HONG KONG — Cotton Incorporated has opened its first office in Hong Kong to serve as the company’s Asian headquarters.
This story first appeared in the May 27, 2008 issue of WWD. Subscribe Today.
“Even though we’ve been in the region for more than 20 years, this will provide us a central location for doing business in China and throughout Asia,” J. Berrye Worsham, president and chief executive officer of Cotton Inc., said during the opening festivities earlier this week. “The investment shows we’re very committed.”
The company also has a Shanghai office, which has been operating for 11 years. Cotton Inc. recently shuttered its Singapore operations and relocated them here to its new offices, which are located in Tsim Sha Tsui’s popular Gateway complex.
Mark Messura, executive vice president of Cotton Inc., said that moving operations to Hong Kong “is like going from a one-bedroom apartment to a house.” He added, “We need to go where the deals are made, and Hong Kong increasingly is the center of a lot of decision making — not just for the suppliers in the U.S., but for the whole world.”
The new office will have a permanent staff of 10 and will provide information on cotton supply and demand and fiber quality and consumer research to its clients. It also will serve as a meeting space for industry-related seminars, lectures and educational activities. This was demonstrated during a series of seminars given over the first three days of operation here.
Messura, who presented an in-depth look at trends in the cotton market, said that it’s not surprising that prices are high.
“In the long term, prices will always move in cycles. The market will always adjust. It’s important to understand where we are in the market — and right now, we’re cycling higher,” he said, citing factors including oil prices, labor cost increases in China and shifts in other commodities markets. “One of the driving factors in the cotton market is the growth in world consumption of cotton. That’s the trend and we believe it will be in place because there’s consistent demand in the world.”
That being said, Messura did present some sobering indications of continued weakness in U.S. retail sales, particularly among teenagers. He also noted a recent Cotton Inc. poll showing that consumers’ satisfaction with their personal finances dropped to 50 percent in March from 69 percent a year earlier.
“Consumers will probably pull back even more….For suppliers, it’s important to manage costs because the retail situation is not allowing room for [price] increases,” Messura said. “The U.S. is obviously a large consumer market, but it’s not the only one. What’s interesting is that, like we saw with the Asian financial crisis of the Nineties, when there is a serious economic situation in one market, it causes ripples. If people in the U.S. are reluctant to open their wallets, it will [eventually] affect China.”
Nevertheless, Messura remains relatively optimistic. “There’s hope. In the market, when there’s innovation or value added to a product — even at higher prices — there’s room to sell. You have to continue to innovate,” he said, pointing out the success of wrinkle-resistant cotton products even in a down market.
From the company’s new Hong Kong headquarters, Cotton Inc. feels poised to not only monitor innovations and economic trends, but also react to the region’s shifting production bases from China to Vietnam, Bangladesh, India and other Asian countries. “There’s a change in distribution in Asia….The competitive advantage seen in China in the last few years is now much smaller or maybe even disappeared, relative to other countries,” Messura said, noting that Cotton Inc.’s policy is to follow the market. “We’ll go where the business goes.”