Biz Talk:
Finlay Monaghan– Polishing partnerships
Staff Writer
Finlay Monaghan, Adidas International Sourcing Limited's country manager, tells ThaiAsiaToday.com what gives this global brand the edge and what makes Thailand a great country for doing business in.
ThaiAsiaToday.com (TAT): Can you tell us a bit about the business and the annual quantity of goods involved in your operations?
Finlay Monaghan (FM): Sure, (Thailand) Adidas will this year produce over 42 million garments (all for export).
There are really two 'Adidas' entities in Thailand - Adidas Thailand, a legal entity - and Adidas International Sourcing Limited, which is an export company. We're not a profit center and we don't make money.
About 70% of the goods produced are for football with the next two biggest categories being basketball and tennis. We produce over 80% of the tennis range and about 50% of the basketball range.
TAT: How many people work for the company and what's your role in the business?
FM: At this facility, we have about 50 people, mainly what we call merchandisers, and then we have an operation center in Khon Kaen, which employs about 15 people, again, mainly merchandisers.
My role is mainly to ensure they can get what they need and make sure they can do their jobs properly. And, perhaps most importantly, I work to keep the relationships with partners – our contractors – healthy. Without those partnerships, you can't achieve anything. They need to be wedding partners.
TAT: What drives your business?
Our business is basically driven by development centers. There's one at the company's global headquarters (in Germany), and there's one in the United States.
The US development center is responsible for developing products for the basketball, football, tennis and training ranges. When they're ready, they send us the drawings (known within the company as 'tech packs').
We operate under a six-month cyclical process. The development season is one year ahead of the production season, so right now were in the Fall/Winter 2008 production season and the Fall/Winter 2009 development season.
Running that process of getting the tech packs, which represent blueprints for products, and commercializing them through to garment form, costing them, and getting to the point which we call 'buy ready', takes six months. Once the goods are 'buy ready', the customer can order them.
TAT: What would you say separates the company from its rivals?
I think what Adidas really represents is 'clothes for athletes'. While we're a commercial company we never lose sight of the dream of (founder) Adi Dassler, which was to clothe athletes and give them the very best equipment. He was an athlete himself.
He (Dassler) made the first spiked shoes for Jesse Owens (in the 1936 Olympics, Germany). He made the first screw-in football boots for the German national football team that won the 1954 World Cup (in Switzerland). The philosophy of aiming for the very best made sense then and it remains within the company today.
We do probably look more closely at the technology and performance of a product than any other companies in our industry. We're probably the only company that produces suits for the luge (Winter sport event in Winter Olympics), for example, since doing so doesn't really make Adidas any money.
So the company really makes servicing athletes a priority - then the rest just falls into place.
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TAT: Adidas purchased Reebok last year – how are things developing?
FM: Reebok over this year has developed well from a business point of view. Process wise we're still two different companies. But it's developed well in terms of Adidas having had a positive input into Reebok in terms of brand and marketing campaigns.
Reebok is very aggressively growing in some of the new markets - China, Russia, and India - they have a huge market share, for example. That's really the focus for Reebok. I can see personally, that the Reebok brand – the shoes and shirts and so on - is really coming along much better. And the big battleground is America where they're aiming to reposition Reebok as a high-end brand.
TAT: What are the advantages of doing business in Thailand?
I think I should look at this one on two levels – business and culture.
(On business) There isn't a country in the world today, particularly in this business [apparel and footwear], that doesn't have its economic challenges. The rising cost of oil is fueling overhead costs in every direction. Labor costs are rising in just about every country.
In places like China and Vietnam, prices are increasing beyond the current effects of higher oil prices and inflation, so they all have their challenges.
Thailand faces a challenge in that it has always been a little bit more expensive than China and Vietnam, but offers other competitive advantages, and so it may be a case of trying to hang on to those advantages. But everything in this business is 'swings and roundabouts'.
Thailand is costlier than the Indian sub-continent but you're getting a better service (in Thailand), maturity in the industry and the skills.
I certainly don't see Thailand at any disadvantage and it is in a position where, definitely in Southeast Asia, it could put itself way in front of its competitors.
TAT: Is that mainly related to cost?
Our industry spins around cost. It's one of the base factors that takes us somewhere or out of somewhere. We have to protect our margin - at the end of the day, that's what we do. But it's not the only thing. Elsewhere (other country locations) we wouldn't get the capabilities or technologies.
Infrastructure is another big thing and we have great infrastructure here in Thailand when it comes to fabric or the mills, for example.
TAT: And what do you like about doing business in Thailand on a more cultural level?
FM: Culturally I love working in Thailand. I think the people are fantastic. They're honest and loyal, which you don't find in a lot of countries. And, for me, I've changed a lot since I've come to Thailand by watching other people and how they conduct themselves and it's influenced me, and, hopefully, I've influenced them a little bit because for me the perfect business person lies somewhere between the European style and the Thai style.
Thai style is a little too accommodating and a little to forgiving, too calm at times, and I've certainly noticed during my time here that the European style is too aggressive, too rushed, and too demanding.
I wouldn't profess to be anywhere near the middle because I've spent too long in Europe, but certainly some of the rougher edges have gone during the three years since I've lived here.
TAT: Thanks very much for talking to us today.
FM: You're welcome, it's been a pleasure.
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