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Although Christian von Daniels led van Laack, the German luxury clothing company, from the brink of financial ruin and into a period of record growth, he is far from the strict accountant or efficient manager you might expect. Von Daniels is warm, gregarious and, above all else, genuinely passionate about the quality of his company’s products.

At the end of November, von Daniels was in Jakarta to celebrate the launch of a new van Laack outlet at Pacific Place mall. During his visit, he toured the company’s clothing factory in Cikarang, and spoke about his vision for the brand and the business strategy he used to keep the company growing rapidly even during the global economic downturn.

“The real problem with the company when I took over in 2002 was not so much about the financial crisis, although the world’s economy had slowed down after 9/11,” von Daniels said. “No, the real crisis the company was having was a strategic one.”

When the German businessman took the helm of van Laack in 2002, the 130-year-old company was a mere shadow of its former self. But von Daniels’ strategy of refocusing on the brand’s core business of selling shirts and implementing a cautious expansion plan has led van Laack to greater heights than at any point in its history. In the last nine years, the company has continuously increased revenue and growth while opening 150 stores in over 25 countries.

Von Daniels has been involved in the fashion business since he was 21. After studying economics in college, he used $5,000 in starting capital to create his first company, which also produced shirts. As the company expanded, he eventually obtained a license to produce shirts for international brands such as Burberry.

Having already become wildly successful, von Daniels considered investing in real estate so he could retire early. But then he learned that the Quandt family, the owner of BMW and one of the richest families in Germany, was thinking of selling off the van Laack brand, which was experiencing financial and managerial problems.

“In the late ‘90s, the management started changing the company’s focus. Instead of emphasizing van Laack shirts as the core business, the company tried to implement a ‘total look strategy,’ so it started to sell pants, shoes, everything. They also tried to compete with other total look brands by establishing big expensive flagship stores in locations that were unsustainable.”

Von Daniels believes straying from the company’s roots led to von Laack’s decline. “By trying to compare themselves to these long-established total look brands, they couldn’t capitalize on the van Laack brand’s strengths,” he said. “It was clear customers didn’t really embrace the company’s new products. They had been spoiled by the very high quality of the shirts and those other products were simply not on the same level. In the end, the company was generating significant losses.”

Because of van Laack’s problems, von Daniels acquired the company for a good price.

“The first thing I did was to get a full picture of the company’s status,” he said. “I found out that the owner had been working with private equity investors. And the management of private equity firms is very much about the bottom line. So when I started, we had five comptrollers in the company, reporting on everything everyday, and doing lots of PowerPoint presentations to justify their salaries. And what those financial people always say is, ‘We have to increase the margins!’

“They suggested we use cheaper raw materials and charge higher prices to increase our profits. Well, that works very well in the short-term, but one day consumers will realize the quality of the fabric is different. They put it on their skin and they can feel it. And after a few washes, this drop in quality becomes quite noticeable. So you cannot cheat them, they will know. And this is what happened. The customers started to retreat from the brand,” he said.

Von Daniels said that when he realized this, he understood the struggling company didn’t need a new marketing campaign. “We needed the right product to come back under the brand name of van Laack,” he said. “And for us, the right product is very much about the right fabric. I always say, the core of a good shirt is the fabric. If the fabric is not nice, it doesn’t attract your eyes and it doesn’t have the right feel on your skin.”

One of the first major changes von Daniels made to production was a renewed focus on high quality fabrics. “I got in contact with the five leading fabric suppliers from Italy, and made deals with them. I would guarantee frequent, high-volume purchases if I got a chance to look at their designs first.”

Another part of von Daniels’ strategy was to make sure all of the clothes produced by Van Laack were manufactured in the company’s own factories.

“One of the core principles of Van Laack is to stick to our own production facilities,” von Daniels said. “A lot of other companies outsource to other factories, but we produce our products 100 percent in our own factories. It is a part of the company’s special philosophy, allowing us to maintain our very high standards. If you outsource, other production managers will always try to cut corners somehow, so it’s impossible to achieve the level of quality we need.”

Despite the turbulent times the world economy has faced in the past decade, von Daniels has been able to steer the company ahead smoothly.

“After 2002, we had about five to six very good years. And then after the crisis of mid-2008, we had this headwind against us,” he said. “But I’ll tell you that even during the crisis, there was no year that we didn’t increase sales. Our profit margin was 16 percent in the best year and 10 percent in the worst,” he said.

When asked what the secret was to maintaining such growth even during economic downturns, von Daniels said it was actually very easy.

“Just do the same thing you were doing before, but even more so. Concentrate on your core products. I also believe very much in property. We own all the land our factories are built on, including our Indonesian factory in Cikarang.”

For those who want to know why his company’s shirts are worth the premium price, von Daniels has a simple answer.

“People expect me to talk about all these quality and technical production things, but that’s not the reason. It’s actually very simple. You put on the shirt, leave the shop and ladies will just stop you and say, ‘Wow, great shirt!’ That’s what you are really paying for.”

van Laack
Pacific Place,
Jl. Jend. Sudirman Kav. 52 - 53,
South Jakarta
Tel. 021 5797 3224