Going All-In on Building Women’s Apparel Production Systems

[ 11/19/2007 ]

Women’s apparel companies are actively working to establish overseas sourcing and production systems. According to industry sources, major mid- to low-priced apparel companies and mid-sized women’s apparel firms, including Hyungji Apparel, Sejung, Aioli, Hyunwoo International, Daehyun, Tomboy, and Shinwon, have recently been focusing on developing raw and subsidiary material sourcing channels and production bases in China, Vietnam, Myanmar, and other countries. This is based on the judgment that, as the mid-priced and mid- to low-priced mass market expands, it will be difficult to remain competitive in the future without securing price competitiveness, and that simple overseas contract manufacturing has limitations in reducing costs. This trend is also being fueled by a growing awareness that companies must secure these resources in advance, as high-quality overseas production bases have already been dominated by global companies and polarization in this area is expected to intensify. Hyungji Apparel recently appointed Chatelaine Vice President Kim Myung-ho as the head of its China branch and began establishing sourcing and production systems in China. As part of its medium- to long-term strategy, the company plans to strengthen its competitiveness by firmly establishing sourcing and production systems in China and Southeast Asia in order to compete in the mid- to low-priced market and enter China’s domestic market. Executives from Sejung, Wevis, and other companies frequently travel overseas to develop production and sourcing channels not only in China but also in third countries such as Vietnam and Myanmar. As the cost advantages of manufacturing in China decline, these companies are focusing on finished-product manufacturing and developing raw and subsidiary material sourcing channels beyond simple contract manufacturing. They are also devising plans to actively utilize the production lines of Korean export companies operating locally. Daehyun recently sent the heads of its four brand divisions and members of its design departments on a group business trip to China and Hong Kong. Having previously focused on domestic production, Daehyun recognized the significant need for overseas sourcing and production through this trip and plans to put these initiatives into practice beginning next year. Until now, only the character brand ‘MOJO.S.PHINE’ and the street-store brand ‘Blupepe’ have carried out some overseas production. The company will expand overseas production to its other brands and begin sourcing raw and subsidiary materials as well. Aioli is concentrating on establishing an overseas production system for ‘Plastic Island,’ its mid-priced young casual brand sold through street stores. The company has explored various approaches, including testing a dual production system that separates its department store brands, such as ‘Egoist’ and ‘McGINN KNIGHTSBRIDGE,’ from ‘Plastic Island,’ and operating a Vietnam office to test raw and subsidiary material sourcing and production systems. Beginning this fall, the company successfully secured its target markup ratios by producing basic items for its department store brands overseas. It plans to expand this initiative further next year and develop operating systems that reflect the characteristics of each brand. Director Woo Jong-ho said, “Without innovation in production systems, there is effectively no future for the women’s apparel business,” adding, “It is not a matter of choice, but an indispensable requirement.”