Tells us how five decades of lavish carpet-making in the Chinese tradition make more than a Chinese luxury brand.
With over fifty years of history to trade on, Tai Ping Carpets is a rarity in greater China. Much of the brand’s legacy mirrors Hong Kong’s fascinating metamorphosis from quaint trading post to British colonial boomtown to the metropolitan lynchpin in China’s ascent to global economic domination.
The story of its founding family also spans an exotic and cosmopolitan era in the Far East which, in a rather unexpected way, neatly complements the path the company has been on ever since its American-born CEO James Kaplan set the luxury brand back on course to become a global enterprise in 2003.
Michael Kadoorie, Tai Ping’s owner and one of Hong Kong’s wealthiest business tycoons, traces his roots back to Iraqi Jews who left Baghdad in the 1700s for Bombay during the time of the British Empire, only to move to Shanghai to found a trade network there before settling in Hong Kong. Now, the Kadoorie family’s rich cross cultural heritage is moving in the other direction – back out of China thanks to one of its company’s smallest subsidiaries.
“What many people don’t know about Tai Ping is that it started as an artisan workshop in 1956 as a way to employ refugees and preserve China’s carpet-making traditions. It was originally a philanthropic organisation, but given the quality of the work produced, it became a luxury business over time,” says Kaplan.
Not long after the Communists took over China, Michael Kadoorie’s father brought some of Shanghai’s best weavers to Hong Kong and began production of hand-made luxury carpets to supply the family’s trophy asset, the Peninsula Hotel, along with other hotels in the region.
Later on, Tai Ping would be kitting out rooms in Buckingham Palace, plush corporate headquarters, and five-star restaurants. But despite the Kadoories’ phenomenal success in their core businesses as both an electricity supplier and hospitality group, Tai Ping’s luxury cache began to languish under its management in the 1990s.
Kaplan says that when he first took the helm, his ambition for Tai Ping was to make it the first truly international Chinese luxury brand but that now he sees things differently.
“I’ve stepped back and realized that where we manufacture our product is second to how we develop the brand globally. There is often the question of, ‘will a Chinese luxury brand work in Europe and the US?’ And I think the answer is yes as long as you maintain the standards of quality and design and customer service that people expect from a luxury brand.”
“ I’ve stepped back and realized that where we manufacture our product is second to how we develop the brand globally ”
“We have been able to grow our business all over the world by highlighting our Chinese heritage, but also by highlighting the luxury and quality of our product. The world has changed; there are many products manufactured in the East that are very high end.”
Kaplan’s three-prong strategy to turn the company around was to invest more in its luxury product assortment; sell off non-core assets and diversify further into the residential carpet market as a launch pad out of Asia. The firm’s specialist residential carpet trade had nearly suffocated under the weight of the commercial machine-made division which had swollen over the years before Kaplan entered the picture.
When he started, 90% of Tai Ping’s sales had come from corporate clients but by last year, thanks to a network of showrooms and aggressive promotions, residential carpet sales had climbed from 10% to 30%. Kaplan expects the proportion to be closer to an even half within a couple years. Some observers have suggested that this was a decisive move for the brand because residential sales helped to absorb the shock of the financial crisis which saw many bulk orders from hotels and commercial developments either put on hold or cancelled.
“The opening of our first US flagship in 2005 has been my proudest achievement with Tai Ping so far. When I began, that was really a focus for us and now we have this beautiful 12,000 square foot showroom in New York – along with nine other showrooms throughout the United States.”
“I think today, for a luxury carpet company like ours, people are being more particular with their selections in terms of things like the fibres that are being used. Whereas in the past during the economic boom, people might have bought rugs that were 100% silk, now they’ll do 50%. For some of our products, people are dialling back a bit. We give our clients the option to use different materials without compromising on quality.”
“ I do think it’s important to look at the definition of luxury and make it more accessible ”
Helping Tai Ping to regain its luxurious lustre was not only a strategic decision but also something very personal for Kaplan, who says that he was immediately hooked by luxury goods from the first purchase he ever made out of college.
“I worked my way through college selling calculators and moved into the electronics industry after graduating. With my first commission check, I bought this Armani suit and remember thinking, ‘Somehow this is going to be my calling.’ I loved the way it felt and I set my sights on the luxury market shortly after that.”
Kaplan then spent fourteen years at home furnishings giant Knoll International, working his way up to become the SVP of sales and marketing.
“At $300 million, it was the single largest division of the company. Selling high-end products like the Mies Van der Rohe Barcelona Chair, for example, to the design community was something I first gained experience with there.”
But despite a “calling” to work in luxury goods, his affinity for beautifully crafted design and the fate of the company he leads today resting on the whims of the ultra affluent, Kaplan believes it is time for the sector to do some soul searching.
“I wouldn’t abandon anything that we’re doing [at Tai Ping], but I do think it’s important to look at the definition of luxury and make it more accessible. I think the notion that luxury means extremely expensive and impossible to get can – and should – be changed. Luxury should mean high quality and unique—not ‘unattainable.’