October is Small Business Month in Canada – a time to recognize and honour Canada’s entrepreneurs and their businesses that contribute so much to the economy, character and communities of this country.
There are over one million small businesses in Canada, who contribute about 50 percent of the national GDP and employ over 70 percent of the total private labour force. Each business is unique and deserves to be supported and celebrated – this year more than ever.
Kathy Cheng, CEO and owner of Redwood Classics, was interviewed in one of Tony Chapman’s recent #SmallBusinessMatters podcasts. Kathy truly represents the character of small business owners in Canada – resilient, passionate, determined, ambitious and hopeful. She shared her extraordinary story with Tony Chapman and Canadian listeners.
Redwood Classics: The Fairytale Beginning
Kathy Cheng emigrated from Hong Kong to Canada when she was four years old. Her family came with nothing and didn’t speak a word of English. Her mom was a seamstress and her dad worked three jobs to make ends meet.With a strong entrepreneurial spirit and a heavy dose of courage, Kathy’s father went from juggling several jobs to becoming an entrepreneur. In 1988, he founded his clothing manufacturing business – WS & Company Ltd. – with his sister and brother. In the early days, they had five people and ten machines. Fast forward to the late nineties and they were employing close to 500 people and were established as one of the key manufacturers of Canadian and U.S. brand names and private label businesses.
External Forces Challenge Their Resilience
In 2001, China joined the World Trade Organization and almost overnight the family business was fighting for survival. “It becomes more and more challenging to compete when there are countries producing apparel cents to a dollar in terms of labour costs,” says Cheng. Then, seven years later, the company and others crashed into a great recession. Kathy’s family almost lost the business.“The demand and the business landscape for domestic production was not necessarily there to support the scale of the business we had scaled to,” she says.But Kathy’s father was not yet ready to give up the fight, and instead of throwing in the towel he asked Kathy to be his business partner. While her initial reaction was not to get involved, she couldn’t turn it down.“I remember going and being on the production floor amongst the humming of the machines,” she says. “And the idea of not having the factory there anymore … as I’m standing there I feel this wave of emotion.” It was her a-ha moment, where she said to herself “I need to do this.”
A Humble Restructure and Renewed Focus
Kathy and her father restructured to forty people and moved back into one of the factories they had outgrown years before. While many textile companies had folded, Kathy and her father instead focused on their key differentiator: Made in Canada. While they were fighting fast fashion (and retailers that changed product line-ups weekly – and cheaply), the Cheng family focused on quality, lasting fashion. They became niche players in a very niche market.And in the last eleven years, they have tripled their headcount, their plant operating space and their top line. They also started selling directly to retailers under their Redwood Classics brand.
What’s Next for Redwood Classics?
Three experts joined the podcast to provide thoughts and advice for Kathy – and for all of us – to help get small business owners get to where they need and deserve to go.
Lori Darlington, VP, Small Business & Strategic Partnerships, RBC
David Kincaid, Founder & Managing Partner, Level5 Strategy
Jeanne Beker, Style Editor at TSC, Author, Keynote Speaker, Freelance Journalist, Creative Director
Here’s what Kathy learned to help move her business forward:
Find a way to separate from the pack. Lori Darlington confirmed how the Made in Canada element is a great differentiator for Redwood Classics, and suggested Kathy lean into that uniqueness – particularly as it’s an important consideration for Canadian shoppers today.
Define your vision. David Kincaid believes there is a very human element to Kathy’s business, and feels there is a great opportunity to create a brand – not just to be a manufacturer. To start, she must answer the questions: What business are you in? And why? By peeling back the onion and getting to the essence of the brand, she can create something really special.
Give the brand an identity. Jeanne Beker feels the story behind Redwood Classics is strong, emotional and compelling – but that needs to shine through in the brand’s personality. “Give people a reason to come back to the brand,” she advises. She also suggested finding ways to give it an edge and make it newsworthy.
Kathy Cheng, like other business owners, is looking for ways to move her business forward and seize its potential. With the help of Canadian business leaders and supporters, the possibilities are boundless.
For other stories about the pioneering journey of small business owners in Canada, tune in to the #SmallBusinessMatters series.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
