Diversify your Business Model for a Better Planet - with Anderson Lee

Today we're here for another Pyro Apparel podcast, and I have the pleasure of welcoming Anderson Lee from the Sustainable Apparel Coalition.

It's my pleasure, thank you.

Welcome, welcome. Thanks for coming and joining us today, Anderson. Um, I was really interested actually to speak to you about obviously sustainability In the fashion industry, it seems to be a matter that's really close to your heart. I've seen all of the different boards that you're on, the memberships, all of the different councils. I'm really interested to know at what point in your life did you start realizing that this is going to be your— it seems to be the main thing in your career so far. Is that correct?

Well, for the lack of a better term, you know, it kind of flow in the family.

Yeah. Okay.

Because I, we, Our background started in industrial engineering and chemical engineering.

Oh, really?

So I'm actually a third generation owner of a tier 2 factory, which has, of course, transformed over the years. We've been around for 60-some years. We started as a coating company.

Yeah.

And then we do— from coating, we start doing lamination. So we were a processor for fabrics.

So how long has this been going on for?

Since 1950-something, '54.

Oh, wow.

Yeah. So once I finally came on board, joined the family business 12 years ago, that's when I also start to work into my way into joining all the industry group, learn, get better, and then, you know, finally invited into the boards and then, you know, become chairman as well, and some of them and all that. So, but during this journey, you know, it's about, you know, sharing knowledge and sharing also your own economy, meaning things that you paid and put your time into it and how you can share it with other people in the industry so we can actually collaborate and look for new solutions. Give you a few examples. So in today's standard, our plastic bottle program has gone way, way, way more ahead. Okay. So for example, since 2008 or 2009, I forgot, I lost track of time. So we are— we have already done our lifecycle assessment. Which is a, you know, 18-month project to look at the non-renewable resources, uh, uh, com— comparison to, you know, okay, a virgin product versus, you know, so virgin product, for example, is what they call non-renewable resources, okay, the usage of non-renewable resources, okay. Other things that people always look at is like greenhouse gas, water usage, chemical discharge, you know, all that. So we start developing a whole bunch of KPIs, okay, that we should look at. Okay. And then in Hong Kong, I work along with some of my friends, you know, to work on a number of initiatives. For example, with Worldwide Fund, we started the Low Carbon Manufacturing Program. We did not reinvent the wheel. There are some standards that's been developed through the LCMP with Worldwide Fund, but we just want one for textile. Okay. So we've developed a new baseline that can allow us to really measure against ourselves. And then we push for— and then a few of us together, we launched the first GRI report for textile industry. Okay.

For those who don't know, what is the GRI?

Global Reporting Initiative. So it's like a standard that you follow on your reporting so you can actually share your metrics. Share your KPIs, then we can really look at, um, to be comparable among the industry. Because without those, there's honestly no way, uh, UN can really come up with like SDGs in a way. Of course, there are many different ways, but then they cannot engage our industry and we cannot talk too. So in today's world and sustainability, we— you may heard of terms like science-based target, you know, United Nations Sustainable Development Goals. So of course, there are some something more on social side too, like you know, human rights, you know, gender inequality, that kind of things. But then there are many other things. So it's about engaging the community after all. Okay. So, so in today's world, plastic not only help us to measure certain things, there's just one part. Okay. But in SAC, for example, Sustainable Para-Collision, it's a work that I started all the way back in 11 years ago. It's called the Eco-Index under the Outdoor Industry Association.

Okay.

At which we started that as the Eco-Index. So we spent a few years into agreeing to a standard to walk away from what we call audit fatigue. Rather than do that, we do very proper self-assessment with validation and all that. So we're able to come up with a standard where we can really in a way, generate our own data that we truly take ownership on. You've probably heard of a lot of people talking about data, but that doesn't mean they know how to manage their data or they know what to understand what those data mean to them. Yeah. And what those data mean to somebody where they can add value. So there's a lot of, you know, data mining, data management. So It took us many years to go through that, to understand how we can really work together. And let me tell you something, how Plastic work these days. For example, there's one project that we are also involved in. It's like this. We have people that help us make transaction more, um, how to say that, I shouldn't use the word flawless, but more seamless in a way, to try to create a good platform to trade plastic bottle before they go to the ocean. In other words, it's stopping the plastic into going to the ocean. But how do we do that? Okay, there are a lot of third world, or we should call even Fourth world these days, countries where, you know, there's plastic, nowhere to put it, they put it to the ocean or put in a landfill. So instead of trying to just buy from them, and even if you buy, does that money really benefit the people that work to collect them? Not always. They still, you know, so, and if you try to buy so much into that economy on buying out a waste that's supposedly not part of their trade policy to export something that has already been taxed. That's a lot of issue. And then there are still also, you know, a currency issue, okay? If all of a sudden I use US dollar or euro to go into Philippines to buy plastic bottle to create this supposedly a new economy, you don't know what the amount of Hong Kong dollar or US dollar or renminbi or whatever comes in and you don't know whether that would actually kill the economy. There's a risk, I'm not saying it would happen. So thanks to technology, and thanks to the concept of carbon trading, it inspired us to buy clean water and renewable technology and put them into places like Philippines. So in other words, You give me bottle, I give you energy. I give you clean energy and I give you clean water. Fair enough.

It's an amazing thing and it's so—

I did not do it myself, okay? I gave the idea to my fiber partner and I asked and I introduced them to the right NGOs because it's not something that you can do it by a company. It's a great commercial idea, but maybe it's great commercial later, but let's try to tackle the situation first. So a lot— I mean, the problem with the whole flat world management globalization is most of the survivors become so practical and cutthroat because they're trained that way, because they have almost no margin. But the fact that they survive made them very strong too. They live to survive, okay? But sometimes in Chinese, we have a saying that these people become so poor that they only have money now. And it's true, because there's no more humanity touch, there's no more thinking, there's no more collaboration. And sometimes they, if they can be a little wiser and be more embracing, maybe they will give them more business. So we try to walk away from all that and we say, okay, I mean, if we just do business as usual again, as usual. Either you buy my company or I buy your company, or we both retire and go to another cheaper place. Say we all move to Phuket, it's cheaper, or, you know, somewhere in Taichung, you know, somewhere, right? Yeah, in Vietnam.

It sounds all right to me.

I'm right, I live in London, so, you know, or you use your whatever money you have left and buy some property in another area where we appreciate it and collect rent, and then you spend money in another place, right?

Yeah, but what if you're always just polluting and where—

yeah, yeah, the water will still come to you one day, right? So, so I mean, if you, if you have trained yourself and have somehow acquired a whole bunch of knowledge over the years, I mean, that this become a greater mission and it's, it's still a good business. Okay, it will— business will come because you learn something. Okay, and you will meet the right people. I mean, gone of the days of just doing what is right to make money. But now you— we have more, more choices. And I think we've been trying to— in a lot of different NGOs, we are pushing, you know, real creativity and real architecture. And I don't mean by just design, but real architecture. Architecture means you take more people to really, you know, to create disruption, to change the way things are doing. And in fact, in a way, I have to do that because if you— I mean, thankfully, if you look at the crowd here, we have pretty young people. Young, I mean, is in today's world young. They're not actually very young, but they have young in mindset and they're not that old. But it's an aging industry. Most of the people in the management are not young. And if by, by, by the '90s standard, most of them supposed to have retired by now. They are extending their career, maybe because things are very expensive, or maybe they love their job. I don't know. Who knows? Okay. But most of them are extending it by, you know, 5, 10 years easy. Okay. And And the thing is, but there is a big obscurity on the understanding of the millennials. Millennials are not young, are not that young anymore. They're now 18 years old. So how can we actually rely on them or educate them or work with them? Or I mean, they have a very different mentality. So, and we have to find a way to really engage with them. And I mean, whatever we do right now in sustainability is the greatest language to engage with them in a way.

The only way is to lead by example. And I'm impressed by what you've done because it seems like you've chosen the, the goal of doing what you think is right first. And letting the business take care of itself second. Because if you do what you think is right for what you believe in—

Well, it's trying to acquire different knowledge first. Yeah. Because, okay, DDD, I mean, in the '80s, there's not many changes you can do. It's driven by the market trends or the leaders, they just ask you to do, to produce and produce because there's a big B2B market.

Yeah.

And there's not no computers. So I mean, not a whole lot, put it this way. Okay. It's not strong. Okay. And I mean, and the communication is different. You're talking about using fax machine, but is a whole lot of communication really great? I am not going to put any judgment on that. But what I'm trying to say is our generation has gone through quite a lot of changes and we learned a whole lot. So my key word is the, the ability to empower the younger generation on trying to empower what they're good at that we don't have, and to empower them also with our resources because It's amazing on how much things have appreciate, I mean in value, over the past 20 years. And that's what I mean by we are, we are on average not poor, and it's all in our pocket. But whether or not we want to spend that money from the pocket, whether financially to empower the young ones or to support them with our knowledge and our time, is our call. Yeah, but if we just try to live in our own lives and think about how we can make the last bucket of money to— instead of retiring, you know, one way, to retire more lavishly, that doesn't help. Okay.

There's nothing lavish about a polluted world and, you know, a big ocean filled with plastic and— exactly, you know, coral reefs dying out. There's nothing lavish about this.

I mean, give you one example. Um, uh, last year, last May, SEC, we had our conference in Bangalore and, um So it's right in Mumbai. So, um, what happened is, um, our hotel is sit right at the edge of so-called the modernity, post-modernity. Yeah, postmodern world and the rest. So at 10 at night, usually at that time, they, you know, the wind kind of comes in. You know, kabluin. So in your hotel would flash a little bit and then the power came back, but then the rest of the world is pitch black. And you start seeing, you know, the, the roads start flooding. But behind our hotel, our hotel is right at the edge, you know, it's just, it's a Marriott, and behind there's the party, you know. Loud music and all that. But you know, it's, it's quite a scene that you don't like to see. That, you know, that— I mean, this can, this can one day be either Hong Kong Island or Kowloon Peninsula if things continue that way. Yeah, you know, it's just that one side is just already messed up. Yeah, that you cannot, you know, uh, fix it anymore. And it's no different from a poor and the rich. It's no different. It becomes a reality that it's not just about, okay, the rich one can— okay, now the analogy I try to say is the rich part can still fix something in front if they try to do it now, or else It might be zombie on the other side.

Yeah, I mean, that's it, isn't it? You can, you can watch and do nothing in your ivory tower.

Yeah, but the thing is, if we don't try to reinvest our so-called the money, which of course comes by inflation, is overprinted anywhere in the world. If we don't even try to use that so-called economy to fix that future, there's nothing we can do, you know.

I see how you're so passionate about it.

And, um, and we are by default, coming back to commercial side, business side, the second most polluted industry in the world, and it will become the first very soon. You know why? Because oil industry is exiting. They become the largest owner of renewable energy, renewable companies.

Yeah, they're done.

Smart, right?

Of course. So what is the apparel industry going to do?

So, hey, but what are they doing? They are transforming their asset to buy and change the right thing. Okay, you can call them change. I'm trying to keep it positive. Okay, yes, but when they are, I mean, The thing is, who the hell said that an oil company cannot buy a renewable energy company? It's a business, right?

Makes perfect sense to me.

But it also sounds good to them. You know, it's a business, you know, it's become the next business for, it's the next milestone for them. You know, I mean, the thing is, is, I mean, people always get the wrong focal point and then be so stuck up on it. It's like, oh, Tesla don't make money, who cares? He is smart enough to pick up a Panasonic battery and make it sound like it's his own, and then took over the UMI, which is formerly a Toyota factory in Fremont, and turn it into his own, and then hire a whole bunch of people. And now he become a great car company that can sell battery, or just sell the battery, not just the car. Or the car can also be collecting energy or using energy and be exchanging in the grid. Very smart. And even that grid can empower— that grid can power the Hyperloop as well.

Yeah, well, and then he just gave that idea to a load of other people. But bringing it back to the fashion industry, what is— like how the oil companies are buying renewable energy companies, and they're transforming in that way, like you said. What is the parallel opportunity for the apparel industry? That's, that's what I'd like to finish on today is, is what is the apparel industry's renewable energy company, if you see what I mean?

Quite frankly, we— I think a lot of us have learned, or it's not that difficult to master what it means to be more environmentally friendly. It's a choice already. It's no longer rocket science. You know, it's not difficult to pick up to be more environmentally friendly. However, you definitely heard a lot about automation. I'm not saying automation is necessary, but it's useful. But are our mindsets really transforming? On the way we do business. So yes, I mean, today earlier Linh was mentioning about, you know, in her head, her brand may not be interested in owning factories to run automation. It's not really their position to do that. However, she said she would expect some of their key partners, the factories, to become automated. So since when we went from talking about that picture to now— I'm not trying to pick on her, she's a good friend of mine— but to expect—

I'm sure she won't take it personally.

So, so, I mean, but, but it can become a more open dialogue. But I think this can open the dialogue to actually speak, okay, So how can we picture that scene? If— what does it mean if they are empowering us to become these kind of company? What can they offer to us? What is the need? What is the— what is it in for each of us? Okay. And how can we work differently if we become a partner? So for a while, people have been kind of like, mascarizing and imagine, oh, this is how it looks, you know, if things are, are running automation, okay, how great, blah blah blah, and all that, you know, you can embrace it. But, but then, but then it never come in a statement where, okay, well, we expect you guys to be doing it. So I mean, if people really take this line seriously— and okay, sorry, I'm trying to pick on it.

It's okay.

So if this is coming from someone really, really important industry Yeah, you know, say, you know, one company that owns almost all of us. Okay, this become a very serious— this can be a very serious statement. Does this mean that we all have to wait for this statement one day to say, oh my, you know, now we all try to do automation and then we figure out, oh, okay, actually we can only do semi-automation, automation doesn't really work for a lot of things. We have to spin our head differently, you know, when, when things are already kind of sitting there and try to think differently, but also in the role of the whole supply chain. Okay, is this a sourcing mindset? Is sourcing still should run the way it used to be? Okay, if we get all the market analytics directly from, from buying a subscriber subscribed data Say, for example, Kung Fu Data is very successful in China. So imagine, Tizen, you know, start running something different. They start selling data instead of trying to run into another Tmall or whatever. Okay. You know, I mean, sorry, to go into a joint, to join into the whole Alibaba part. Okay.

Okay.

Yeah. Yeah. So imagine someone is selling those data, then I think with our automation able to serve different customers in a different variety and having the industry data, do we still need a sourcing department from a brand to actually tell us what to do? I'm just trying to give you an extreme, extreme Yeah, thinking. I may think that, yeah, of course I would, but do you think I can change a millennial to think this way?

I think you see what I'm saying. Yeah, it's a great point. And I think this is—

so you have to think this way. I'm not saying like I try to think this way, but, but you have to think for a millennial, okay? 10 years later, I'll be almost 50-year-old, okay? I'm almost 40 now, so Then, but then the millennial will be €30. And the idea is if the millennial wearing the hat from a retailer will of course think, yeah, I'm giving you a chance to continue business with me if you go fully automated. Since you don't have automated, I give you 2 more years, trying to be kind. Okay, but you have to do that. Okay, that's the nicest way to do it already. Okay, but the idea is, okay, but if, if now, you know, a manufacturer now going to 70 and 80 years in the fourth generation, you know, now running by fourth generation millennial, would be thinking like, okay, if I can buy the data from the, you know, they would be like, okay, um, Maybe I invest into money into as a distributor, so I know the data myself, or I buy data from some— I'm just making this up. Okay.

Yeah, but the thing is, is that you're trying to make it up from your perspective, right? Yeah, but that millennial who's then 30 years old, if he is a forward-thinking millennial, he's going to be trying to think like a 20-year-old because he— do you understand?

Yes, and he never experienced the 1980s and 1990s and the 2000s of how collaboration at many different levels still good. You don't try to be cutthroat and to burn bridges, okay? I mean, there's reason why people, certain people and certain role, because they are doing better in that role, okay? If you ask me to run a retail, I may not do well in it, okay? Because you have to build it, and each company have built up their own path. So, but then from a very linear standpoint, linear thinking in, you know, for a millennial, okay, don't mean to pinpoint, but, you know, they will be thinking that why the hell do I need to sell to them? I do it myself. But you have also seen a lot of people try to run their own brand and it's just, you know, it's a disaster. So we have to kind of preserve, you know, we have to find what is good in certain people. So my keyword again is empowerment, is to find a way to use your influence and what you have and what you got to empower someone that has something that you don't have and to try to work together differently. And somehow sustainability has always been working. It's the best catalyst because it's nothing wrong. It embraces technology, it embraces innovation, and it works. Otherwise, everything else is only a hype, it's a belief. And what is it? And to me, I have enough history to support that. And I don't find any good reason to just focus on any fast money, to not to continue when I have a good history. And a good legacy. So I'm not trying to ride on something, but we have built it, we have earned it. And so, and when this has not been an interesting topic to many, I find it very fascinating to learn new things and it makes me different. It makes me, it helps me to make decision a lot quicker and I make decision that people have not made before.

Well, Anderson, thank you so much for your time today. It's really been a fascinating discussion for me, and I think your passion for this particular area within fashion apparel, footwear, textiles, the whole industries joining together really comes through, and I wish you every success in the future. [FOREIGN LANGUAGE]