Unitex (裕泰針織)

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

York Lo: Unitex (裕泰針織)

Left: IPO notice of Unitex in 1972 (WKYP, 1972-12-15) ; right : article about the IPO of Unitex in 1972 (WKYP, 1972-12-5)

Unitex Ltd was a leading publicly listed knitwear manufacturer in Hong Kong in the 1970s and 1980s, making shirts for the leading brands in the US and Europe. The firm was founded in 1960 by Frank Cheng Fur-she (程福𨭎, hereafter referred to as “F.S. Cheng”) with the support of his fellow Shanghainese textile industrialists such as Yuan-Loong Yang (楊元龍), Jerry Han-Tang Liu (劉漢棟) and Chen-Che Lee (李震之) and his Cantonese father in law, the toilet king Lee Iu-cheung who was covered earlier.

Left: F.S. Cheng (Brazilian immigration record, 1953); Middle: Y.L. Yang with his new bride Dora Tsai (seated left) and his future partner at Unitex – Jerry H.T. Liu (standing, center) and other friends in 1948. Right: C.C. Lee at one of his factories (SCMP)

Born in Kiangsu province in 1917, Cheng was the son of Cheng Cho-sun and lived in Chungking during the War. He graduated from Lowell Textile Institute in Massachusetts with a B.S. in cotton engineering in 1950. While studying in Boston, he met his wife Lee Kit-yiu (李潔瑤), who was a student at Pine Manor College and got married after they returned to HK with Yang Sih-zung of carpet manufacturer G.R. Coleman who knew both families as the introducer at their wedding. During his time in Boston, Cheng was also a member of the Alpha Lambda fraternity and was friendly with Y.L. Yang who was studying chemical engineering at the Lowell Institute and Jerry Liu who had graduated from MIT in 1944. Yang returned to HK in the 1950s to join his relative C.C. Lee’s Textile Alliance while Jerry Liu, the second son of prominent Changchow textile industrialist K.C. Liu and brother in law of Cha Chi-ming, established South Textiles in HK with his father and older brother. (Both Liu and Lee served as chairman of the HK Cotton Spinners Association and Yang later started the Esquel Group. Since each of them deserved their own article and this article is about Unitex, we will not cover their careers here). In 1960, Cheng founded Unitex to manufacture shirts and other knitted garments with the support of Yang, Liu, C.C. Lee and his own father in law Lee Iu-cheung who served as chairman of the firm. Allegedly the original Unitex factory was located inside the South Textile mill in Tsuen Wan. By 1964, Union Yarn Processing Ltd (裕南紗業, renamed Union Fabrics in 1970) was also established and Unitex also expanded to Singapore.

Pictures of Unitex’s Singapore plant in 1964 (left) and a congratulatory advertisement by firms including Textile Alliance, South Textiles and Lee Yu Kee from HK (The Straits Times, 7 April 1964)

In April 1964, Unitex in partnership with Sim Yeow Seng Ltd (沈耀成公司) and Jardine Waugh Ltd established Unitex Malaysia Ltd (耀泰針織, later renamed Unitex Singapore) in the Redhill Industrial Estate in Singapore with $1 million in capital. Jardine Waugh director Chan U-seek (陳有錫) was chairman of the venture while F.S. Cheng and Y.L. Yang from Unitex HK and Sim Yeow-kiah (沈耀嘉) from Sim Yeow Seng were directors with Wai-Hing Chan (陳維慶) as manager. The new venture, which was opened by Singapore Finance Minister Goh Keng-swee (吳慶瑞), started with 120 workers with monthly production capacity of 5000 dozen knitted garments, mostly men’s shirts and another plant with production capacity of 15000 dozen per month and 400 workers was opened in Jurong in 1966. By 1967, the joint venture was producing 20000 pieces of knitted garment ranging from blouses, shirts and children’s T-shirts, 96% of which were exported to the US (for brands such as Jockey undergarments), the UK and Europe and 4% sold locally at Metro stores. Jardine sold out of its stake at Unitex in 1971 and in 1975, Unitex closed its factory on Commonwealth Drive and laid 600 workers off due to high costs and poor sales while keeping its Jurong plant (which suffered a fire in 1974) with 500 workers open. (New Nation, 1975-6-12)

Back in Hong Kong, Unitex grew to become one of the largest knitting mills and by the time it went public in December 1972 on the HK Stock Exchange through the issuance of 2 million new shares at $5 per share (raising a total of $10 million), it was projecting to make HK$4.5 million in profits on HK$51 million in annual sales with its own 230,000 sq ft, 8-story Unitex Building at 100 Texaco Road in Tsuen Wan and plans to build a 100,000 sq ft, 10-story building next door at 59-63 Wang Wo Tsai Street in Tsuen Wan.

By the mid-1970s, Unitex had over 2000 workers and produced 46000 dozen shirts monthly. While many HK garment manufacturers focused on the low-end, Unitex had earned a reputation as a high-end manufacturer and its shirt clients included top US brands such as Arrow and Manhattan, top French designer labels such as Christian Dior, Pierre Cardin and Philippe Venet and the Italian brand Bronzini. Its weaving operations was producing 1 million yards of fabric per month and began exporting to the US and the UK in August 1974 in addition to supplying yarn for its own garment production. Its export markets included the US, Europe, Japan and Australia and in the US its products were sold in major department stores such as Lord & Taylor. (KSEN, 1975-7-17) Net profits jumped from $4.38 million in fiscal year ending June 1975 to $11.89 million in fiscal year ending June 1976.

In 1979, Unitex made headlines in the US when it acquired 8% of Dan River Corporation, one of the largest textile companies in America (its mill in Danville, Virginia was once the world’s largest) in the public market with the financial support of Wardley Finance and Chartered Bank. As Unitex only had sales of US$27 million compare with Dan River’s sales of US$525 million, the acquisition raised a lot of heads with Dan River’s management accusing Unitex of acting as a front for Japanese textile giant Toray Industries which was the majority shareholder of its affiliate TAL. In fact, Dan River asked the SEC to investigate and filed a lawsuit against Unitex to block it from buying more shares. At the end, F.S. Cheng (who had by then succeeded his father in law as chairman of Unitex in addition to running the firm as its managing director) joined the board of Dan River but Unitex ultimately sold its stake in Dan River to the activist investor Carl Icahn in 1982. Dan River eventually shut down in 2013 after 126 years of operations.

For the fiscal year ending June 1982, Unitex reported revenues of $214.9 million, an increase of 10.4% from the prior year and pretax earnings of $16.37 million, which was a 27% increase from the prior year. Subsidiary Mappin Trading (萬昇貿易) was also involved in garment exports from mainland China, which was beginning to take off (TKP, 1982-10-30). For the fiscal year ending June 1983, Unitex earned profits of HK$15.5 million, of which $6.35 million came from the sale of US investment properties and vessels for $47.5 million and the remainder came from currency gains as Unitex received revenues in US dollars while HK dollars depreciated significantly at the time due to the confidence crisis. (KSEN, 1983-10-27) In 1983, Unitex acquired three Panama-registered, 3-5 years old vessels for US$4 million each (TKP, 1983-3-29) In November 1986, Unitex announced that it lost HK$69.1 million (HK$50.9 million of which related to its shipping investments) on revenues of HK$258 million in the fiscal year ending June 1986 (TKP, 1986-11-7)

For the fiscal year ending June 1989, Unitex reported losses of $26 million, compared with $17 million in profits in the prior year. In November 1989, F.S. Cheng, Jerry Liu and C.C. Lee who collectively with related parties already controlled 42.9 million shares or 82% of Unitex’s outstanding shares through Carle Enterprises Ltd announced plan to privatize Unitex at HK$3.90 per share. (TKP, 1989-11-15) As a firm, both Unitex Ltd and Union Fabrics Ltd were dissolved in 1999.

Kit Lee and her sons Philip and David Cheng (Peter Q. Yang website)

F.S. Cheng and Kit Lee (who served as director of Po Leung Kuk and Yan Chai Hospital) has two sons – Philip Cheng Yee-sing (程裕昇) and David Cheng Yee-ding (程裕庭), both of whom had worked at Unitex. Philip received his BS from Cornell and MBA from Harvard and after Unitex, he served as director of his father in law Lui Che-wo’s Galaxy Entertainment in more recent years.

Sources (other than those quoted above)

https://www.washingtonpost.com/archive/business/1979/02/27/federal-judge-halts-textile-stock-sale/150e7f99-e890-4f1e-8a34-695cbb2c6a81/?utm_term=.7859eeb46560

http://www.pqyang.com/chp7.html

The Straits Times, 14 May 1967, Page 11

http://www.talapparel.com/en/our-story/history

This article was first posted on 17th June 2019.

Unitex (裕泰針織)

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