CHAPTER 15
No Kickbacks
With limited capital for such a massive operation, before approaching banks and lenders, the new Anne Klein II division needed an agent. Although I had an extensive network in the Far East, I could not oversee everything and we weren’t ready to get involved without the bridge line in production and selling in stores. For Anne Klein II to become successful, we needed the right production and manufacturers as well as proper quality control. We opened a small office in Hong Kong, but we preferred to spend less capital on labor than future distribution and production costs. Because of our budget for the launch of the line, however, we held a number of concerns. First and foremost would be the loss of control.
In Hong Kong, where we would do most of our manufacturing for Anne Klein II, there was a practice of giving incorrect yields for particular garments to distributors and wholesalers. More particularly, a manufacturer might need 2.5 yards to complete a dress, but the manufacturer would quote us at 3.1 yards. Although 0.6 yards may not be enough to make one dress, when buying many rolls of fabric and sending it to Hong Kong for manufacturing, that extra 0.6 yards per dress can add up. Many manufacturers would take that 0.6 yards and make another or similar dress for sale in wholesale or retail markets. Since many of our fabrics were unique, Anne Klein II couldn’t afford to let something like this happen. For this reason, we paid more to warehouse the unused ...
