Oriental Pacific Mills (東亞太平) – the Largest Wool Textile Producer in HK

May 17, 2019 York Lo Articles, Hong Kong Companies, Manufacturing, Non-Hong Kong Companies, People

York Lo: Oriental Pacific Mills (東亞太平) – the Largest Wool Textile Producer in HK

Left: Oriental Pacific Mills at Sheung Kwai Chung in 1966 (Land Use Survey, HKU Libraries); Right: logo of Oriental Pacific Mills

Oriental Pacific Mills (refer to as “OP”) was the largest worsted and woolen spinning group in HK which was formed in 1959 as the result of a merger between Oriental Corporation– which traced its origins to Oriental Wool Manufacturers, the largest yarn producer in Republican China based in Tientsin founded by the Sung family and Pacific Worsted Mills – founded by K.P. Chao who later became the king of denim and whose family was the driving force behind Dragonair and Tommy Hilfiger. The group got even bigger under the ownership of Hutchison and Winsor Industrial through the amalgamation of several other leading firms in the 1960s and 1970s and the many executives involved with the many companies associated with the group were pioneers of the wool industry in HK and China.

Oriental Wool Manufacturers (東亞毛紡廠) in Tientsin and Oriental Corporation (東亞企業) in HK

Left: The Sung brothers of Oriental – Sung Fei-ching (left) and Harvey Sung (right); Right: the “Butting Ram” trademark of the Oriental Wool Manufacturers in Tientsin

The story of Oriental began with the patriarch of the Sung family – Sung Chuan-tien (宋傳典, 1875-1930). A native of Tsing-chow in Shantung province, Chuan-tien was converted by the British Baptist missionaries (“Chuan-tien” means “preaching the gospels”) at an early age and studied and taught at the local Christian school. In 1900, he and his mentor Samuel Couling started a lace company called Teh-Chang (德昌) to help generate income for the Church and when Couling left Shantung in 1908, Chuan-tien took over the firm and renamed it Sung Chuan-Tien & Co but maintained the same Chinese name. He became a millionaire making lace and hairnets for exports and moved his operations to the provincial capital of Jinan in 1922 where he also became involved in politics and served as the president of the provincial assembly. When the KMT troops took over Jinan in 1928, they seized the Sung family’s properties and issued an arrest warrant for Chuan-tien who had fled to Shanghai where he died in 1930.

The task of restoring the family fortunes was left to Chuan-tien’s eldest son Sung Fei-ching (宋棐卿, 1898-1955). Fei-ching attended primary school with Time magazine founder Henry Luce in Jinan and later went to Cheloo and Yenching universities before studying business administration at Northwestern University in the US. In 1932, Sung teamed up with C.C. Chao (趙子貞) to form Oriental Wool Manufacturers in Tientsin to manufacture wool knitting yarn with the financial support of General Han Fu-chu, the governor of Shantung province and Y.S. Wang (王雨生, he served as chairman of Oriental during the Japanese occupation), nephew of the warlord Wang Chanyuan. The firm was the first to use Chinese wool to produce its yarn and its “Butting Ram” (抵羊牌, which also sounded like “resisting the foreigners” in Chinese) brand of woolen yarn gained popularity domestically as Chinese customers switched to Chinese made products as the Sino-Japanese War progressed and was also exported. By 1940, Oriental was the largest yarn producer in China with 80% of the domestic market. By combining scientific management and Christian beliefs, Sung attempted to create an industrial Eden at Oriental in Tientsin which could sustain itself with its own dormitories, schools, choirs, clinics, agricultural research stations etc. despite the constant harassments by the KMT and Japanese governments.

Left: Advertisement of the Oriental Corporation in the early 1950s (Song Feiqing papers, Hoover Institution); Right: the UK Deputy Secretary of Trade touring the Oriental plant in HK in 1957 (KSEN, 1957-10-3)

Oriental’s operations in HK began in December 1946 as a trading subsidiary to purchase raw materials and machinery for the Tientsin mill. As the economic and the Civil War situation in the mainland deteriorated, Sung decided to build a plant in HK with British machinery under the name of Oriental Corporation in 1948. He sent his younger brother Harvey C. Sung (宋宇涵 or 宋霞飛) to HK to serve as the general manager of the new venture with their cousin Herbert M. Sung (宋顯民) and trusted lieutenant Peter S.T. Shek (石少東, famous stamp collector and father of conductor Henry Shek 石信之) as deputy managers. A director and major supporter of the new venture in HK was their longtime business partner – Chih-shen Tu (杜之紳, hereafter refer to as “C.S. Tu”), the leader of the Chiuchow business community in Tientsin, who used his Chiuchow connections in HK to facilitate the establishment of the plant, which was the first wool knitting yarn manufacturer in Hong Kong with factory on Castle Peak Road.

When the Communists came to power in the mainland in 1949, Sung Fei-ching at first was sympathetic to the new regime as he saw alignments with his ideologies and befriended the Communist leader Liu Shaoqi (later president of China). In May 1950, Sung Fei-ching received permission to leave for HK under the guise of purchasing raw materials – he never returned to Tientsin and with the help of loyal employees, his wife and two youngest daughters joined him in HK two months later. In HK, he found that his brother and business partner had taken over his business and as a result, he left for Argentina in 1951 where he tried to start another textile venture. The Argentinian venture failed and Sung Fei-ching died of a broken heart in Buenos Aires in July 1955. Fei-ching’s eldest son Paul Sung (宋允泰) was president of Lions Club of Kowloon Tong in 1978-79 and a US/Canada real estate investment advisor while another son Alexander Sung (宋允鵬) is a famous pianist.

Under the management of Tu, Sung (Harvey and Herbert) and Shek, Oriental bought new machinery in HK and by the second half of 1953, its products were exported to Taiwan, South Korea, Japan and Southeast Asia and total assets of the firm exceeded HK$4 million with net assets of HK$2.4 million. By 1957, Oriental had 300 full-time workers and several hundred more part-time workers and it purchased wool from the UK and shipped its yarn to Southeast Asian markets such as Indonesia and also made woolen gloves.

Pacific Worsted Mills (太平毛紡廠)

Left: Inside the Pacific mill in 1955 (Ta Kung Pao, 1955-12-7); Right: KP Chao

Pacific Worsted Mills was founded in HK in 1954 by Kuang-Piu Chao (曹光彪, he also used the English Billy in the 1950s-60s) and other veterans of the wool industry from Shanghai. A native of Ningbo, Chao dropped out of school at the age of 17 in 1937 to take over his father’s debt-ridden Hong Zang Woollen Goods Co (鸿祥呢绒) in Shanghai. Within less than a decade, he not only turned around the business but expanded it to Chunking, Nanking and Taipei and grew it from a 5-person firm to a 500-strong business. Chao moved to HK in 1950 and initially was involved in import/export, working with China Resources to import medicine into the mainland during the Korean War. After the War concluded, he turned his attention back to the wool business and started Pacific.

Article about Pacific Worsted Mil’s business and sales during the HK Products Expo in 1955 (TKP, 1955-12-7); right: Ad of H.C. Chang’s China Textile Engineering in 1946 (TKP, 1946-12-9)

Chao’s partners at Pacific included the firm’s chairman Nien-Ban Chen (程年彭, 1901-1988), executive directors S.F. Ma (馬世輝) and S.H. Dong (童孝宏) and factory manager Lu Han-yung (盧煥榮, 1919-2010). Born in 1901, Chen was a lieutenant of the “King of Industries” O.S. Lieu (for more info on the Lieu family, see article on Great China Match Co) and ran China Woollen & Worsted Co (章華毛紡織廠, founded in 1929), the largest wool mill in China and his eldest son Yee-Sun Chen (程詒孫) was the factory manager of Overseas Textiles (華僑紗廠) in HK, which was formed in 1954 when his family along with H.C. Tang and others took over Oriental Cotton Spinning & Weaving (大元紗廠) from the Yung family. Ma co-founded Yan Yick Hat Factory (仁益製帽廠) in Shanghai in 1939 before moving to HK. Lu was a graduate of Chiao Tung University in Shanghai.

Pacific’s first factory was located at 9 mile Castle Peak Road in Tsuen Wan. Starting with 720 spindles in April 1954, the plant manufactured its “444” and “666” brands of wool yarn using British wool and had a dyeing operation. By 1955, a second factory was added on Texaco Road in Tsuen Wan where it made yarn in French style using Australian wool and machinery imported from Osaka, Japan which could mix wool with nylon and the firm’s total spindle count had increased to 2320 (with another 800 being ordered) and production capacity of 100,000-150,000 pounds of yarn per month. By the late 1950s, Frank Chia-Hsiang Jen (任家祥) from Shanghai was also involved with Pacific and became involved in the manufacturing and export of knitwear to markets such as Europe. Jen’s Ziang Kong Co Ltd (祥康公司, incorporated in 1952) was one of the pioneers in the export of knitwear in HK (Ziang Kong Knitting Factory and Ziang Kong Garment Manufacturing was incorporated in 1966 and 1968 respectively) and was also the distributor of Hitachi electronics products and elevators in HK in the 1950s. Frank Jen himself as a member of the general committee of the Federation of HK Industries and Chinese Manufacturers Association and was involved in many of the garment trade talks in Europe.

Frank Jen (second from right) and Lu Han-yung (second from left) explaining to visiting British MP at Pacific Worsted Mills while the director of the Department of Labor looked on in 1958 (WKYP, 1958-11-7); Right: Lu Han-yung (HK Album, 1967)

In 1957, a weaving division under the name of Pacific Worsted Mills (Weaving Mill) Ltd was added and Ma left Pacific and co-founded Fibres & Fabrics Industries Ltd (經緯紡織) with Winston Woo Yu-ta (吳予達, Wharton MBA and son of Shanghai banker Woo Wen-chai 吳蕴齋), Chang Hung-ting (張宏丁) of textile equipment distributor China Textile Engineering (中紡工程) and Francis Tien Yuan-ho (田元灝, 1915-1992), a UK-trained engineer from Shanghai who had worked for China Light & Power. The same year, the firm purchased a 300,000 sq ft lot in Kwun Tong for $755,000 to build a woolen plant.

In 1958, Ma, Woo and Tien together with New York garment importer Cohen Sons and Cha Chi-ming of China Dyeing Works established Manhattan Garments (萬泰製衣) to export garments to the US market with Cohen Sons holding 24% of the firm’s outstanding shares. In 1959, Fibres & Fabrics incorporated two subsidiaries – one in the wool business – Fibres & Fabrics Industries (Wool) Ltd and the other in weaving – Fibres & Fabrics Industries (Weaving) Ltd. In 1963, the partners decided to split up with Tien taking over Manhattan and Ma and Woo keeping Fibres & Fabrics.

Oriental Pacific in the 1960s: Formation, Expansion and Acquisition by Hutchison

The late 1950s was a difficult period for the nascent HK wool yarn industry with the rise of protectionism not only in the West but also in markets such as Japan and South Korea. To survive and better compete in the global stage, Oriental and Pacific decided to merge to form Oriental Pacific Mills in August 1959.

With combined spindle count of 14628 and combined workforce of 700 workers, OP was Hongkong’s largest worsted and woollen spinning mill with 94% of wool spindles in HK and annual output of 6 million pounds. The mill is divided into three main sections—spinning, dyeing (added after the merger) and packing with an additional 200,000 cubic feet godown. Each of the departments was equipped with modern imported machines from the U.K., West Germany and Japan. The spinning section was subdivided into the woollen and the worsted spinning. The products range from thick hand knitting yarn to fine hosiery or weaving yarns, carpet yarn which were not only exported overseas but also supplied to all the major manufacturers of knitwear, gloves and carpets in Hong Kong.

Article about the newly formed Oriental Pacific with picture of its first joint booth at the HK Products Expo in December 1959 (TKP, 1959-12-10)

The initial OP board was comprised of Harvey Sung, K. P. Chao, S. H. Dong, C. S. Tu, Frank Jen and Herbert Sung with Y. T. Loo as General Manager. Y.T. Loo (羅永正1913-2001). A graduate of Lester School and St John’s College in Shanghai, Y.T. Loo was a devout Buddhist who led OP to greater heights until his retirement in 1974 through expanding into new markets and acquisitions.

Left: OP general manager Y.T. Loo (middle) delivering a talk on Buddhism in 1968; Right: Eddie Lu

In 1961, Oriental Pacific (Export) Ltd was established to expand the group’s export business and another subsidiary was established in Hamburg, Germany in 1963 to help OP expand into the European market. Two of the key executives at OP in the 1960s in building its export business were the Lu brothers from Shanghai – Eddie Lu Tseng-yung (陸增鏞, 1925-2008) and Lu Tseng-chi (陸增祺, 1926-). The scions of a family of wealthy mandarins and book collectors from Huzhou in Zhejiang, Eddie graduated from University of Shanghai while Tseng-chi was a graduate of St. John’s. By the 1950s when they arrived in HK, the family fortune was gone so the brothers started from the bottom – Eddie worked for the British trading firm Gordon Woodroffe while Tseng-chi worked at torchlight manufacturer V.K. Song & Co as personal assistant to S.Y. Chung (see article on the Song brothers). As Gordon Woodroffe represented Pacific Worsted Mills, Eddie befriended K.P. Chao who asked him and his brother to join OP as sales manager and assistant to the managing director.

In terms of acquisitions, OP renamed its weaving mill division HK Wool Industries which manufactured piecegoods such as gaberdine and flannel and absorbed Imex Corporation Ltd (manufacturer of woolen sweaters, cardigans and pullover) and Tefel Industries (Wool) Ltd (德孚毛紡) in the early 1960s. By 1963, the group had 3000 employees.

In July 1963, a major strike erupted at OP where 300 employees barricaded themselves inside the factory and refused to leave. 126 workers at the affiliated Tefel factory also struck in sympathy.

Scenes and article about the strike at Oriental Pacific in 1963 (WKYP, 1963-7-22)

In December 1963, Oriental Pacific received a further boost when the Hutchison group under Sir Douglas Clague acquired 31% of the firm and expanded its capital to HK$20 million. Clague became the firm’s chairman but the firm continued to be managed by OP’s directors and executives mentioned above.

Hutchison taipan Sir Douglas Clague (second from left) with Harvey Sung (first from left), Herbert Sung (second from right) and John Pearce in 1963. (Kung Sheung Daily News, 1963-12-10)

As a shareholder of OP, Hutchison assisted the firm with its international expansion through its extensive trading network and in 1967, a US subsidiary was established in New York. In August 1967, the Hutchison group acquired all the outstanding shares of Oriental Pacific. In November of the same year, Oriental Pacific acquired majority control of Standard Knitting Factory Ltd founded by the Ho brothers of the Jan Sin Mee group (to be covered). The same month, OP opened a factory outlet store in Worldwide House on Des Voeux Road in Central (WKYP, 1967-11-2)

Harvey Sung (left) and Herbert Sung before their trip to Abyssinia (Ethiopia) and Europe to explore new markets for Oriental Pacific (WKYP, 1965-9-30)

By the end of 1967, the OP group under the ownership of Hutchison had three woolen mills and two knitwear factories with combined spindle count of 26000, annual production of 12 million pounds of woolen yarn, 350,000 dozens knitwear and 250,000 dozens gloves. It did HK$120 million in local wool sales, representing over 25% market share (WKYP, 1968-7-22) and did export sales of HK$63.9 million for the year. its knitwear division also had 5 retail outlets. As OP was a major supplier of wool to the HK knitwear industry, its reception in 1968 was attended by the Who’s Who of the HK knitwear industry including T.C. Ying of Lea Tai, Frank Lin of Milo’s, Hung Wai-ching of HK Handicraft (see Lam Yuen Fong article) and Yuen Yee-man of Koon Chuen Kow (see article).

In March 1968, Oriental Pacific Mills and its subsidiary the Standard Knitting and Hongkong Carpet Manufacturers Ltd (aka Taiping Carpets) became the first three Hongkong firms licensed to use the Woolmark, the trademark applied to wool products which comply with the quality standards laid down by the International Wool Secretariat. The same year, the firm received a HK$1.5 million order for wool garment from the C&A group from the UK.

Meanwhile, former Pacific director S.F. Ma and his son David Ma Kee-man (馬紀文) continued to build Fibres & Fabrics and its wool division Fibres & Fabrics Industries (Wool) Ltd (經緯毛紡) had 100,000 sq ft of factory space in Kwun Tong and over $3.5 million in net profits when it went public on the Far East Stock Exchange in 1970. (KSDN, 1970-7-11). In November 1971, Ralli International, established by British financier Malcolm Horsman (later arrested for murdering his wife), a protégé of the controversial takeover artist Jim Slater of Slater Walker (which bought Haw Par and Mandarin Textiles), acquired the majority control of Fibres & Fabrics Industries (Wool) Ltd from the Ma family (WKYP, 1971-11-16) and renamed the firm HK Fibres & Fabrics Ltd. Months later in March 1972, Fibres & Fabrics in turn acquired 65% of HK Sales Ltd (偉新有限公司), a major knitwear manufacturer founded in HK in 1963 by Cho Sun-kong and Yu Wei-pan (the firm’s Chinese name was likely named after its two founders) with factories in Macau (added in 1966) and Singapore. HK Sales had net income of HK$2.9 million in 1971, which was even higher than F&F’s $2.3 million for the same year (WKYP, 1972-3-9). Five months later in August 1972, Ralli sold HK Fibres & Fabrics to Hutchison, putting OP and F&F back under one roof.

Hilwin Enterprises (南聯和記) – 1973 and beyond

In April 1973, Hutchison decided to merge its Oriental Pacific and Fibres & Fabrics divisions with Winsor Industrial’s wool operations South Enterprises (新南企業) to form Hilwin Enterprises, “Hil” being “Hutchison International Limited” and “Win” being Winsor. The new entity had combined wool revenue of HK$200 million and knitwear export revenue of HK$300 million and total output of 1.5 million pieces of knitwear. Sir Douglas Clague served as chairman of Hilwin with James Hsiung Lee (see China Engineers articles) and C.K. Chow of Winsor as vice chairmen and K.P. Chao of OP as managing director. (The Sung family by this time no longer appear to be involved) Part of the merger involved the issuance of 1.6 million new shares at $14 per share (so total $22.4 million was raised), of which 1 million shares were subscribed by British textile manufacturer Joseph Dawson Holdings Ltd from Yorkshire (owner of the Pringle brand which was sold to HK firm SC Fang & Sons) and the remainder was subscribed by a Japanese firm. (WKYP, 1973-4-10)

After the merger, the Hilwin group had five main wool spinning mills– OP, F&F, Pacific Woollen Mills, Macao Woollen Spinners and Pacific Woollen Mills (Macao) Ltd with total spindle count of over 37000 and woolen yarn production of 18 million pounds with 2 new factories in Macau being launched in partnership with Japanese firms Toyo Boshi and Japan Exlan Co Ltd. When HSBC took over Hutchison and placed the firm under the management of turnaround expert Bill Wyllie (see Harpers article), he disposed of 103 Hutchison subsidiaries and in 1976, he sold Hutchison’s 49% stake at Hilwin to Winsor. (KSEN, 1976-11-30) After China opened to foreign investors in 1978, Heshan Oriental Pacific was established in Heshan in Guangdong province as a 80% owned foreign-Sino joint venture. Most of the Hilwin entities remained subsidiaries of the Winsor group except HK Sales which under the leadership of Herbert Lee Shan-kai (李賢凱) became a leading knitwear exporter in HK with factories in the mainland, Madagascar and Bangladesh and sales offices all over the globe.

K.P. Chao left OP after the 1970s to focus on his Novel Enterprises (永新企業), which he started in 1964 to manufacture denim and South Ocean Knitters (南洋針織廠), which he started in 1974 to focus on knitwear. With the assistance of his children (such as the Japan educated Ronald Chao Kee-young and Silas Chou who became the owner of Tommy Hilfiger and Michael Kors), the Novel group built factories all over the world including Mauritius (1975), Portugal, Macau (where his daughter Susana Chou became president of the legislature) and mainland China and became one of the world’s largest manufacturer of denim and knitwear. In November 1978, Chao established Xiang Zhou Woolen Mills in Zhuhai, one of the first HK textile concerns in the mainland and over the years he was involved in over 50 business ventures in the mainland such as color picture tube manufacturing (launched in 1987) and real estate in Shanghai (e.g. Novel Plaza in Nanjing Road in 1993) and distribution of Intel’s electronic products in Greater China. But the most recognizable enterprise which Chao was involved in was probably Dragonair, which he co-founded in 1985 and sold to Cathay Pacific in 1990. Lu Han-yung, the manager of Pacific Worsted Mill mentioned earlier, remained involved in the wool business with Chao as vice chairman of Novel until 1996 when he retired.

In 1973, the Lu brothers also left OP and launched the Afasia Group (亞非集團) with the backing of H.C. Tang of Winsor and Y.L. Yang of Unitex (later Esquel) to build garment factories in Mauritius. Eddie served as chairman of the HK Knitwear Exporters & Manufacturers Association and for his involvement was awarded the CBE in 1990.

As for Frank Jen, he moved back to Shanghai in his later years where he died in 2010. His son Franklin Jen (任元誠) who was an executive with Citibank married the daughter of Leo Lee Tung-hai of Tung Tai group (see article on Wah Mei Electric) in 1974.

Sources (other than those quoted above):

唐翔千傳, 2014

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http://www.mahabodhi.org/newsletters/TeacherLoo.htm

http://tjzy.tjl.tj.cn/mrgj/song-fei-qing/zp-5.htm

http://www.whartonhongkong07.com/bio-s-chao.html

他的梦: 宋棐卿 : 原天津市东亚紡厂抵羊版毛綫创始人, 宋允璋, 王维剛, 明文出版社有限公司, 2006

Sheehan, Brett, Industrial Eden: A Chinese Capitalist’s Vision Harvard University Press, 2015

https://hk.news.appledaily.com/local/daily/article/20100511/14017444

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https://www.hoover.org/news/hoover-acquires-personal-papers-well-known-chinese-industrialist-and-entrepreneur