Young M. Lee of Dream International says Hong Kong has many advantages as a regional headquarters for the Korean toy manufacturer, a world leader in the industry

When Korean businessman Kyoo Yoon Choi started C&H in 1992 in Hong Kong to take advantage of the SAR's low taxation system, flexible business regulations and its proximity to manufacturing facilities in the Chinese mainland, his vision was clear: "To build a plush toy manufacturing empire second to none".

Over a decade later, C&H was renamed Dream International Limited, Hong Kong's first Korean listed company. It has grown from a small toy manufacturing company to become the world's leading manufacturer, with 139 customers from 13 countries. Strong turnover and orders from entertainment and industry heavyweights such as Warner Brothers, Disney, Bandai and Wal-Mart helped Dream record over 15 per cent rise in profit to HK$114 million (US$14.6 million) for the year ended December 2002.

Dream's managing director and chief financial officer Young M. Lee said that having Hong Kong as the headquarters for its China operations contributed to the company's success. Acknowledging that Hong Kong is a major place for the toy industry, he said: "We wanted recognition, and that is why we chose to list in Hong Kong rather than in Korea. Hong Kong has a sizable capital market, is better for risk management, and there is a free flow of capital, information and goods."

Close to production heartland

Mr Lee further added: "It is close to the mainland where we have eight production factories, and it's also close to Korea where we still have a lot of dealings with our parent company C&H. Hong Kong has good infrastructure and excellent port facilities from where we can ship our goods to the rest of the world." Dream has five factories outside Shanghai and three in Shenzhen. 

Dream, which started with four staff in Hong Kong, has expanded to over 28 and employs 12,000 workers in the mainland.  Mr Lee describes it as a "one-stop shop in manufacturing, marketing, design and product development of plush toys as well as steel and plastic toys".

He said Dream was able to power ahead with good Hong Kong staff to run the mainland operation. "Hong Kong people know more about the mainland than Koreans. They speak the same language as the mainland Chinese and at the same time, they can communicate in English with us." He recalled the difficult early years in the mainland where he had to rely on a small group of Koreans who were bilingual in Putonghua and Korean. "Nowadays, the main problem is finding mainlanders who'll take over the management responsibilities of the firm's operation in China. The local college graduates do not seem interested."

Commitment to expansion

Mr Lee said the owner and founder Mr Choi, who is in his fifties and based in Seoul, is still young and is not satisfied with the current size of the operation. "Right now we have little less than 2 per cent of the global market share. We want to expand so that Dream's share will rise between 5 to 6 per cent."

According to Mr Lee, Phase One was sheer hard work, setting up the company and developing its compatibility and reputation in the market.  Phase Two started with Dream's listing in February 2002 for further expansion of market share. "The next phase will come within four or five years when we achieve our target global market share and will be ready to diversify into related areas such as creating characters through multimedia, computer games, cartoon and animation movies."

Hong Kong has been good to Dream International, said Mr Lee. "We had a failed operation in Sri Lanka when we first started. We looked around the Asia-Pacific region and there were three reasons for picking Hong Kong then - low tax regime, sound financial system, and efficient infrastructure. These are the same three reasons why we will continue to stay in Hong Kong."

Hong Kong, it seems, is a dream come true for the plush toys company.

Related link:
Dream International Limited  www.dream-i.com.hk