No Boundaries to Success in San Gabriel Valley
Jennie Kiang recalls how much simpler global business was when she started her footwear importing company, HYI Inc., 22 years ago.
At that time, she and her husband imported 600,000 pairs of shoes a year through a small office and warehouse shared with a friend’s company in Commerce.
Today, HYI employs 64 people, has about $100 million in annual revenue and occupies a 6.7-acre warehouse and office site in Covina where it imports and ships 10 million pairs of hiking boots, golf shoes and other sports footwear and equipment each year.
But expansion has brought an ever-growing set of challenges.
“Then, you imported shoes, shipped them to the customer and got paid,” she says of her early days in the business. “Today, it’s a lot more responsibility. We supply Wal-Mart and Kmart, and they want us to do marketing and product planning and inventory control for them,” Kiang says.
The company illustrates how the global economy’s complexity contributes to the spread of new business and new jobs in the San Gabriel Valley.
HYI once got along with a few employees. But today it employs a senior manager, Vera Korpaprun, who monitors HYI’s hiking boots and sports footwear in Wal-Mart and Kmart stores and tracks which models are moving and which need sales support. Korpaprun tells Wal-Mart when to emphasize a new style.
She is sure of her information, too, because HYI “builds product lines,” Kiang says. Lars MacLeod, whose job it is to build lines, visits shopping malls across the United States, watches fashion trends among the young and tells Wal-Mart what will be hot in footwear for the following season. An order for 250,000 pairs may result from his advice.
HYI beams such orders to an agent in Taiwan named Rick Lee, who has been associated with the Kiangs from the start. He then chooses a factory to fill each order from Taiwanese-owned manufacturing plants in Guangzhou, China. About 70% of the world’s footwear is made in China, Kiang estimates.
Trade with China through the ports of Los Angeles and Long Beach is up this year, despite a slowdown of trade with other Asian countries, including Taiwan, whose economy is barely growing.
That’s significant because trade with Taiwan and Hong Kong, and immigrants from those two islands, drove development of a prosperous economy in San Gabriel Valley communities--Monterey Park, Industry, San Gabriel, Rowland Heights--in the early 1990s when the rest of Southern California suffered severe recession.
Businesses and banks started or bought by those immigrants thrived in the last decade. And they are thriving today because of a new wave of immigrants to the Valley, this time from mainland China.
The new immigrants, like the old, “start small businesses, restaurants, car repair shops, retail stores,” says John Hou, chairman of Asian Pacific National Bank in San Gabriel. Hou, who came to the United States in 1977 to get degrees in physics from Stanford and public policy from Harvard’s John F. Kennedy School, founded Asian Pacific as a family bank in 1990.
Hou’s bank, which today has $46 million in assets and 16 employees, lends to small businesses and commercial real estate ventures in the area, if they are backed by funds from the U.S. Small Business Administration or Taiwan-based Chinese Credit Guarantee. “We don’t take risks,” says Hou, who is a member of San Gabriel’s Planning Commission.
Where do new immigrants get the capital to start a business? They save it, says a leading banker. “They come for work but they save their money,” says Dominic Ng, the chairman of Monterey Park-based East West Bancorp. “I see new depositors putting in $2,000 to $3,000 a month. It adds up.”
Ng, who emigrated from Hong Kong 24 years ago, brought in equity investors from Wall Street--including Merrill Lynch, Wellington Fund, Oppenheimer Capital and 50 other firms--to buy East West from Indonesian Chinese owners who were selling during the Asian economic crisis in 1998.
East West, which acquired Prime Bank in Century City in January, has grown to $2.5 billion in assets, more than 500 employees and a scope of lending and dealing far beyond San Gabriel Valley’s Chinese community.
The bank is not alone in expanding its horizons. “We all must reach out for alliances with ‘mainstream’ institutions,” says Edward Lo, chairman of United National Bank, which is based in San Marino.
United National was losing money in 1992 when it was bought by insurance company owner Tsai Wan-lin, the richest man in Taiwan. Lo was brought over from Omni Bank in Monterey Park to run United National. He dealt with the losses by adding branches in four other cities in the San Gabriel Valley and ultimately in Beverly Hills, Irvine and Cupertino in Northern California.
Today, United National has $620 million in assets. Lo might reach out to other states in seeking opportunities for growth.
Community ties and knowledge of borrowers help San Gabriel Valley businesses. It was East West Bank that came to the aid of Jennie Kiang’s HYI five years ago. Nike Inc. had sued Wal-Mart for patent infringement on a number of products, including a style of sports shoes that HYI supplied to the big chain.
Nike won a court judgment that threatened HYI with having to pay $6 million in damages. “We had indemnified Wal-Mart,” Kiang says.
HYI was in danger of losing its credit line from its old banker, but East West stepped in and filled the gap. And Kiang pushed Wal-Mart to back her company, which it did. It appealed the Nike lawsuit to the U.S. Supreme Court, which awarded a partial victory to the retailer. HYI ended up having to pay $1.4 million plus legal costs, says Jacob Lee, a former Beverly Hills lawyer who became general counsel and chief financial officer of HYI two years ago.
“Business is different over here. In Taiwan you never worry about being sued. But here you need protection,” Kiang says.
Risk and reward--a once small immigrant-run company needs a big, sophisticated operation to handle large orders.
