TAL Apparel in response to COVID-19

About TAL Apparel

TAL Apparel is one of the world’s largest apparel companies, with over 70 years of history.  Owned by Hong-Kong based TAL group, TAL Apparel employs about 26,000 garment workers in 10 factories globally, producing roughly 50 million pieces of apparel each year, including men’s chinos, polo tees, outerwear, and dress shirts. TAL Apparel claims it makes one in six dress shirts sold in the United States, including for well-known U.S. fashion brands such as Brooks Brothers, Bonobos, and LL Bean.

Other than owning factories in Asian countries such as Vietnam, China, Malaysia, Indonesia, and Thailand, TAL Apparel opened its first garment factory in Ethiopia in 2018 – based at the country’s flagship Hawassa Industrial Park. Among the reasons behind the decision is Ethiopia’s duty-free access to the US under the African Growth and Opportunity Act (AGOA), and to Europe under the Everything But Arms (EBA) initiative.

Discussion questions [Anyone is more than welcome to join our online discussions; For FASH455, please address at least two questions in your comment; please also mention the question number in your comment.]

  1. From TAL Apparel’s perspective, what are the major impacts of COVID-19 on the apparel industry, especially regarding sourcing and supply chain management? What are the key challenges apparel companies facing?
  2. How has TAL Apparel responded to COVID-19? What lessons can we learn from their experiences?
  3. From TAL Apparel’s story, how is the big landscape of apparel sourcing changing because of COVID-19?
  4. What long term business decisions apparel companies like TAL Apparel have to make, and what are your recommendations?
  5. Anything else you find interesting/intriguing/surprising/enlightening from the video?

Author: Sheng Lu

Professor @ University of Delaware

27 thoughts on “TAL Apparel in response to COVID-19”

  1. Question 2: How has TAL responded to COVID-19? What lessons can we learn from their experiences?
    Luckily, TAL correctly predicted that their business would be operating around 50% of sales. They also acted quickly and started making PPE, which was a smart business decision based on the shortage of masks in the early days of the pandemic. TAL also got lucky once again when they decided to move away from producing in China because of the expenses. Not only did this allow them to prepare their factories in other countries as the virus spread through China, it also allowed them to cut costs. I think most business can learn from TAL because they prepared for the worst. TAL had a frugal financial plan which helped when the pandemic struck. The industry experts working at TAL also prepared for a 50% decrease in sales, unlike other companies who only prepared for a 15% decrease. This prediction was right and may have been a huge factor in saving TAL.

    Question 5: Anything else you find interesting/intriguing/surprising/enlightening from the video?
    I found it interesting that many of TAL’s customers only prepared to be down 15%. I wonder why there was such a discrepancy between fashion companies about how COVID would effect business. I would think industry professionals, like the ones at TAL, would try to spread helpful information to their customers. This way their customers would be better prepared.

  2. 1) Because of COVID-19, the apparel industry is having to expedite long-term decisions that otherwise would have been given much more thought. The more expensive apparel factories, like those in China, are being closed permanently in an attempt to currently recover funds and cut costs in the future. Sourcing will increase in lower-cost countries, such as Vietnam and Ethiopia. These shifts are due to the extreme challenge to survive financially through the pandemic and the downturn in consumption of apparel. TAL apparel actually began lessening their exposure to Chinese imports 5 years ago, so their company will probably experience a smoother transition in this endeavor than other companies. Supply chain management will be at the forefront of business ventures, as companies will need to know every factory they employ (and owe money to) and customers will demand increased transparency in how companies treated their factory workers during the pandemic.

    2) TAL Apparel’s response to COVID has been one that is future-oriented. Even though the pandemic seems to be a short term situation, they are manufacturing PPE and masks because they are looking to not only profit from these now; but also, believe these products will be sought after for a long time. The lesson from this investment in new items is to have the leadership and supplies necessary to pivot a company’s focus to what the consumers need and want in current times. Creating masks and PPE is aiding in TAL Apparel’s finances currently and in the long term. Furthermore, their company is only operating at 30% capacity which is respectful to their employees for their health and safety. We can learn that companies need to plan ahead as much as possible for emergency situations like COVID-19, as CEO Roger Lee views planning as the difference between surviving or bankruptcy.

  3. Question 2: I think the way that TAL Apparel has responded to COVID-19 has been very effective. The way that they were able to pivot their focus and start manufacturing PPE was a smart decision. They already had the resources in line to make this change and were able to do it fast and efficiently. In order to be a successful business it is imperative that you can adapt when needed. Other businesses should be taking note on how they adapted. TAL could have just sat back and watched their profits continue to decrease, instead they chose to be proactive. If a business is not able to do this a quickly it can be detrimental for them.
    Question 5: I found it interesting that TAL Apparel was so prepared for a downturn like this. The CEO stated that they have no worries about their financial status moving forward. This was great planning on behalf of the company. It was so sad during the pandemic to see many businesses having to close down almost immediately because they were not planning for any event like this to happen. Even though no body could have expected what an effect that COVID-19 would have on us, it is still important for a business to be prepared for anything.

    1. I completely agree with you that you were surprised that TAL Apparel was so prepared for a downturn like this. The company already began to shift away and reducing its exposure to China and their manufacturing. I also was so upset that so many businesses around me were closing temporarily or going into bankruptcy. However, it is good to know that companies like TAL Apparel have found alternatives to ensure their success like manufacturing PPE including masks.

  4. Question 2: TAL Apparel took into consideration their forecasted sales in March would be down 50%. They needed to alter their business model to ensure that they would receive revenue. TAL Apparel looked at their manufacturing footprint and decided to close expensive factories permanently. They decided 5 years ago to start this initiative and reduce their exposure with China. TAL Apparel also decided to move to lower cost manufacturing countries like Hong Kong, Thailand, and Vietnam. While the company realized that consumers were buying garments at a slower rate during COVID-19, TAL Apparel made adjustments and began to produce PPE specifically face masks which has driven their revenue since March. The lessons we can learn from their experiences is that companies will begin to make decisions that not only benefit them but the world as well. TAL Apparel company opening up new factories helped keep manufacturing costs low to benefit the company but it also kept the overall price low which benefits the consumers.

    Question 5: Something that I found interesting in the video was how significant of a drop in sales TAL Apparel experienced. They experienced a 30% drop and that was surprising to me because clothing is something essential to society. However, due to COVID-19 I believe garments are seen now as a want more than a need. That is why I found it surprising that TAL Apparel started producing face masks to replace the 30% drop that was occurring. It also made me realize how much society is changing. COVID-19 took so much from people such as jobs, money, and the ability to live without fear. The fact that PPE such as masks will become a long term business further proves how much we have evolved as a nation.

    1. Hailey, I agree that since COVID-19 consumers view shopping for new clothes as more of a want than a need. I wonder if this is related to the rise in sustainability trends that have educated consumers on why buying new clothes can be bad for the environment. Likewise, lots of young people have grown keen on thrift shopping as opposed to buying new. On the other hand, customers might simply have lost interest in garment shopping during the pandemic because of all the quarantining that prevents people from needing to “dress-up.” Consumers are wearing the clothes they already have and may be wearing them consecutively for days at a time because they’re not really going out in public. Also due to COVID, consumers are appreciating family and friends more than they are material goods. These complex times have awakened the notion that we shouldn’t be fixating on trivial accessories, but instead the health of ourselves and loved ones.

      I also like that you mentioned PPE could be a long term business because it kind of provides a safety net for the future if a pandemic were to occur again; this way perhaps people won’t be scrambling for masks and wiping out store shelves if they feel like they’re already prepared.

    2. excellent comment! Just want to add that the impact of COVID-19 has been much worse than even the 2009 world financial crisis (for example, you may check this graph I created: https://shenglufashion.files.wordpress.com/2020/10/11.jpg)

      From the video, I have been also thinking whether COVID-19 has affected relatedly large-size companies (such as TAL) more significantly or small and medium-sized enterprises (SMEs). Somehow, I don’t think all factories would have financial resources like TAL to quickly adjust their production lines and product offers.

  5. 3) Apparel sourcing is changing as a result of COVID-19 through the locations of factories and the careful budgeting of current factories. The CEO of TAL, Roger Lee, says with excess capacity in some locations, TAL has had to close their more expensive factories permanently in order to maintain full utilization of the cheaper ones. Ultimately for TAL, sourcing during the pandemic has warranted revised management of factory locations. Throughout the rest of the industry, I speculate that sourcing for other brands has followed similar trends to that of TAL such that more companies are searching for affordable supply chains because this will help them prioritize efficiently and stay afloat during the pandemic when customers might not be generating enough profit for the brands.

    4) By the same token, TAL and other businesses might consider making decisions for the long term regarding disaster preparedness so that any future obstacles that came as a result of the pandemic can be avoided. In other words, fashion brands should devise a plan for their employees that ensures some form of payment or care package in the event that they would be unable to work for an uncertain period of time. Additionally, companies in the fashion industry are already having to make long term decisions when it comes to supply chain ethics and sourcing responsibly so as to reduce carbon footprints and promote their own products’ longevity. For this reason, I would suggest these brands investigate sustainable sourcing methods and work on improving working conditions. In doing this, companies will last longer in the industry because they’re better geared for a greener future.

    1. Great points, Julia! Two follow-up comments based on your answers: first, you made a good point that apparel companies have shifted from short-term response to COVID-19 to making a long-term strategy for survival in the post-COVID world. The tricky part is adjusting business strategies typically requires new investments (say moving from making suits to making facial masks) or changing the sourcing destinations. However, COVID-19 probably is the worst time to commit to such a new investment because of the financial pressures.

      Second, here is my concern–many small and medium-sized (SME) vendors, particularly in developing countries, are near the tipping point of bankruptcy after months of struggle with the order cancellation, mandatory lockdown measures, and a lack of financial support. The post-covid recovery of the apparel business relies on a capable, stable, and efficient textile and apparel supply chain, in which these SME vendors play a critical role.

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