A coffee at a self-proclaimed New World Grand Café in London feels apt for a catch-up with Lever Style’s Szeto.
His apparel production company, which is headquartered in Hong Kong continues to go from strength-to-strength, but he says he’s keen to have a production footprint “everywhere” with “more boots on the ground in different continents”.
He admits: “We’re still not there and we are still pan-Asia, so whether we can break out of Pan-Asia depends on whether we’re successful at acquiring companies at the right place and at the right price.”
The future continues to look promising as the company’s results for H1 2025 revealed a profit increase from the same period last year.
He shares that his business “thrives in times of uncertainty,” and there is no doubt that 2025, which has been shaped by Trump’s tariffs, has created lots of uncertainty within the global fashion sector.
Szeto explains his business model is shaped around tackling such uncertainty because it is focused on providing versatility for fashion brands and retailers with varied sourcing options in terms of country of origin and order size: “Flexibility is what people need in uncertain times.”
Szeto describes this current period of uncertainty as a mini version of the Covid pandemic and he used that period to make a series of acquisitions.
Given the current uncertainty could exist for a while longer he says: “We’re cautiously optimistic for the next few years. We’re sitting on two years of earnings in net cash with no debt, so we have the balance sheet to buy things, and bad times is the best time to buy things.”
In terms of what he might be interested in buying, he notes that Lever Style is still underrepresented in athleisure.
“And we also look for acquisition opportunities from a geographical diversification point of view so Türkiye and Portugal for the EU and Peru for the American market.”
China remains part of Lever Style’s sourcing portfolio (around 20 to 25%), but Szeto shares: “It’s not going to zero”. In fact, he says: “We have some international customers that are ramping up production in China because of [growing] fashion sales within the China market itself.
“We supply to [Canadian outerwear brand] Arc’teryx and 40-45% of their sales is in China. [Norwegian outerwear brand] Helly Hanson is increasing in China in a big way. And, Swedish outdoor brand Haglöfs, which is now owned by a private Hong Kong-based equity firm, is trying to build up its China distribution.”
In other words, he says: “For brands that are trying to sell more into China, the production for that is certainly going to be in China.”
Plus, he shares: “If you’re a European brand and not selling in America, it makes sense to produce more in China. American brands are taking production out [of China] so that means there’s more capacity available and it’s cheaper.”
Irrespective of Trump’s tariffs Szeto is of the firm opinion that any country can be attractive one day and unattractive the next.
For this reason, he plans to continue diversifying Lever Style’s production base so his clients are not reliant on any single country being in Donald Trump’s good graces.
He’s also keen to expand his geographical footprint both organically as well as through acquisitions, and notes Lever Style’s entry into Bangladesh came from an acquisition.
Outside of Asia, he sees potential in the garment producing countries he mentioned earlier, such as Türkiye, Portugal and Morocco for Europe and Peru for the US market.
However, he adds: “We want to be everywhere. We want to be in Mexico, we want to be in Canada and we want to be in Egypt. If the right opportunity comes along, we’ll buy something.”
To this point, he shares that he was even looking at a US company based in LA, but the talks fell through.
Szeto believes the focus on fashion sustainability has declined in the US. While in Europe, he observes that it remains higher up the agenda, but even there it has softened a little.
Basically, he says: “When times are difficult, the focus is on how to survive. Sustainability is a nice story to share with consumers, but when push comes to shove, brands focus on survival before sustainability.”
In terms of his own business and its relationship with sustainability, he explains: “We’re here to provide what our customers need, so if they want sustainable fabrics or recycled materials we will provide it. But if they say, they want the conventional option, it’s not our job to tell them otherwise.”
Lever Style is seeing a 10-15% reduction in orders for this fall (autumn) so there is top-line pressure for the latter half of 2025. He suggests the best thing for fashion sourcing executives to do is delay financial commitments on inventory for as long as possible.
He notes that Trump’s decision to end de minimis exemptions worldwide (and not just from China) is going to have an impact on global fashion brands that sell to the US market in the coming months, but it is not yet clear as to when this will come into force.
When pressed for his prediction on the state of fashion sourcing in 2026, he jokes: “Well, nobody’s walking around naked, so people will still be buying clothes”.
But, he adds more seriously: “Whether it will be slow growth or slow contraction or flat, nobody knows.”
He’s confident the fashion brands with innovative business models will continue to take market share, and those that never change will continue to lose out.
He believes innovative companies like ultra-fast fashion retailer Shein will continue to do well. He explains: “Either you have a very good product or you have a very good process, and that process allows you to deliver the right product to the right consumers at the right price when they want it. Shein has mastered this process.”
The winners will also be those that are keeping inventory very low and allowing people to replenish: “By keeping inventory low, you basically have to produce in small batches. You probably pay a bit more for small batch production, but you have a much higher final margin because you don’t have to discount items. Brands can basically react to demand rather than predict what’s going to sell and forecast and then just pray to God that the weather is right.”
In that vein, it frustrates Szeto when fashion brands still try to blame the weather for poor quarterly or annual results. He states: “If it is more rainy than normal, you should sell raincoats, right? If it’s very sunny, you sell short sleeves instead of long sleeves. You have to adapt, and in order to adapt, you need less quantities. If an item sells well, you replenish, replenish, replenish. And if it doesn’t sell well, you’re able to clear out a very relatively small number of units so there’s less discounting.”
He shares that Shein is willing to invest in anything that enables it to delay decision-making until the last moment, which does take it a step apart from the competition. For example, a digital printing factory allows decisions to be made at the last moment, which makes it much quicker, although not cheaper.
The question, he asserts, is: “How do you maximise margin against initial mark-up?”
He concludes that other brands will have to adopt some of these practices as if they keep operating in the same way, they won’t be here in future.
Earlier this year (February), Lever Style reported a 10% increase in FY24 company earnings despite a challenging backdrop with its executive chairman suggesting adaptability, digitalisation, and reduced order sizes would all be critical to the success of its fashion brand clients in 2025.
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“Lever Style’s Szeto: China fashion sourcing still makes sense for Europe” was originally created and published by Just Style, a GlobalData owned brand.
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