The King of Shoes: Tse Family of Kam Shing and Silver Eagle
York Lo: The King of Shoes: Tse Family of Kam Shing and Silver Eagle
Arthur Tse with some of his shoes in the 1990s
From the 1960s to the 1990s, the family of TseHei (謝熹) earned the reputation of “King of Shoes” through the publicly listed Kam Shing and Silver Eagle, which went public in 1973 and 1992 respectively and were the largest manufacturers of shoes in Hong Kong at the time before the family footwear empire collapsed in the mid-1990s.
Kam Shing Footwear (金城鞋業)
A landlord in his native Gaoyao in Guangdong province, TseHei was born in 1922 and came to HK in the early 1950s after the Communists came to power. He started making low-end PVC shoes for ladies at a squatter factory in Diamond Hill with a dozen workers and incorporated Kam Shing Shoes with Lai Yat-ming (黎日明) in 1965. His address at the time of incorporation was Magnolia House at the Ma Tau Wai public housing estate.
Driven by strong demands from Europe, US and Africa, Kam Sing’s export sales grew fivefold from 1965 to 1972 and its profits for fiscal years ending March 31 went from $104,000 in 1968 to $139,000 in 1969 to $305,000 in 1970 to $478,000 in 1971 to $887,000 in 1972 and over $1.6 million for the six months ending September 1972. The success enabled the firm into its own 4 Kwei Chow Street in To Kwa Wan and rented 4 floors of a factory building at 66-68 How Ming Street in Kwun Tong. The firm which was manufacturing all types of shoes by this time had over 1000 workers and over HK$10 million in sales.
In late 1970, Kam Sing made the headlines when one of the security guards at its factory at Kwei Chow Street was found tied up and strangled to death andthe office was ransacked and its safe moved after the night of the Mid-Autumn Festival (September 19). Four suspects, including one former Kam Sing employee who often borrowed money from the firm, were arrested and charged with murder. (WKYP, 1971-2-2)
In 1972, Tse’s22 year oldeldest son Arthur TseLup-kee (謝立基) joined the family business after graduation from Texas A&M with a degree in electrical engineering. Tse was also supported by Lai Yat-ming and Ho Sing (何星) who were directors of the firm. External directors of Kam Shing included lawyer Roland Chow Kun-chee (周近智, son of China Emporium managing director Chow Hau-leung), Far East Exchange co-founder and Chee San & Co scion Fung Sun-chung and Fok Kam-shek, a veteran of the shoe industry who was involved with Fung Keong and United Rubber Works. (see articles).
In March 1973, Kam Shing Footwear was renamed Kam Shing Commercial & Industrial Development (金城工商發展) and went public the next month through the issuance of 3 million new shares at $1 apiece on the Far East and Kam Ngan exchanges. The firm had total authorized capital of $30 million and had properties worth over $7 million including its 10671 sq ft of factory space, two pre-war properties on Temple Street and several floors of the Kam Shing Industrial Building with total space of 54460 sq ft. (WKYP, 1973-3-1) Kam Shing Footwear (1973) Ltd was set up in April 1973 as the subsidiary responsible for the footwear business.
In August 1973, a major fire broke out at Kam Shing’s factory in Kwun Tong after a security guard dropped a kerosene stove while cooking.The fire which lasted for five hours destroyed its four floors of factory space in the building including 200 tons of materials inside, resulting in millions in losses. (TKP, 1973-8-20) The mid-1970s were difficult times for the HK shoe industry as the appreciation of the HK dollar and the soaring labor costs made its products less competitive relative to Taiwan, which captured a lot of market share. To add to that, shoe manufacturing is a labor-intensive business with tough working conditions (strong smell from the rubber and leather) and other industries such as garments and wigs were fighting for the same talent pool. In 1975, Kam Shing decided to shut down its shoe production in Hong Kong and switched to wholesale distribution of shoes and garment manufacturing.
In the 1960s and 1970s, Kam Shing primarily focused on low cost, no frills shoes which worked for the generally poor society at the time and the old guards resisted going up market. But as the society became more affluent and competition in the low end became too intense, Arthur Tse’s push for going into apparel and branded shoes was accepted by his father and the old guards at the firm.The firm also built the “Boby” brand of casual shoes (波比皮鞋, trademark registered in 1972) which became a top-selling brand in the lower to middle market segment of men’s shoes in the local market. Inspired by the success of local apparel brands such as Texwood covered earlier, the family formed Lagain Garment Manufacturing (力奇製衣廠) in 1980 to make the Lagain (浪潮) brand of clothing.
In September 1982, Kam Shing increased its capital from $30 million to $100 million. 55% of the firm’s profits that year came from rental income while 30% were from financial services (KSEN, 1982-9-9) At the time, the firm was eager to diversify into financial services, having acquired licenses in dealing in gold, stocks and futures for $3 million but gave up plans to launch a finance company in June 1983 after the government introduced new regulations in July 1983 which forbid deposit taking companies to take in short term deposits of under 3 months. In 1983, its garment business had seen improvement with recovery from the US market and expected sales growth of 50%. (KSEN, 1983-6-23) For the year ending September 1983, Kam Shing recorded profits of $2.7 million, a decrease of 30% from the prior year’s profits of $3.9 million. (WKYP, 1984-6-23)
For the year ending September 1984, Kam Shing’s profits plunged to $54,738 from $2.7 million in the prior year as a result of bad debt from a property that was sold during the year. (WKYP, 1985-6-5) At the shareholder meeting held in June 1985, TseHei announced the firm’s plans to add 6-7 retail outlets in the coming year. According to him, the firm’s garment business was doing so-so due to sluggish sales in the US and he was looking into buying more properties as rental income was bringing in $2-3 million per year to the group. (TKP, 1985-6-29)
In June 1986, TseHei told reporters his intention to focus Kam Shingon real estate and garments. (WKYP, 1986-6-18) But the same year, the Tse family decided to go big in the retail business and established Millset to import Italian shoes. For the year ending September 1986, Kam Shing recorded profits of $4.6 million, a 68% increase from the prior year’s profits of $2.5 million (WKYP, 1987-3-28) For the six months ending March 1987, Kam Shing recorded profits of $2.8 million, compared with $1.7 million from the same period in the prior year. (WKYP, 1987-7-2) For the year ending September 1987, Kam Shing recorded profits of $5.9 million, a 40.6% increase from the prior year and gave out $3.4 million in dividends (TKP, 1988-3-3)
For fiscal year ending March 1988, Kam Shing recorded profits of $4.8 million, an increase of 68% from the prior year’s profits of $2.8 million. According to TseHei, the results were helped by better domestic sales and operational efficiencies despite of the slowdown in the US retail market. (TKP, 1988-7-27) In April 1988, TseHei reiterated to the press that he has no intention of selling the listed shell of the firm despite of liabilities (TKP, 1988-4-1) The same year, the Lagain label was shut down and Lagain Garments renamed Flying Eagle Shoes (飛鷹鞋業) as the firm resumed production of shoes after the popularity of sneakers and the opening of China as a low cost manufacturing base rejuvenated the HK footwear industry.
In 1989, Kam Shing established a shoe factory in Shunde in Guangdong province and was looking for distributors in Europe and the US with leather goods as an area of focus. (TKP, 1989-4-1) In November 1989, Kam Shing’s shares rallied from $2 to $3.10 per share as the Tse family which controlled 70% of its shares engaged in talks with third party who was interested in buying the firm (TKP, 1989-11-30) In March 1990, GGS Company Ltd from Japan through Conisbee acquired 60% of Kam Shing for $4.86 per share. At the time, Arthur Tse told the press that Kam Shing would leverage GGS’ connections to access the Japanese apparel and footwear market. (TKP, 1990-3-27) But the next month, TseHei, Arthur Tse, Lai Yat-ming and Ho Singall stepped down from Kam Shing’s board and was succeeded by Mitsuru Iwasaki as chairman.
In July 1991, a consortium comprised of Taiwanese businessmanRustom Ho Ming-yu (賀鳴玉, 1952-2016), mainland Chinese foodstuff giant COFCO and Singaporean businessman Tan Kee-cheang acquired 74% of Kam Shing from GGS. (TKP, 1991-7-29) As a result of this, Kam Shing was renamed Great China Holdings (大中華集團) in 1992 remained under the control of the Ho family until 2016 and has since been renamed Sky Chinafortune Holdings.
Silver Eagle Holdings (銀鷹控股)
While the Tse family sold Kam Shing to GGS in 1990, they kept Kam Shing Footwear (1973) Ltd and its Shunde subsidiary and also built a separate footwear empire throughSave Power Ltd (儲權有限公司) which in 1988 established Gold Eagle Shoes (金鷹鞋業) in Dongguan which focused on making sneakers for exports for brands such as Walt Disney and Ninja Turtles. Starting out with 500 workers in two assembly lines churning out 5000 pairs of sneakers per day, Gold Eagle added two more assembly lines within 4 months of operations and when that wasn’t enough to fill all the orders they established Silver Eagle Shoes (銀鷹鞋業) in Dongguan and expanded the total number of assembly lines to six with annual production capacity of 1.5 million pairs by the end of 1988. By 1989, the Dongguan operations was expanded to 8 assembly lines and 4000 workers, churning out 4 million pairs of shoes with value of HK$175 million.
In 1990, the Tse family’s shoe operations was making 7 million pairs of sneakers and 1 million pairs of casual shoes and recorded HK$440 million in revenues and over $20 million in profits. They had 300,000 sq ft of factory space in Dongguan and 70% of its outputs were exported with America being its largest market. (TKP, 1991-12-5)
In 1991, Silver Eagle Holdings was formed to hold 50% of Silver Eagle Shoes and Gold Eagles Shoes, a third of retail operations Millset and Kam Shing Footwear and the group did sales of over HK$560 millionthat year, making it the largest footwear manufacturer in HK at the time. Silver Eagle began to plan its listing in late 1991 although it was postponed due to US trade conflicts. In January 1992, Silver Eagle went public on the Stock Exchange of HK with TseHei as chairman and Arthur Tse as managing director. Other Silver Eagle directors included former directors of Kam Shing including Roland Chow, Lai Yat-ming and Ho Sing plus Moses Cheng and Mar Po-chiu (馬寶釗).In 1992, Arthur Tse received the Young Industrialists Award from the FHKI and joined the board of the office furniture manufacturer Lamex which went public in November.
By that time, Silver Eagle’s Millset operations had established 13 retail outlets in HK and Kowloon under the brands of Bianco, Rosso and Vero Cuoio.Arthur Tse also acquired one third of Riddell Athletic Footwear and 80% ofZubaz, a popular brand of pants founded in 1988 which was already losing steam by the time.
Just as quickly as Tse’s footwear empire re-emerged, it collapsed in the mid-1990s. By 1994, Silver Eagle was experiencing financial troubles. Arthur Tse sold Zubaz to 20/20 Sport, a manufacturer of activewear in New York. In October 1994, he stepped down as managing director of Silver Eagle and was succeeded by Christopher Ho Wing-on of Grande Group. In September 1995, Arthur Tse resigned from the board of Silver Eagle and in May 1996, he skipped town ahead on a court ruling that he through a bankrupt footwear distributor borrowed US$32 million from his family’s shoe company. At the time, he also owed Deutsche Bank HK$22 million. (WSJ, 1996-6-11) As for Silver Eagle, it was renamed Cybersonic in 1998, then Netalone.com in 1999 during the dotcom bubble, then Leaptek in 2001 before it was acquired by Huabao International in 2004 which assumed its listing status.
Sources (other than those cited above):
Lui Chi-wah “HK King of Enterprises” Ming Pao Publications, 1995 (Fourth Edition)
This article was first posted on 21st June 2021.
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