Just last week, I was talking about the South African textile industry, and how it had collapsed under the pressure of global competition, so I found this interview especially interesting. In the interview, former fund manager and private equity specialist Tracey Chiappini Young talks about her new venture Taunina, a company that has South Africa seamstresses producing unique handcrafted teddy bears for sale as luxury goods. While the company is, of itself, an interesting thing and a great story of empowerment and upliftment, I was especially interested to note Chiappini Young’s comments on the South African textile industry. In particular, I was struck by her argument that, if South Africa does plan to become a centre for design and style, a domestic textile business is essential to ensure supply chain efficiency. In fact, she argues that it would be more expensive – in terms of complex supply chain management and reduced flexibility – to import textiles than it would be to make them domestically. An interesting argument. – FD
ALEC HOGG: Tracy Chiappini Young, Co-founder and CEO of Taunina Sustainable Luxury Lifestyle Brand (there’s a mouthful for you), is creating employment in the country through seamstresses producing toys, which are going into the most exclusive toy shops in the world. Tracey, it’s so good to have you on the program. I think many of our viewers will recognise you for your past involvement in the financial services sector. When did you give up analysing companies and decide to start growing employment?
TRACEY CHIAPPINI YOUNG:  Thanks Alec, I left Asset Management in 2004 and then I was involved in setting up one of our first broad based black economic empowerment private equity funds. I worked on that for five to six years, doing the deals and building a fund, which essentially, was funding university for disadvantaged children. In 2011, I looked at ways that I could build sustainability but at the same time, leverage handcrafts and art in South Africa and Africa, and that’s Taunina.
ALEC HOGG: The name…
TRACEY CHIAPPINI YOUNG: Â Taunina.
ALEC HOGG:Â Where does it come from?
TRACEY CHIAPPINI YOUNG:  Well, ‘tau’ is a Sotho word for lion and Nina is an acronym for ‘no income, no assets’, and put together, we have Taunina. Really, the name represents what the business is trying to achieve, which is empowering women from disadvantaged communities to use their age-old artistry to create one-of-a-kind luxury items.
GUGULETHU MFUPHI:  Tracey, I’m sure starting up this project wasn’t entirely easy. What were some of the challenges you encountered?
TRACEY CHIAPPINI YOUNG:  It wasn’t easy. It was absolutely one of the most challenging things I’ve ever done, good learning for someone who likes to direct executives of businesses in terms of capital allocation, as Alec is well aware. It was a very interesting challenge and I would say the most difficult thing has been building a business based on compassion and empathy, focusing on sustainable development, but at the same time a business, which in itself, is sustainable. There needs to be a strong business ethic, a strong focus on process, and really, a business that can contend with luxury brands around the world. That’s a very interesting dynamic, which I deal with every day and probably the most challenging from a personal perspective.
GUGULETHU MFUPHI:  Many people say the market in South Africa is not a very easy one to access. I take it your raw materials are sourced from outside the country. Financing must have also been a challenge.
TRACEY CHIAPPINI YOUNG:  Well, my partner and I funded the business personally, and we now have three external individual investors, so we haven’t actually found that to be too much of a challenge. I actually think there are many people who are very passionate sustainable business, especially if they can see that there’s a differentiated position in the market. We have, I think, fairly successfully built a global logistics channel into that marketplace, and we’ve done things I hope, cleverly, in identifying what we felt was a market, which was pretty much uncontended other than the large STIFE organisation. While teddy bears are often believed to be a very crazy idea, I think there was method in the madness. It was identifying a sector in the market, which really isn’t challenged and isn’t competitive, and being able to use age-old artistry to create these arts/collectors’ pieces. I think you’re absolutely right in highlighting the challenges of sourcing materials in South Africa. We have found that a fairly distressing process, just because we used to obviously have a wealth of textile companies. We do have a wealth of hand skill, but we have had to import many of our fabrics, which, of course, is not what we would choose to do, and unfortunately, we are. We’re importing those from around the world, but we are in the process of trying to develop our own fabrics locally and that is a challenge. There’s no doubt that it’s a huge challenge. I hope that we can assist in trying to drive capital allocation into those sectors again. Unlike many other players in the market, I really do believe people do not price their supply chains appropriately. I think sourcing fabrics internationally while it obviously, on the face of it, can be cheaper, it really, in terms of managing your supply chain and having that type of flexibility to create short, exciting, and creative collections, you really do need to have your finger on the pulse and have short-term access to creativity in this country.
ALEC HOGG: Tracey, are they all unique – each one of these teddy bears? Your distribution chain, which you were talking about, is very top-end of the market. Harrods is coming on stream soon as well as Barney’s in New York. I think that quite a few people watching here are saying ‘eish, but this is going to be an expensive purchase for my little girl or little boy’.
TRACEY CHIAPPINI YOUNG:  It definitely is an expensive purchase and I guess expensive is how you view it. As far as I’m concerned, they are one-of-a-kind pieces and they do take four days to make – each one – so they’re very much positioned at the high end of the market. However, I believe that there’s a customer who is looking for something highly differentiated. The reality, Alec, is that you can’t scale handwork, and I believe the people appreciate that. Each piece is designed 100 percent by the artist, each piece is completely unique, it’s a talisman, it’s a gift with soul, and I think what it represents is a lifelong friendship or connection with the artist concerned and their family, and it’s a piece of art. What Taunina is about is elevating the status of craft in this country, to art. For me as a businessperson obviously, I believe there needs to be a far greater understanding of what’s involved in handwork and I think there is a consumer that understands that. The reality is it’s something that has to be elevated to art or it’s non-competitive. South Africa’s in a very interesting position. With Cape Town, being selected as the design capital of the world, you see many businesses that can’t compete because they are targeting a premium customer, but they have a product, which is a very high cost product to produce. Right up front, I think people need to be clear on what the cost of their product is and then assure that they can price to achieve that, otherwise we need to close up shop.
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