17 Shokay

Luxury with a Story, Style with a Touch of Humanity

Emily Di Capua

Carol Chyau wants to use her education and training to help those less fortunate than she is.

During her junior year at the University of Pennsylvania’s Huntsman Program in International Studies and Business, Carol spent a semester abroad in Peru. In meeting poor farmers there, she became aware of what life could be without opportunities, without the means to make one’s dreams come true. As she notes,

During that trip Carol decided she wanted to work on a social venture and help change the fate of people with fewer opportunities than she had. Deciding just how to make this happen took a few more years.

After graduating from the University of Pennsylvania with bachelor’s degrees in Spanish and business, Carol headed to Harvard’s Kennedy School of Government, where she studied social entrepreneurship and public policy. Two important milestones during her time at Harvard led her to found Shokay.

First, Carol learned about Muhammed Yunas, the Nobel Peace laureate and founder of Grameen Bank, largely credited as the world’s microfinance and community development bank. She had the opportunity to hear Mr. Yunas speak at Harvard and became fascinated with the for-profit social enterprise model, which uses a traditional business structure to solve a specific problem within society. With her undergraduate focus in business and her dedication to solving social problems, Carol decided this was the model for her.

Second, while Carol was at Harvard, she had the opportunity to travel to mainland China with a classmate from Hong Kong, Marie Liou. The two had become close friends and visited the country of their ancestors together during summer break. Marie was also interested in starting a social venture, but had not yet determined the specifics. As the two traveled in southern China, they discussed potential social venture opportunities and quickly decided to work together on an idea. From the very beginning, they knew they wanted to focus on the social enterprise model. As Carol notes, “We read a lot of [business] cases in school but we never saw a case on social enterprises in China. So we thought, could we come to China and promote the social enterprise model in China?”

Marie shares Carol’s convictions: “I am from Hong Kong and I am surrounded by wealth everywhere, but that’s not the case for so many people, especially in mainland China. So why not use our education to contribute to change this?”²

The new business partners first went to Yunnan province in China’s southern basin. Yunnan borders Laos, Vietnam, and Myanmar and is rich both ecologically and demographically. It boasts the largest diversity of plant life in China and is home to twenty-five of China’s fifty-six ethnic minorities. Every time Carol and Marie saw something interesting, they made a note of it, musing, “Could this be a potential business plan or idea?” Carol explains, “We saw big local peaches and we thought, could we mash the peaches into a powder and perhaps make a make-up? Or do the juices inside the seeds have some sort of use in industry?”

Carol and Marie were open to everything. But when they first saw yaks and yak herders in the Yunnan highlands, close to the border with Qinghai province, they paid them little attention. As Carol puts it, “We didn’t know about all the treasures a yak provides for its herders.”

Eventually Carol and Marie were introduced to the yaks’ special characteristics and were amazed at all the riches they provide. One herder referred to every part of the yak as a treasure because the herders, for years, have been able to make a living solely from these animals. Thick yak hair is used to make tents and bedding; yak down makes warm clothing that protects against the winds on the Qinghai plateau; yak milk provides nutritious milk and cheese; and yak dung is used for fuel.

Carol and Marie learned about the Tibetan-speaking Zang minority, who herd most of Yunnan and Qinghai’s yaks. Most of this group’s capital is tied up in yaks, which are their main source of income. But that income usually hovers around 650RMB (US$100) per month. Carol wondered whether she and Marie could help the herders generate more income from the yaks so they would not be forced to leave their traditional way of life to get factory jobs in one of China’s sprawling cities. “I remember thinking, how can I help create more economic value for these herders’ traditions?”

As Carol reflected on all the “treasures” yaks supply to their herders, she was captivated by the soft yak down, under the coarse yak hair.

With yak down being just as soft as Mongolian and Chinese cashmere, Carol thought she might be able to market yak down products to the same market—foreign knitters looking for luxury yarn—while funneling most of the profits back to the herders. Thus was born “Shokay: Luxury with a Story, Style with a Touch of Humanity.” (Shokay means yak in Tibetan.)

Shokay now sells and distributes yak down yarn and hand-knit and machine-woven yak down fashion accessories, children’s clothes, household goods, and toys in Shanghai and around the world. The company distributes primarily to retail operations in Japan and the U.S. It also operates two stores in Shanghai—one in the historic Taikang Lu neighborhood and one in the Hong Qiao Sheraton. Both Shanghai retailers cater primarily to expatriates and wealthy Chinese customers.

Yaks 101: an Introduction

Yaks are long-haired bovines that typically reside in Tibet and southwestern China. As 95 percent of the world’s yaks live in the remote Tibetan and Qinghai plateau, these gentle, grass-grazing animals are unknown to much of the world. References to yaks in Chinese literature point to the belief that they were domesticated in China over 3,000 years ago. They are valued by herders for their milk, meat, dung, and fiber. They are also used as beasts of burden.

Yaks produce two types of hair: a coarse, thick hair often used for bags, belts, and ropes, and a softer under hair called yak down. Like cashmere, yak down is smooth and long. Thus, when woven, it is as soft as cashmere, as Carol discovered. (One can contrast this with wool, which is short and “crinkled” and so causes an itchy sensation against the skin.) Unlike cashmere, yak down’s natural color is a chocolate brown. Products of this color are the softest. The fiber must be “depigmented” to create other colors, a process that often reduces the softness.

Before Shokay was established, yak down was virtually unknown in the international knitting market. Given that cashmere is so wildly successful around the world, Chinese textile companies did not see a need to develop a market for this alternative product. In addition, not only are the yaks hard to access, but the low annual yield of their down (each yak produces only 2–3 pounds of fiber over the course of its 20-year lifespan, making shearing and collection a labor-intensive process) does not make it attractive to Chinese textile companies.

Shokay: the Business

Through trade shows and store trunk sales, Carol and Marie have developed their European, Japanese, and U.S. markets. Currently, Shokay sells to more than 130 stores around the world, most of them knitting yarn stores. Shokay opened in the Chinese market in late 2007 and directly manages only two stores in Shanghai. In addition to the yarn and product sales in China, Shokay’s merchandise is sold to customers around the world as corporate gifts, to other fashion brands for co-branded projects, and to wholesale boutiques and distributors.

Carol’s goal for Shokay was to create a social enterprise to improve the lives of the impoverished yak herders in the remote Yunnan and Qinghai provinces and the women knitters in rural Shanghai by directly sourcing the yak fiber and then selling the finished products to the Chinese and international markets. According to Carol, “A social enterprise is an innovative, profit-making but not profit-maximizing solution to a social problem.” She looks at metrics that reflect the progress of this goal to assess Shokay’s success. These metrics include how many employment opportunities have been generated and how much income growth has been created.

Currently, Carol has a staff of thirteen in Shanghai. There are also two employees in Xi Ning (the capital of Qinghai province in western China), local Tibetans who manage the fiber sourcing once a year. Shokay works with over thirty yak herders; and the knitting cooperative employs fifty women on Chongming Island, Shanghai.

The People of Shokay

Shokay employs a wide range of people. From knitting (ayis or aunties) in the knitting cooperative with grown children to expat summer interns interested in China and social ventures to local Chinese college graduates and a Parson’s Fashion Institute of Technology fabric and fashion expert; part of the beauty of the Shokay stores and the Shokay head office is the warmth of a multicultural, engaged, and productive family.

Knitting Ayis

As of October 2009, Shokay employed fifty knitting ayis both in Shanghai and on Chongming Island, China’s third largest island, situated on the Yangtze river estuary about 60 miles from central Shanghai. This area has been plagued by flooding for years, despite protective dykes built in the early twentieth century. Chongming’s population currently hovers around 600,000, most of whom fish and farm. Over the last 20 years Chongming has faced a new problem: As labor and residential laws in China have been eased, there has been a mass exodus of youth, who look to the Chinese urban centers for opportunities. Families and parents are left behind to face dwindling farming opportunities.

Shokay approached the Chongming islanders in mid-2008 with an idea: to start a knitting cooperative on the island to harness skills the residents already possessed while also giving them the opportunity to supplement their incomes. The idea took off, and the Chongming knitting cooperative now employs forty knitting ayis who produce all of Shokay’s handmade goods, from little stuffed yaks and baby booties to throw pillows and scarves.

Just like the herders, the ayis have found tremendous value in their partnership with Shokay. The company provides value for something the women of Chongming have done all their lives: knitting. Some women use this income to supplement their farming income, while others rely on Shokay as their full-time employer. Here are some of their stories:

Yuan Mei Ping raises fish for a living and supplements her income by knitting for Shokay. Lu Ping worked at a cotton factory and also knitted sweaters for export; working full time with Shokay now allows her a more flexible schedule to take care of her 14-year-old son.

Viola Zhang is one of Shokay’s new product designers. She sits with the team in Shanghai bringing to life products like the stuffed baby yaks, key chains, and other accessories. Among her many other projects last summer, she worked on a “Twitter” stuffed bird to commemorate Shokay’s presence on Twitter and a bride-and-groom yak pair for the top of a customer’s wedding cake. No bigger than a postcard, the bride yak’s intricate crocheted veil took weeks to design. Discouraged from knitting at a young age by her father, Viola secretly continued to knit presents for her family and friends. Her Shokay work gives her a sense of accomplishment, pride, and legitimacy.

Shokay also employs recent Chinese graduates with an interest in changing the world around them. Jocelyn Chu graduated in 2009 with a B.A. in economics from Shanghai Jiao Tong University. She had interned with a Chinese consulting company and was all set to return in June 2009. In spring 2009, however, she met Sam, a Shokay employee at the Taikang Lu store who introduced her to Shokay’s concept and Carol’s project. Intrigued by the story of the herders and Carol’s dedication to keeping their traditions alive, Jocelyn decided to learn more. By graduation she had declined her consulting offer, and by July she was working full time for Shokay.

As Jocelyn says, Shokay allows her to “help people through what she does every day.”³ Thrilled to have found a job that holds meaning for her, she has thrown herself into her work. She manages the Shokay Sheraton store and guides the company’s marketing and communications data management. While turning down the lucrative pay of a consulting job was very difficult, Jocelyn says she was unusually lucky to have her family’s support in her decision.

Jocelyn’s favorite part about working at Shokay is sharing the company’s message and story with her peer group and customers. She finds herself repeating a few key messages again and again. She continually reminds her friends from college that Shokay is not a charity: “A charity is a one-time thing that might not guarantee any sort of long-term sustainability. You help someone once, but you’re not helping them help themselves.” Socially minded for-profit enterprises are relatively unheard of in China; and Jocelyn likes to share Shokay’s unique business model with her friends, hoping they will be inspired to look into ways they can help their communities. With customers, it is sharing the Shokay mission and story that energizes Jocelyn. She makes sure everyone who walks through the door of the Sheraton store leaves knowing a little bit about yak down and the Tibetan yak herders Shokay is helping.

Jocelyn is convinced that Shokay plays a unique role on the Shanghai retail scene.

Jocelyn believes that “as long as consumers know about Shokay, they will support us.”

Shokay in Shanghai

In just three years, Shokay has grown from one to three locations in Shanghai. Originally, Carol and Marie had not conceived of Shokay as a retail outlet, and Shanghai served only as Shokay’s nerve center for inventory storage and order taking. In early 2008 Carol learned that a retail space in a charming historic shopping district was available and decided to open the next chapter in Shokay’s story.

Taikang Lu, as it is now referred to by throngs of Chinese and expats, is a maze of tiny alleys behind the one block of Taikang Street in south central Shanghai. The alleys are exceptional, as they feature traditional Shanghai urban architecture—shiku men or stone archways—that have largely been bulldozed in Shanghai in favor of gleaming skyscrapers. Five years ago, Chinese artists took up residence in the warren of little alleys behind Taikang Street. Since then the area has been a Shanghai mecca to the laid-back, artistic crowd. The retail and restaurant outlets are tiny and squeezed right next to each other; and the alleys are often only four feet wide, resulting in a cozy, labyrinth-like atmosphere.

Figure 17.1 The Shokay Flagship Store

Source: Emily Di Capua, August 2009.

Taikang Lu is home to galleries, coffee shops, wine bars, dumpling stands, clothing stores, and, since 2008, Shokay’s flagship store.

The Shokay store at 66 Taikang Lu is large for a Taikang Lu establishment. The store takes up what used to be the center room and two side rooms of a traditional shiku men-style home. Shokay’s household goods, adult accessories, and children’s clothing line the well-lit walls and shelves. Antique Chinese furniture and rugs harken back to the days when this shiku men was a home (see Figure 17.1).

Hongqiao is a wealthy, expatriate neighborhood to the west of central Shanghai with broad, tree-lined streets and many parks and shopping malls. Shokay’s Sheraton Hongqiao store has a completely different look and feel from the Taikang Lu store. Walking into the hotel’s marble foyer, one immediately notices a huge sign inviting guests to head up the sweeping staircase to visit the Shokay store. This store is like a little treasure chest of color. A plethora of baby yaks in rainbow colors is piled together in a corner, while accessories like ear muffs and scarves fill the glass display cases. The store, tucked next to the hotel’s gourmet delicatessen and food shop, caters to tourists and business people visiting Shanghai.

Shokay’s partnership with the Sheraton is exclusive. The hotel approached Carol in winter 2009 after a Sheraton representative met her and learned about Shokay at an International School Christmas fair. Shokay pays a subsidized rent for the Sheraton space, in return for which it enjoys exclusive retail rights, selling Shokay goods and basic toiletries. The Sheraton markets Shokay throughout its operations, from providing a flier introducing Shokay to guests at check-in, to inviting Shokay to participate in Sheraton promotional events. According to Sheraton, Shokay provides guests with a memorable and unique shopping experience and the Sheraton provides a steady stream of customers to Shokay.

Shokay’s Shanghai headquarters is in a tall Chinese commercial and residential building situated in an upscale neighborhood. The Shokay team’s lunch options range from a nearby noodle stall to an upscale food court complete with a Starbucks and sushi. The Shokay office occupies a small, jam-packed two-story space. Walking in, one is immediately aware of the buzz of a start-up. The first floor is overrun by desks; and everyone is on the phone, with customers, distributors, factory managers, the knitting ayis, one of the stores, or perhaps a CCTV press representative. (The Chinese press has gotten wind of Shokay and is interested in promoting its work. In early summer 2009, CCTV completed a video segment on the company.) On the second floor of the cramped Shokay headquarters, a large rectangular work table sits surrounded by shelves, one side bulging with brightly colored Shokay inventory and rainbow-like stacks of Shokay sample swatches, and the other side prepared for customers around the world. At the table Danielle is on the phone back and forth with distributors and the Tibetan connections all day long, while Rema, from Parsons, darts to and from her computer and the wall of Shokay products as she dreams up new designs for Shokay products. By the window sit two ayis who knit the prototypes. They are islands of calm in the busy office, surrounded by colorful yarns and some of their newest designs. Every now and then a funny story emerges in Chinese, English, or Chinglish, and within seconds everyone on the second floor is laughing.

The Marketing Challenge: Marketing on a Shoestring Budget

As a newly minted entrepreneur in Shanghai, Carol faces a growing number of expenses. There are new employees to hire, more storage space to rent for inventory, and more travel expenses as she and Marie travel to promote Shokay at trade fairs and meet with distributors around the world. With a slim operating budget and little beyond the proceeds of two business case competitions in terms of investment, a marketing budget for Shokay is out of the question. How, then, does Carol manage to spread the message about Shokay’s products—“Luxury with a Story, Style with a Touch of Humanity”—around Shanghai and around the world? As Carol puts it bluntly, “We need to market our products to grow the business, with a marketing budget of zero.”

Over the course of 18 months, Carol has come up with some imaginative marketing ideas that cost little or nothing and have established Shokay as a fixture on the Shanghai expat scene and in the world of social ventures.

Taikang Lu History Tour

When Shokay moved into its Taikang Lu store, little did Carol know that it would quickly become a retail landmark in the artsy neighborhood. With one of the largest retail spaces and one of the longest-running enterprises (in general, store turnover is extremely high), Shokay has become a “must-stop” on Taikang Lu visits. In spring 2009 Carol decided to capitalize on this and on the unique history of the neighborhood. One of her store employees, Sam, a recent Chinese college graduate, had grown up on Taikang Lu long before it was a tourist destination. He and his extended family have lived in one of the shiku men for generations, and he is well-versed in the twentieth-century history of the area. Seeing an opportunity, Carol helped Sam design a 45-minute “History of Taikang Lu” walking tour that starts and ends at the Shokay store. The tour takes visitors down Taikang Lu’s meandering alleys as Sam points out architectural details and describes the neighborhood’s relationship with the burgeoning construction springing up around it. Visitors can peek into a peaceful courtyard in front of the last remaining fully residential shiku men, which so many tourists simply miss as their trip turns into a shopping and eating frenzy.

One stop on the tour is the studio of He Zhang, a retired art professor from Zhe Jiang University who now photographs disappearing traditional neighborhoods in Shanghai. His simple studio, which doubles as his living room, is lined with black and white photos of Shanghai street scenes and shiku men. Professor Zhang shares the history and specific architectural details of shiku men with the tour group and holds a question-and-answer session. Shortly afterwards the tour arrives back at Shokay, where a knitting lesson with complimentary needles and Shokay yarn, accompanied by tea and yak cheese (from the Shokay yaks!), is provided for all the attendees.

Carol markets this new “Shokay: Taikang Lu Tour and Knitting Lesson” in free expatriate newsletters and embassy bulletins. Her primary target audience is expatriate wives who do not speak Chinese and perhaps would not venture out to Taikang Lu on their own. The tour package is priced at 350 RMB (US$50). It is too soon to gauge the success of the tour, but creativity like this helps circumvent the problem of no marketing budget.

Expatriate Publications/Consulate Newsletters

Carol makes use of every free expatriate publication in Shanghai, of which there are many. She and her team also promote Shokay in many Shanghai publications, such as the weekly City Weekend and the monthly That’s Shanghai. Shokay does this not through paid advertisements, but rather through publicizing promotions and events at Shokay. These magazines have calendar sections in which local events can be listed for free. Shokay’s events range from the Taikang Lu tour to brooch-knitting lessons in honor of International Women’s Day, and from holiday specials (spend x amount, get a Christmas tree ornament) to frequent “readers-only” discounts. Carol also promotes Shokay through various consulate newsletters. All these forums are great ways to reach Shokay’s target expatriate clients.

Marketing and Shanghai's International Schools

In the last 10 years the number of international elementary, middle, and high schools in Shanghai has grown exponentially. There are schools that offer curricula from anywhere in the world, in addition to religious schools, bilingual schools, and schools with unique foci, such as sports or the arts. The social events sponsored and hosted by these schools provide Shokay with many free or low-cost marketing opportunities: holiday fairs, gala raffles, special deals for school community members, and gift package ideas.

Carol notes that from November through the Chinese New Year (usually in mid-February), Shokay’s schedule is packed with school fair bookings. The schools host holiday fairs during which local retailers will set up tables and display a selection of goods for sale, often with a holiday theme. The students, teachers, staff, and parents select holiday presents while being introduced to Shanghai retailers. Carol finds these fairs, which serve to increase Shokay’s market awareness, also provide a lot of promotional material, and the sales staff can invite community members to visit the Shokay store. That Shokay also gets to sell goods is, according to Carol, the icing on the cake

The Tweeting Yak: Shokay on Twitter

Carol uses Twitter as a low-cost tool to spread Shokay news to customers, community members, social entrepreneurs, and knitting enthusiasts around the world. Shokay tweets fall into four categories: events and promotions, websites of interest and retweets, yak tracking, and opportunities with Shokay.

Primarily, Shokay will tweet about upcoming events at one of the stores, such as a yak-cheese tasting at the Sheraton store, a feature piece on Shokay in Chinese Vogue, or an upcoming 25 percent off sale. The Shokay family also tweets on topics of interest to its community. Recently Carol passed on a Fast Company study on social media in China. She also retweeted two articles: “7 Tools for Running a Startup Social Enterprise” and “How Knitters Can Create Positive Social Change.”

When the Shokay family began tweeting, they thought it would be fun to strengthen the association of the Shokay name with the yak. Jocelyn and Carol started “yak tracking,” tweeting photos and references to yaks that they found online or that customers had given them. An “I ♥ Yaks” tee shirt, spotted in NYC, was sent to Shokay and immediately tweeted about. This creates a fun and interactive game for those following Shokay and also serves to raise awareness of the company. Finally, Carol uses Twitter to announce employment opportunities that followers can learn more about on the Shokay website or in the stores.

To keep up with all this Twitter activity, Shokay uses mainly Twitpic and Tweetdeck. Twitpic allows Twitter users to easily upload photos and images for all followers to see. Shokay does this with the yak tracking and to post images of the many trade shows that Carol and Marie attend. Tweetdeck is a browser that allows users to manage their online social media updates in real time. Its users can manage more than one Twitter account (Shokay has two), retweet (Shokay uses this feature often), create Twitter follower lists, follow topics in real time, and easily see who is following them. During summer 2009, Danielle, an intern from the University of Pennsylvania, was in charge of setting up Shokay’s Tweetdeck. To an outsider, the complexity of her main browser page with its constant Twitter follow updates and live streams from Facebook seems to rival the display of an airplane cockpit.

One neat feature of Tweetdeck is the ability to search all tweets for keywords and retweet them. Shokay uses this feature often. Any time anyone around the world tweets about coming to the Shokay store, using Shokay yarn, or wearing a Shokay piece and tweets about it, using “Shokay” in the tweet, Danielle finds it and retweets it to Shokay’s other Twitter followers.

Carol’s Imaginative “Yaks Around the World Campaign”

Carol recently began an inexpensive campaign that ties Shokay marketing to spreading the company’s message of improving one’s community and making the world a better place. Carol decided to use one of her bestselling products—the hand-knit, colorful, stuffed baby yaks—to create a network of people doing social good around the world.

The campaign, called “Yaks Around the World,” was launched in Shanghai in summer 2009. Carol prepared twenty-five different baby stuffed yaks, each in a separate color with a different name and identity card. She then used her expanding network of friends and colleagues around the world who are involved in similar social ventures to identify twenty-five “change makers,” people who are striving to make the world a better place. Each “change maker” receives a baby yak with instructions to photograph the yak in the “change maker’s” community before sending it along to another “change maker.” Ideally, the little yaks will travel around the world, connecting “change makers” from all different areas and thereby creating a global community of “change makers” who can share experiences and learn from each other. This campaign will also serve to generate interest in Shokay as people track the baby yaks on the company’s website and members of the various “change makers’” communities learn about Shokay upon introduction to the baby yaks. So far, the little yaks have gone out to “change makers” who lead organizations as diverse as Circle of Women, the World Toilet Organization, Rubicon National Social Innovations, and Givology. These “change makers” have in turn passed the yaks onto others who share their values and thus the little animals are slowly making their way around the world.

As Carol looks towards Shokay’s future she wants to continue engaging with her community—both locally through an expansion of events like the Taikang Lu tours and globally through social media like Twitter and creative engagements like her “Around the World Campaign.”

Besides running the day-to-day business of Shokay, how to expand current marketing efforts is a question that occupies Carol. How can she and the Shokay team continue to build brand recognition in both China and abroad?