Full Sail Ahead-David Chu and Nautica

It's late April and in New York's Rockefeller Center a panoply of flags representing a myriad countries wave in the breeze. The glum post-September 11 ambience seems to have all but vanished as pedestrians throng together on streets lined with name brand stores, amongst which Nautica's own brass-fashioned storefront insignia winks silently in the afternoon sunlight, exuding a dignified elegance. Inside the store's bright, high-ceilinged ground floor, customers leisurely explore this year's spring line, and up on the mezzanine level colorful women's swimwear is already on display. Glancing downward from the loft one can make out the circular shape of what in bygone days was the stage of the old Walter Reid Theater, but now furnishes a display surface for a series of trendy jeans. Standing here imagining the flourishing scenes of yesteryear heightens the shopping experience.

Far away from there, in a bustling urban center in Taipei's Tienmu district, a newly refurbished Nautica store housed within an Eslite bookstore is in the midst of a promotional activity. It all makes for quite a busy scene: Young customers exuberantly fly about making their purchases, women pick out children's clothing, and on the other side of the room a middle-aged gent is trying on apparel in front of a full-length mirror with the assistance of a store employee.

Nautica started out making men's casuals. Today, with its firm grasp of market currents, it has attained an enviable position as one of the three leading name brands for men's clothing worldwide. Nautica's sportswear and competition clothes are widely known throughout the US. David Chu is in fact an avid supporter of sporting events.

A young New Yorker

Both refined and dynamic, Nautica's products are highly regarded for their tasteful casualness. At present, there are over 100 Nautica stores worldwide operating in places as disparate as Latin America, Milan, Paris, Hong Kong, and Shanghai. That figure, moreover, does not account for the nearly 3000 department stores that either carry Nautica's casual attire, or the 1700 retailers that sell Nautica jeans.

Most people are undoubtedly unaware of the fact that the man behind this American brand-along with Polo and Tommy Hilfiger one of the three giants in the global menswear market-originally hails from Taiwan, and that at the time of Nautica's inception he was a 29 year-old clothing designer who was wet behind the ears when it came to entrepreneurial matters. But what he lacked in business experience, Chu made up for in enthusiasm.

Chu's family moved to the US when he was 13. Though he loved to draw as a kid, by the time he graduated from high school he had set his sights on studying advertising or architecture. While the young Chu was attending a summer session at New York's Fashion Institute of Technology, a teacher found that his sketches displayed excellent command of proportion and style, and encouraged him to consider studying fashion design. Later, he entered the department of fashion design at that very institute.

Chu returned to Taiwan after graduating college and established a garment trading company with the cooperation of a Taiwanese clothing manufacturer. Initially, the plan was to manufacture clothing in Taiwan to export to the US, but unfortunately, the new company went under after only a year. "Back then people in Taiwan didn't have a grasp of what it meant to design, nor was there much regard for quality. The overriding concerns were quantity and profits," avers Chu, further reflecting that poor timing and lack of experience were the main culprits behind the failure of his first business venture. Nonetheless, the setback helped him to recognize with greater clarity that design was indeed his calling. Upon returning to the US, Chu worked as a designer for several large firms. His desire to found his own company intensified over the ensuing four or five years, during which time he eventually came to realize that only by being his own boss would he be able to give full rein to his interests.

Nautica started out making men's casuals. Today, with its firm grasp of market currents, it has attained an enviable position as one of the three leading name brands for men's clothing worldwide. Nautica's sportswear and competition clothes are widely known throughout the US. David Chu is in fact an avid supporter of sporting events.

Seizing the moment

Chu may well have been guided by youthful audacity, but he still had the acumen to make his move just when the American menswear industry appeared to be stagnant during the early 1980s. When he established his business in 1983 he managed to catch the leisurewear (i.e., t-shirts, polo shirts, and khaki pants) fad that was beginning to sweep through America.

Yeh Le-chang, a lecturer at Shih Chien University's Department of Fashion Design, observes that during the 1970s and 1980s Western societies were largely informed by postmodernism. As a theory, postmodernism challenged and reassessed modernism's predilection for rationality, efficiency, and order. As a style, postmodernism espoused the rejection of traditional authority, advocating in its place the crossing of the traditional boundaries between cultures and style periods. Literature, art, architecture all came to evince a pronounced postmodern flavor. The emergence of a new concept of leisure reflected in everyday apparel also displayed the influence of postmodernism. "Starting in the 1980's, men's apparel was no longer restricted to suits and ties-wearing relaxing sportswear became part and parcel of contemporary life," Yeh notes. It was at that time that brands producing exercise clothing like Lacoste (France), Fila (Italy), and Polo (US) came into prominence and began gaining widespread consumer acceptance.

It was approximately during the same period that the concept of name brands began to take off. The cover story in a 1974 edition of the American periodical Time recounted the founding of the first name brand, Pierre Cardin. The article pointed out that the brand had amassed a fortune by targeting its sales at people of all nations and all walks of life. It was Pierre Cardin's success that ushered in the brand name fever of today.

The years leading up to Chu's establishment of Nautica witnessed a boom in the American economy and the mounting popularity of athletic clothing. Nonetheless, even given such auspicious conditions, success like Chu's is no ordinary feat. As Chu himself points out, the excellence of Nautica's designs and quality were indispensable.

He believed in himself from the very beginning. Not longer after Nautica's inception, he presented a series of six men's clothing designs to three upper-end clothing stores, declaring confidently "this is where our potential customers are." Though previously unfamiliar with Chu's work, one company, New York Barney, ended up purchasing his designs. Knowing that people appreciated his work gave his confidence a tremendous boost, and he was able to deliver on his promises by earning US$70,000 in sales the first year. In order to increase his working capital, he merged with a bathrobe company worth US$20 million called State-O-Maine. Over the course of the next three to four years, Nautica each year achieved annual growth of a factor of two or three, allowing it to quickly recoup its investment.

"Business really blasted off in those first two or three years, leaving us badly understaffed. It wasn't easy to find skilled management personnel, so as a result I became extremely involved in all of the company's departments," recalls Chu. Back in his company's fledgling days-what he would later describe as the single most grueling period in his 20 years in the business-Chu would work 15-hour days, seven days a week, dividing his time between design, promotion, and management. He would even receive phone calls in the middle of the night from creditors at a bank in Hong Kong pressing him to repay his loans.

Nautica's clothing, while plenty chic, also strives for classic elegance. The photo shows the Nautica flagship store, situated in New York's Rockefeller Center.

Form follows function

Nautica won the affections of consumers with an appreciation for quality-made athletic clothing. Customers were first allured by the clothing's colorful vitality and the unaffected simplicity of the design. However, upon further inspection they would discover that the clothing was very practical, as well. From the material and the tailoring work, to the location of the pockets and the adjustable sleeves, all the way down to minute details like the size of the zipper, Nautica's quality was immediately self-evident.

David Chu maintains that functionality is the essence of design, or as he puts it, "form follows function." If a design strives for novelty in such a way that usefulness is impaired, then the design is a failure. Says Chu: "Nautica doesn't try to be modish. For instance, we haven't done anything with Japanese calico, which is currently in vogue." As to the question of how he, a fashion designer, is able to draw inspiration from clothing as unfashionable as military and hunting apparel, he says: "These kinds of clothing aren't made for the sake of appearances. Scrutinizing uniforms designed with specific functional objectives provides a lot of insights, which helps us to be innovative when designing our own products."

"Fashion innovations can occur in many different forms, like function, appearance, or technology," says Chu. He offers synthetic nylon fabric as an example. In ancient times there was no water-repellant, breathable fabric, and now with this technology at our disposal, "we are compelled to find an innovative use for it."

Nautica has always been imbued with a spirit of integration, combining things Western and Eastern, old and new. Perhaps growing up in the US, a country forged by the wedding of a multiplicity of immigrant cultures, has allowed him to grasp the essence of integration. "Californian cuisine is a big melting pot filled with variable influences. There are restaurants with European chefs who combine French cuisine with Asian seasonings, thereby inventing a new kind of cuisine as a result," he explains. Just as cuisine continues to reinvent itself, design is similarly a process of perpetual evolution, and Nautica continues to advance the torch of sartorial innovation.

The word Nautica itself derives from the Latin word for boat. Chu hopes that the nautical tinge in the brand's hallmark will evoke romantic images of the sea. As someone who has lived all his life near the sea and who often vacations in the Caribbean, appropriating the sea as his company's underlying motif reflects more than just his personal interests, but rather mankind's general seaward yearnings. "Why does everyone want to build houses by the ocean? And why is it that beachside real estate is always the most expensive?" he queries rhetorically.

By 1987, Nautica had become a large-scale, stable enterprise that had started to take its development to a new level. First, they set up a company store with which to forge the brand's image. In 1989 Nautica's business revenue fell just shy of $100 million, and, seeking to grow in new directions, the company began to solicit experienced franchisers. That same year Nautica signed a contract with a Japanese company for the manufacture and sale of its branded products in Japan under license, thus reaching a new milestone in terms of brand licensing and international marketing. In 1994 Nautica was introduced into the mainland Chinese market, and in the same year opened retail outlets in Hong Kong and set up a branch office in Taiwan.

His own brand of philosophy

"After we had our own brand, we hoped to achieve a brand effect." Chu has much to say when it comes the management of his brand.

He maintains that the most important aspect of brand management is ensuring that the brand is able to find its own niche. "If the product isn't unique, then there's just no way," he says. Secondly, it is important to be in it for the long haul. A brand might be a hot commodity for two or three years, but keeping the ball rolling for an extended period is really what counts.

"Products must undergo constant change and revision, but the underlying philosophy behind the process remains fundamentally the same: it is the process itself that is an art," elaborates Chu. He points to Picasso as an example. Though he produced a number of celebrated works, one could say that Picasso was himself a painting, and that he embodied a certain spirit, because, as Chu notes, "All it takes is one look to know that it's a Picasso."

Branching out

In the last 20 years, the Nautica line has undergone incessant expansion. Today, there is little related to a life of comfort that Nautica doesn't sell. In addition to the sportswear series that first established its reputation, there is a jeans series, and a series of competition clothes; there are suits, shirts, swimsuits, and pajamas; there are also a whopping 20-30 different kinds of accessories, such as leather goods, wristwatches, glasses, shoes, perfumes, and skin lotions. Five years ago, Chu extended his domain to include household items like furniture, curtains, sheets, and dinnerware.

Given Nautica's abundant and multifarious product line, it would be impossible to ensure quality if they insisted on direct control of all production. At present, in addition to being responsible for overall product design and marketing, Nautica itself directly operates the production of all sportswear and jeans, with the production of other product lines delegated to other manufacturers. This is a strategy that has in fact been favored by many enterprises.

Tsai Su-lee, head of the executive graduate program at the Graduate Institute of Textile and Clothing in the College of Human Ecology at Fu Jen University, has analyzed Nautica's business tactics. Her results demonstrate that understanding core competitiveness, division of labor, and franchising overseas are crucial factors in the company's success.

"An enterprise needs to take care of the things it does best," says Tsai. Though Nautica has reduced its own production department, it nevertheless has made certain to maintain direct control over such pivotal aspects as the selection of materials and placing orders. By doing so, Nautica is able to guarantee quality products, which in turn advances the label's reputation. In addition to cooperating with others in the productional aspects, Nautica also allows its business partners to share in the responsibility of operating the brand in the marketplace. "David Chu recognizes that the whims of the market are as fickle as the tides. One has to be vigilant at all times, because it doesn't take much for everything to change," comments Tsai. Besides allowing Nautica to focus more of its attention on design, delegating out responsibility to others also helps it create strong linkage between production and marketing. Tsai observes how Taiwanese companies, in contrast, would rather invest their time and capital into imitating the work of outside brands than make a long-term effort to develop their own designers. Nautica's experience, she believes, gives us a lot to chew on.

"Nautica was already franchising overseas ten years ago," notes Tsai. Success overseas showed that Nautica possessed international appeal. At the same time, Nautica provided FOB pricing and new product specifications aimed specifically at overseas markets, all of which resulted in bigger profits and increased name brand competitiveness for its overseas franchisees.

David Chu has spent a considerable amount of his time in the last five years focusing on furniture and household products. The revenue Nautica earned from its home collection has rapidly accelerated, even to the point that he anticipates that it will surpass sportswear sales in another three years. "Travel really declined in the aftermath of September 11. The returned emphasis on domesticity provided a boost for sales of our household wares," he says. Apart from its radiant accomplishments in terms of sales, Nautica has also built up credibility in the aesthetic realm. Last year Elle Decor, an American magazine specializing in interior design, ran a feature on Nautica furniture design. In addition to covering David Chu himself, his love of travel and Eastern art and architecture, the magazine also praised Nautica as "redefining the word 'integration' with its blend of Asian form and American comfort and relaxation."

Doing it for the love

Chu's enormous success made it only natural for people to inquire into the methods behind it. He declares that keeping his enthusiasm nourished is more important than getting caught up in success. "I'm always keen to find new perspectives and ways of accomplishing things," he emphasizes. For him, every day is full of challenges.

"It's truly remarkable how David continues to be so modest and driven after all of the success he's had," comments Rebecca Wang, vice president of retailing at Ruentex, Nautica's sales agent in Taiwan. His outstanding commitment to fashion is something she finds inspiring. "His eyes sparkle whenever he discusses Nautica's name brand philosophy," she adds. His enthusiasm is truly contagious. Moreover, Chu's approachability and friendliness towards workers is common knowledge, and many in fact believe that his affable, unaffected style is partly responsible for his success.

How does Chu, still the supervisor of Nautica's designs, keep the creative juices flowing? "Never stop studying and absorbing new things," responds Chu, who in addition to enjoying books and periodicals on history and geography also regards travel as a great way to broaden his perspectives. Research is vital for technical matters, so he spends a considerable amount of time looking into fabric and other materials. "In textiles, materials make all the difference," he says.

In recent years Chu has sought to give back to society by focusing his attention on education. Nautica currently has scholarships and funds installed in New York, Beijing, and Shanghai to help young designers to embark on their careers and move onto the international stage. As a Chinese himself, he has high hopes for young Chinese designers. While touring fine arts institutes in the mainland, he found that while the young designers were bright and talented and possessed finely-honed skills, they were somewhat lacking in terms of creativity and perspective. Chu fervently hopes that the young generation of designers will develop a sense of global consciousness, and that they will stand by their dreams.

As of this year, Nautica has been in existence for 20 years. As Nautica enters its third decade, David Chu plans to continue expansion in the global market, including Europe and the Far East. In terms of products, he also plans to begin producing women's clothing. "Women's clothing holds tremendous potential-I mean, women spend a lot more than men!" he quips. Listening to his confident laughter resounding in the room, there's no doubt that Nautica will soon leave its mark on the world of women's clothing, as well.