. So, so yeah, I’m, I’m, pretty grateful. My family is as well. And, and we, that’s just, I think a note of, thanks, this should be given to them.

Granger Whitelaw: Absolutely. Well, on that note, thank you so much for your time today, Bill. I really appreciate it. I learned a lot as always I do when I speak with you and, I think our listeners will learn a lot from you as well.

Bil Watson: Thanks a lot Granger. It’s been a pleasure to be here and I hope I catch up with you really soon.

Granger Whitelaw: Absolutely. For everybody else. Thank you for your time today. the next episode we will follow up with is Carey Zesiger, who is with Ha vana and, we’ll follow that with another episode with Betty Tran to complete the manufacturing, textile, and retail episodes that we’re doing for the series.

Granger Whitelaw: Until then. Thank you so much. Be safe. This is Granger Whitelaw.

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