Vin Lamoriello, who runs a promotional products company in Warwick, has figured out an effective method to help his customers reduce costs while keeping his business profitable.
Lamoriello’s firm, Tailor Made Promotional Products Inc., has an office and employees halfway around the world, in Hong Kong, to do business directly with manufacturers and suppliers in China. “We found we could save our customers a whole lot of money by cutting out the middleman and going direct to overseas markets,” he said.
Like many other business owners in Rhode Island, he has discovered that English-speaking Hong Kong, with its many ties to the U.S., is an optimal vantage point from which to trade with China and other points in Asia.
In terms of exports alone, Rhode Island businesses sent approximately $36 million worth of goods to Hong Kong in 2008, according to state figures. More than 1,300 American businesses have offices in the former British territory – the largest contingent of overseas companies in Hong Kong – and its American Chamber of Commerce is the largest outside the U.S., according to Hong Kong trade officials.
Donald C.K. Tong, Hong Kong commissioner to the U.S., based in Washington, D.C., is quick to point out that trading with Hong Kong can expose businesses to a lot more than the 7 million people who live there. “We know the Chinese market extremely well because of our historic links and increasingly close economic ties to the mainland,” he told Providence Business News. China has a population of 1.3 billion.
Ray Fogarty, director of the Chafee Center for International Business at Bryant University, said Hong Kong ranks 13th in terms of value of goods among places that accept products exported from Rhode Island, with Canada first. He could not provide figures on imports from Hong Kong.
According to Tong, Fogarty’s office and the R.I. Economic Development Corporation (EDC), many Rhode Island companies trade in Hong Kong to varying degrees including, for example, FM Global in Johnston, Swarovski North America Ltd. in Cranston, Ideal Windlass Co. in East Greenwich, Taco Inc. in Cranston, Technic Inc. in Cranston, the Darlene Group Inc. in Pawtucket and Ann & Hope Inc. in Cumberland.
As his business grew, Lamoriello said, he began to receive orders for as many as 500,000 or 1 million pieces at a time. To stay competitive, he knew he had to expand his options beyond what major U.S. distributors could provide.
Now, most of the promotional products he sells are made in China, where the customized work such as affixing company names also is done, so when his products are shipped to his Warwick base of operations they are “ready to go.”
It is essential, Lamoriello said, for anyone doing business overseas to have “people on the ground there to make sure you are getting what you pay for. Once items are shipped and paid for, you’re pretty much on the hook for them.”
A free trade zone, Hong Kong offers many benefits to American companies, Lamoriello said, such as financial assistance to pay for office space. He has five employees stationed in Hong Kong, eight in his China office, five in Warwick and another six sales representatives who travel throughout the U.S. “A lot of our actual work is done in China, the cost of labor is definitely lower,” he said, “but it is much easier to communicate with Hong Kong.”
The only down side to Hong Kong trade that Lamoriello could cite is the need for a longer lead time, especially for small electronics like cell phone and iPod chargers. It can take four to six weeks for a shipment to arrive by boat and truck, he said, although air shipments can take just one week but with “a dramatic increase in cost.” •
