WASHINGTON: I generally don’t think of Maryland as a home to manufacturing. But if you drive to Glen Burnie, the Chesapeake Bay Candle factory has 80 full-time employees who are creating an average of more than 500,000 home fragrance candles a month.
Factory tours are one of the most fun parts of this job. I visited Chesapeake Bay’s cavernous $6 million factory on a hot summer day, watching as the two assembly lines churned out their scented glimmers.
The hangar-size factory includes a research-and-development department as well as a darkened quality-control room where samples are tested to ensure that they burn cleanly and evenly (soot is bad).
A flock of workers surround the assembly line, plucking bent-over wicks from the warm, gooey wax and standing them upright so customers can fire them up more easily.
Outside, there are eight loading docks where tractor-trailers from Target, T.J. Maxx, Avon, Bed Bath & Beyond and Kohl’s pick up thousands of candles for retail sales.
Chesapeake’s founder and chief executive, Mei Xu, 49, a Chinese immigrant, created this oasis of productivity while trolling the aisles at the flagship Bloomingdale’s store on Manhattan’s Upper East Side in the 1990s.
Xu was working in New York at a firm that exported medical equipment. She would walk a few blocks to Bloomingdale’s, where she burnt her free time searching for inspiration in the housewares and fashion departments.
“Bloomingdale’s is where I found my entrepreneurial spirit,” the businesswoman said.
Since the company’s start two decades ago as an experiment in an Annapolis basement with wax poured into soup cans, Chesapeake Bay Candle has sold more than 350 million candles. The United States is its biggest market, followed by Europe and Asia.
The company employs 50 people at its Rockville headquarters in addition to the 80 in Glen Burnie, from which it ships $15 million in candles. Factories in China and in Vietnam employ an additional 1,200 people.
US sales are at $60 million. The cost of manufacturing each candle starts at about $2 and increases from there depending on the fragrance and size. Gross profit margin after cost of goods sold is in the neighbourhood of $20 million. Chesapeake pays for labour, leases, overhead and insurance from that amount. The bottom line is a profit in the single-digit millions, by my estimate.
The most interesting thing about the candle business is the psychology behind Xu’s sales strategy. The typical buyer is a woman 25 to 55 who believes that scent is a key ingredient of a gracious home.
“She likes the ambience,” Xu said of her hypothetical customer. “She wants the house ready for the kids coming home, friends coming over for the weekend or a family dinner and celebration.
“Scents are a big part of memories,” she added. “When we smell a fragrance, such as a pumpkin pie or a cookie, it brings back memories from when we grew up: Mother baking at Thanksgiving, or your first romantic walk with your wife.”
With prices that range from $2.99 to $50, candles can also be a poor man’s substitute for a vacation. For that, you get caramel, fig, spice, noble fir, falling snow, spiced apple, cinnamon and the ever-popular juniper.
“When the economy is bad, people can afford candles when they can’t travel. We see a big surge on anything that has scents like coconut, which reminds them of a tropical island. It takes them somewhere, and we bring it home,” Xu said.
I hate to say this, but hurricanes are good for business. Xu said she sees sales spike before the big cyclones hit, which she attributes to a fragrance’s calming effect. I’m guessing the ability to provide light without electricity also doesn’t hurt.
Xu was born in Hangzhou, a city near China’s east coast that recently hosted the G20 summit of world leaders. It is also the home of Alibaba, the Chinese version of Amazon.com founded by the colourful entrepreneur Jack Ma.
Xu’s mother ran an elementary school, and her father was an engineer for a steel manufacturer. “I guess I have the factory blood in my system,” she said.
You wouldn’t know it from her start. She went to boarding school at 12 to study diplomacy. She later studied at the prestigious Beijing Foreign Studies University, where she specialised in American studies and met her future husband, a geophysicist. They divorced but share ownership of the candle business.
After graduating in 1989, she wanted to continue her education, so she applied to the University of Maryland, where she majored in journalism.
She and her then-husband settled in Washington after graduation. During the week, she commuted to New York, where she worked exporting high-tech American-made medical devices to Chinese hospitals.
After her Bloomingdale’s epiphany, she resigned from her New York job and moved back to Washington, hankering to start her own company.
“We knew a lot of companies in China that wanted to export around the world,” Xu said. “So I used my contacts back home.”
Xu eventually focused on home-product sales, where she saw a niche. The couple took fans, silk flowers, candles, calligraphy and several other categories of decorations to a wholesale gift show in North Carolina to test the waters with store owners.
It was the candles that sold, and a global business was born.
The fledgling firm had to move quickly to fill the inventory, using contacts in China to find a factory. They raised $100,000 in working capital from friends and family and found a warehouse in Laurel to store and ship the candles. They bought a 1-800 number.
By Christmas 1994, Xu and her then-husband had sold $500,000 worth of candles.
The self-described “global thinker” next went on a fact-finding trip to Germany, where she attended one of the largest housewares shows in the world. Two things happened: She discovered the importance of fragrance, and she decided to go with a minimalist design, allowing the scent to sell the candle.
The business took off. The couple worked with her sister in China to start the first factory in 1995. It gave them a lead over other candle manufacturers in fragrance technology and design.
They made and sold their candles from China until 2008. That’s when the United States was in the midst of a financial crisis, and American retailers demanded lower prices and a shorter lead time for putting candles on the shelves.
The company eventually built a domestic factory to fulfil its retailers’ needs and leased a warehouse in Glen Burnie, beginning what would become a $6 million investment.
When I checked in with her last week, Xu was heading into a nearly three-hour meeting to discuss taxes. Chesapeake Candle pays a lot of taxes, she said.
She said her company is one of the few to start manufacturing in Maryland over the past 20 years. The Chinese immigrant is proud of that.
