The chief executive of one of the world’s largest lingerie manufacturers who makes intimates for Rihanna, Marks and Spencer and H&M is putting his $500mn business up for sale after his children declined to take over the company.
Erik Ryd, a low-profile entrepreneur based in Hong Kong, said his company had capitalised on a pandemic-fuelled comfort clothing surge and was expected to increase revenue by as much as 17 per cent in 2022 to $684mn.
Hop Lun, which manufactures in China, Indonesia and Bangladesh, employs more than 30,000 people and produces 94mn pieces of lingerie a year. The company has 14 factories, including in Indonesia, a preferred destination for US brands and where they do some production for Victoria’s Secret.
“We have rebounded very quickly from Covid . . . we expect next year to grow [revenue] to nearly $700mn,” Ryd said in an interview with the Financial Times.
Ryd said that during the pandemic there was an explosion of new online brands searching for a supplier to manufacture bras, which have up to 20 different components. “It’s a bit of a specialist area, it’s not like making a T-shirt,” he said.
But despite the pandemic success, Ryd, 60, from Sweden, is preparing to put Hop Lun up for sale. “It’s like when you’re getting old, and you have an old house that you have lived in . . . And maybe the kids, either they are not interested in the house, or they cannot handle the house,” he said.
“You want the house to be stable, successful, and go to the next level, but you also want to be part of it.”
Speaking at his office decorated with Scandinavian-style furniture in Lai Chi Kok, in Hong Kong’s rag trade heart of Kowloon, Ryd said that pandemic-related supply chain disruption had been an issue for the company.
He is in the process of identifying sites in Mexico, Morocco and eastern Europe to ensure five to 10 per cent of production can be done closer to retailers in the EU and US.
“I can see the future also maybe to have one or two factories, maybe more near Europe or near the US, to cater for more flexibility, more speed, and also to avoid some of the logistical drama and costs,” Ryd said.
The global lingerie market was worth $72bn in 2020, according to Mordor Intelligence, a market research company.
While Hop Lun’s revenue dipped slightly to $409mn in the first year of the pandemic from $420mn in 2019, sales rose in 2021 to $583mn with the demand for comfortable work-from-home underwear reviving growth.
In 2020, UK retailer Figleaves reported a 40 per cent rise in sales of non-wired bras and bralettes, while NPD Group, a market research firm, said there was a 32 per cent increase in sports bra sales the same year.
“There’s a big change in the demand. So a lot of wire-free, a lot of bralettes, a lot of sports bras,” Ryd said. “We have developed well over Covid.”
Junni Zhang, who works for market research firm Daxue Consulting, said customers had embraced “anti-body shaming” comfortable underwear and activewear.
“More and more female consumers pay attention to fitness activities, such as yoga,” she said. Technavio, a market research firm, listed Hop Lun as one of the world’s main lingerie vendors in a January report.
Ryd has kept a low profile throughout his 30-year career. “[Other companies] have foreigners who work for them but there is always a Chinese boss,” he said. “A big material supplier said ‘Oh, we still wonder who is really behind Hop Lun?’”
Ryd first moved to Hong Kong in the late 1980s with H&M to source intimates. He left to start Hop Lun in 1993, then entered mainland China in 1999 without a local partner and set up a factory in Dongguan, in China’s southern manufacturing heartland. “China at that time, it was just opening up and you can imagine the energy,” he said.
While Hop Lun still has two factories in the southern Chinese provinces of Jiangxi and Guangdong, a larger proportion of their production is moving into south-east Asia as a result of US-China trade tensions and rising wages in China as its economy develops.
“All the sample making, all the details about the fitting, the technical part and the material is actually still done in China,” he said.
“We also have a few emerging Chinese customers, [but] our China production is mainly for [Chinese brands] and some speed orders or some smaller quantity orders.”