{"id":2386,"date":"2016-03-01T16:30:56","date_gmt":"2016-03-01T21:30:56","guid":{"rendered":"https:\/\/www.bu.edu\/questrom-magazine\/?page_id=2386"},"modified":"2019-11-14T10:42:36","modified_gmt":"2019-11-14T15:42:36","slug":"high-ideals-and-profits","status":"publish","type":"page","link":"https:\/\/www.bu.edu\/questrom-magazine\/spring-2016\/high-ideals-and-profits\/","title":{"rendered":"High Ideals and Profits"},"content":{"rendered":"

Her story is the perfect response to those questioning whether ethics equals earnings. Fashion designer Chan Luu\u2019s brand is built on a commitment to giving women in the developing world fair wages, good work, and life skills. Her return on investment has been 14 percent year-on-year growth for a solid decade and a global presence in more than 2,000 stores. And the creation of hundreds of safe, well-paid jobs in countries where a decent wage can be hard to find. While many retailers still stock shelves with sweatshop-produced clothes\u2014Business Insider<\/em> claims \u201cethically made clothes make up a tiny fraction of 1 percent of the overall $1 trillion global fashion industry\u201d\u2014Luu (BSBA\u201975) is showing there\u2019s an alternative: a fashion line that\u2019s chic, principled, and profitable.<\/p>\n

A selection of silver pendants on leather cords, manufactured at the factory in Vietnam that she personally selected for its fair labor practices, hangs from Chan Luu\u2019s neck. Her wrists are stacked with bracelets from her eponymous fashion line.<\/p>\n

She listens carefully as, one by one, Questrom students sit down with her for a coveted half-hour of her time to pitch their business ideas\u2014apps to safely connect students as they sell and trade clothing; games to help sick children manage their medications; a healthful superfood alternative to fast snacks. After each presentation, she asks the same question:<\/p>\n

\u201cHow will you make money?\u201d<\/p>\n

Though she\u2019s been lauded in circles as diverse as Good Morning America<\/em><\/a> and the United Nations<\/a> for championing ethical fashion best practices, Luu (BSBA\u201975) has achieved her success by never losing sight of the first principle of business: without profit, you don\u2019t exist. She learned the lesson early, finishing her undergraduate education at Boston University with less than $500 to her name, and starting her fashion career as a retail worker. She built her design prowess by working in every facet of the industry, and today is at the head of Chan Luu, Inc.<\/a>, a global brand sold in 2,000 retailers around the world and a United Nations partner in bringing fashion work opportunities to developing countries. Luu\u2019s support of workers isn\u2019t just humane practice, it\u2019s proven to be a smart public persona that\u2019s helped vault her to the top of the marketplace.<\/p>\n

Luu met\u00a0with\u00a0the BU Fashion and Retail Association in September 2015. Among the students\u00a0attending were Jessica Lohr (BSBA\u201917) (right). Photo by Cydney Scott<\/p><\/div>\n

\u201cWhen you have a product, you have a commodity,\u201d she says. \u201cWhen you have a brand, you have a business.\u201d<\/p>\n

Growing up, Luu didn\u2019t dream of pursuing a career in industry. She was interested in art. Born and raised in Nha Trang, Vietnam, Luu was part of a privileged family that pulled strings\u2014she still doesn\u2019t know how\u2014to get her out of the war-torn country in 1972. Once she\u2019d arrived in the United States, they insisted she study business so she could earn a comfortable living; Luu obeyed, though she fast-tracked her classes to graduate in three years instead of four. By her final semester of college, the Vietnam War ended, and Luu was cut off from her parents and her family\u2019s financial support by the new embargoes.<\/p>\n

When she graduated in spring 1975, she used her last remaining cash to move to Los Angeles, and took a job in a clothing store. She loved the idea of drawing and design, but was aware of her shortcomings\u2014she had no work history, no fashion background, and no real understanding of how the industry functioned. So after her first education, she embarked on her second: a hands-on experience of retail fashion, from the ground up. For nearly two decades, Luu taught herself the business of fashion, working as a salesperson, a manufacturer\u2019s assistant, a private shopper, and a fashion buyer. The work gave her a solid footing that served her when she launched her own brand, and allowed her to make mistakes without affecting her own financial solvency.<\/p>\n

\u201cI learned at somebody else\u2019s expense,\u201d she says. \u201cIt reinforced each step of my career, because I made fewer mistakes in my own business practice.\u201d<\/p>\n

In 1983, she parlayed the experience and connections into her own brick-and-mortar store, selling women\u2019s clothing and accessories. After years of struggle, she was finally making a living in the industry she\u2019d long admired. And yet she still didn\u2019t feel secure. \u201cI was earning money, but retail didn\u2019t give me a future,\u201d she says. \u201cI wanted to go further.\u201d<\/p>\n

In 1996, Luu closed her store and began a career in jewelry design by creating a studio in her garage. \u201cI designed, and I answered the phone. I knew every facet of my business, from top to bottom,\u201d she says. She later found a studio space, hired a few employees, and, with a collection in hand, went to New York to find a showroom to represent her. A high-end retailer in SoHo called her in and said her work could generate $2 million in sales annually.<\/p>\n

\u201cI had a poker face,\u201d Luu recalls. \u201cThen I walked out, called my boyfriend, and said, \u2018Two frickin\u2019 million!\u2019\u201d<\/p>\n

The Chan Luu brand exploded. The showroom helped place her designs on celebrities and in fashion magazines. When actress Jennifer Aniston<\/a> was photographed at a fashion show wearing one of Luu\u2019s necklaces, demand for the piece, a painted seashell pendant, became so high that the price eventually doubled. After starting at $18, items in the collection reached $42; some half-a-million of them flew off shelves. Today, her signature piece is the wrap bracelet<\/a>, multiple rows of tightly-packed beads\u2014sometimes hundreds of them\u2014woven into leather. She expanded to a clothing line in 2004, and opened her own showrooms in Los Angeles and New York in 2004 and 2005, respectively. Chief Financial Officer Dennis Dunn estimates that average annual revenues have grown 14 percent each year for the past decade.<\/p>\n

Luu credits her success to two factors: everything she knew, and everything she didn\u2019t know. Take manufacturing: her experience in the industry had already taught her that domestic manufacturing was safe and productive, but financially out of reach for a small design business. So she sought international manufacturers that were willing to follow United Nations labor standards for equitable wages, and gave enough business to incentivize them to honor her company\u2019s commitment to being an ethical fashion line that supports good working conditions and a fair supply chain. \u201cIt\u2019s how you build loyalty and trust,\u201d she says. \u201cI pick the people I want to do business with, and I give them enough business so that they stand on their heads for me. They can\u2019t fail me.\u201d Luu\u2019s overseas partners help her manufacture handicrafts in India, jewelry in Vietnam, and cashmere in Mongolia. The company reports that its overseas production efforts provide jobs for several hundred women.<\/p>\n

\n

\u201cIt\u2019s up to you to decide whether you support what I do or you don\u2019t. The people who make this get paid fairly and have a safe place to work.<\/span> And some people buy my jewelry only because they love it, but other people do care about those things, and they buy and then they campaign for me.\u201d<\/h3>\n<\/div>\n

And when it came to everything she didn\u2019t know, Luu outsourced. Early on, she looked for a major money management firm to help with financial planning; when they told her she was too small to be a client, she assured them she wouldn\u2019t be small for long. (It took her on.) Later, when she found that managing the business was leaving her little time to design, she hired a vice president of sales and a chief operating officer.<\/p>\n

Chan Luu, Inc., is now nearly 20 years old, but Luu says the fashion industry keeps her too engaged to retire. The old models of trade shows and brick-and-mortar stores are changing\u2014Luu no longer has any retail stores; she focuses mainly on direct online sales. She\u2019s not interested in chasing every new model, however. Luu believes the preponderance of low-cost, on-trend clothing retailers, known in the industry as \u201cfast fashion,\u201d is a threat to designers at all ends of the price spectrum. \u201cI can in no way compete with that,\u201d Luu says. \u201cA skirt they\u2019re selling for $68 would cost me $198, wholesale, to make. But there\u2019s a reason it\u2019s so cheap in the marketplace, and it\u2019s because we don\u2019t go to the factory and see if they\u2019re in compliance with labor rules. I make less profit, but I sleep at night. And that\u2019s the line I walk for my business.\u201d<\/p>\n

Anyone can go out and buy an inexpensive knockoff of her signature wrap bracelet, she says, but people who are loyal to the Chan Luu brand appreciate more than its style. They like the story behind the Haiti collection, which uses beads crafted from recycled magazines by earthquake survivors. They like her partnership with the United Nations Ethical Fashion Initiative<\/a>, which aims to use \u201cfashion as a vehicle for development\u201d and also collaborates with designers such as Stella McCartney<\/a> and Sass & Bide<\/a> to teach handiwork skills to women in the developing world. Women like Sophia, a Kenyan grandmother responsible for feeding, clothing, and paying for the education of 10 people in her family. Before she earned a sustainable wage making Luu\u2019s wrap bracelets, Sophia reportedly scraped a subsistence living dishing out porridge in a Nairobi slum. According to 2013\/14 figures from the International Trade Centre<\/a> (a joint World Trade Organization and UN agency) provided by Chan Luu, Inc., the company has created 782 jobs in Kenya alone\u201498 percent of them going to women. For every product sold from her Ethical Fashion Initiative line<\/a>, Luu also donates a pair of glasses to the Reading Glass Project<\/a>, which hand delivers them to artisans suffering from age-related presbyopia, a condition that impairs the ability to perform detailed, close-up work.<\/p>\n

Luu\u2019s customers understand the difference, she says, between a product and a brand.<\/p>\n

\u201cIt\u2019s up to you to decide whether you support what I do or you don\u2019t,\u201d she says. \u201cThe people who make this get paid fairly and have a safe place to work. And some people buy my jewelry only because they love it, but other people do care about those things, and they buy and then they campaign for me.\u201d Celebrity fans known for their activism\u2014model and UN Environment Programme Ambassador Gisele B\u00fcndchen, actress and UN Women Goodwill Ambassador Emma Watson<\/a>\u2014are happy to be snapped in public sporting Luu\u2019s designs.<\/p>\n

In 2014, Luu sold the majority of her company to DRC Capital<\/a>, a Japanese investment firm. She retains a 30 percent stake in the business, and remains its chief executive officer and designer. She has some reservations, she confesses, about no longer being the majority owner of the company that bears her name, but she\u2019s happy with the decision, which will help her expand the brand throughout Asia, considered the fastest-growing market for mid-market and luxury fashion. Japan, she says, has some of the highest manufacturing standards in the world, so she\u2019s not concerned about a conflict of values with the new ownership. And, eventually, she says, every businesswoman needs to answer the question she posed to the entrepreneurs at Questrom: how will you make money?<\/p>\n

\u201cIf there\u2019s no profit, there\u2019s no business, and at some point it\u2019s smart to monetize,\u201d Luu says. \u201cI found the right partner, someone who\u2019s comfortable with the culture of my practice, and I went for it. I\u2019m very happy.\u201d<\/p>\n

Interested in sharing your expertise with Questrom students? Connect with us.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Her story is the perfect response to those questioning whether ethics equals earnings. Fashion designer Chan Luu\u2019s brand is built on a commitment to giving women in the developing world fair wages, good work, and life skills. 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