CASE STUDY – How to make money in copycatbusiness

Kenneth Lai is a copycat. He makes money by apingworld’s most famous fashion designers and selling this apparel tothe middle class segment throughout Hong Kong and he is quitesuccessful in what he does. He comes from a poor family and droppedout of high school. He set out on his own in 1980 with $30,000 inborrowed cash. He launched the first of his retail stores thatyear. He has now 53 stores in Hong Kong, 9 in Singapore, 16 inTaiwan and 2 each in Malaysia and Indonesia. About the half firm’sturnover comes from the clothing business, rest from an assortmentof other enterprises. About 90% of clothes are produced in China.He has currently employed nearly 30,000 workers.

Mr. Lai has found the formula of copycat success byclosely following industry trends and mass producing in China. Hehas 3 types of stores, THEME, THEME PLUS & BODY GLOVE. Themestore targets young professional office going women and offer thema value for money approach. Theme has become a recognizable brandname and its line is narrow but selective. THEME-PLUS offers partywear for the trendy women at moderate price. BODY GLOVE is a trendyUS label that began as a swim wear for women. Mr. Lai spotted thepotential for BODY GLOVE and has exclusive rights for the MiddleEast market.

Kenneth Lai has 3 advantages over other manufacturersand retailers that have enabled him to thrive when others cannot:total vertical integration (every activity done in house), askilled design team that imitates the product but save on the costsand his own gift for picking up the fashion trends. Recently hecopied LA Gear Gimmick of flashing and taillights on the back ofthe sneakers. Now some of Body Glove’s sneakers also have thelights. Mr. Lai thinks this will pay off big.

“I have a commercial eye. It’s either in you or it’snot. You don’t learn it at school. We have a whole team ofdesigners but we don’t create original designs. We travel the worldand find samples from different brand names and then we copy thedesigns. Every one copies but I am the only one being honest aboutit”. Mr. Lai concludes.

QUESTIONS FROM THE CASE STUDY:

1. What resources do Lai and his organization possess thatgive him a competitive edge? Is this advantage sustainable? How canhe protect it? Which elements cannot be protected in the long run?App 150 words
2. What other areas of business would you recommend to Laithat he might be successful in? In other words, what resources aretransferable to other situations? App 150 words