[Viewpoint] Bringing Korea back from China

Amancio Ortega Gaona was born as the son of a railway worker. He arrived in Galicia, Spain, when he was 14 because that’s where his father landed a job. Ortega had to quit school and begin working at clothing stores to earn money. After much time in the clothing business, he opened his own store after he turned 27.

That was just the beginning. A decade later, in 1975, he opened the first store in what would become the enormous fashion brand, Zara. As of last year, Zara was operating 4,600 stores in 74 nations and recording $14.1 billion in sales. It has become the largest clothing business in the world, thrusting aside Gap of the United States.

Until Zara’s emergence, Spain was an outsider in the fashion world. Italy had dominated the fashion industry while textile manufacturing in Spain shrank. Jobless dressmakers flooded the streets. Unionized textile workers made a final bid to save the industry. Claiming that the only way for survival was Zara’s success, they supported the company. Their choice was proven prescient as Spain became a fashion power with its brands of Zara, Mango, Camper and many more.

Going against the trend was what paved the way for Zara’s success. While competitors like Gap and H&M outsourced their products to China and South America, Zara focused on Spain. It insisted on selling “made-in-Spain” merchandise and produced about 70 percent of its items inside its home country.

The key to the strategy was “fast fashion,” something akin to fast food. The idea was to quickly manufacture trendy items while minimizing inventory. Zara, in fact, completes the process from design to production within two weeks. To do so, a well-organized network of production facilities was crucial. Zara accurately read the trend that the fashion of today equals speed.

In Korea, Chairman Lee Man-jung of the domestic women’s fashion brand Beaucre Merchandising is known as the godfather of the country’s off-the-shelf clothing industry. Among industry insiders, he is also called “big brother.” In the late 1970s, when Koreans used to buy tailor-made clothes, Lee opened the era of ready-made clothing by working as the fashion department head at Kolon. This year, Lee turned 66, but he is still dreaming. And in those dreams are three words: “Made in Korea.”

His dream will begin on a very large parcel of land in Neungam-ri, Yangseong-myeon, Chungju. Before the end of this year, groundbreaking for the Chungju Green Fashion Industrial Complex in North Chungcheong will take place. Lee plans to create a well-organized production facility, just like Zara. It is also his goal to develop the site as a fashion city, with a fashion museum, a design research institute, a factory outlet, child care and cultural facilities. When the project is completed, up to 5,000 new jobs will be created.

For this project, seven mainstream clothing companies - including Ssamzie and Hyungji Apparel - joined forces. They had all outsourced their products to China. The companies jointly invested 8.8 billion won ($7.47 million) and created a consortium called MIK - the acronym of “Made in Korea.” The name signifies that the companies have realized the limits of “Made in China.” They have, instead, returned home, seeking to build a local industry. Some compared the move with salmon returning to spawn.

Chairman Lee visited China in 1999. Just like many industries of Korea at the time, off-the-shelf clothing companies in Korea saw utilizing China as a matter of survival. Because of skyrocketing wages in Korea’s factories, production in the country had been staggered. Jobless workers became day-job employees or retired. In such circumstances, China seemed to be the only place to turn to.

In early 2007, Lee began thinking about returning to Korea. The value of the Chinese yuan escalated and wages for Chinese workers grew. The difference between production costs in Korea and China shrank to about 10 percent.

Lee gradually tried to persuade others that they should also return to Korea. Many, however, disagreed. They said China was still competitive. Wages were still cheap while technologies and materials were improving, they insisted.

Lee, however, did not agree. China appears to have no competitiveness in his eyes. While women’s fashion evolves quickly, China’s factories react slowly.

Speed has become the trend in global fashion, and the key to following the trend is having on hand highly skilled professionals. Most of all, Lee also said he wanted to return jobs to Korea’s young.

His dream is just about to begin, and there is no guarantee of a happy ending. It needs more money, more people and more technology. Lee, however, still dreams of “made in Korea” because in that phrase rests the nation’s hope. I vote for his dream.

*The writer is the economic news editor of the JoongAng Sunday.

by Yi Jung-jae