Our time in the spotlight
Orange Factory, hardly a household brand in Korea, has been topping the fashion news these days. The brand, run by parent company Woojin Fashion Biz, is has been getting ahead in the fashion business by selling popular items since more than two years ago in outlets in satellite cities. It bought outmoded fashion brands like A La Mode and Trad Club from various apparel companies and turned itself into a solid mid-sized retailer with annual revenue of 250 billion won ($233 million) selling a variety of women’s, men’s and outdoor wear.
The company was thrust into the spotlight after a Chinese fund announced it will invest 2 trillion won in the company. The Chinese partner offered initial capital of 180 billion won with ambitious plans to open 300 Orange Factory outlets across China over the next five years. Orange Factory will receive a 5 percent royalty for using its brand and be in charge of overseeing outlet design, stock assembly and display, and sales and marketing. Such a stunning deal could make Orange Factory Korea’s household fashion brand in China and beat large local brands that have been struggling to compete with international fast fashion brands like Zara in the world’s fastest growing consumer market.
Company CEO Jeon Sang-yong was equally surprised by the windfall.
“I never dreamed of it. But suddenly, we had an investment offer from China,” he said.
He later learned that Chinese public officials were impressed by one of its outlets near the Walker Hill Hotel during a stay in Korea. He didn’t know why but the Chinese investor wanted the company to introduce many elements of the Korean lifestyle to China from retail fashion to cosmic surgery, beauty tips and food.
Why was Orange Factory chosen out of all fashion companies in Korea? There are a great number of choices in fast fashion brands, mostly run by big companies. Orange Factory’s business model is somewhat unique. Most fast fashion - dubbed specialist private-label apparel, or SPA - sells clothing under one specific brand. But Orange Factory brings together a variety of designs from out-of-date brands and old stocks of famous brands under one roof. Jeon said there was no special marketing strategy, but he just knows what can sell after being in the business for more than 30 years. The Chinese investors must have sensed the seasoned knowhow in the selection and marketing of wardrobe choices.
I recently met with a head of a Chinese investment bank. He said he was very interested in purchasing a license for a Korean brand, its management knowhow and business model. He said the lifestyle of Koreans has great appeal in China. He was not interested in investing in materials or parts or factories in Korea. He was looking for items that can sell well in China, which is trying to shift focus from overseas to domestic demand to drive the economy. He said the ways of Koreans, their style, was what could sell things in China.
Industry insiders say they have been getting a lot of calls from China. Interest in Korean lifestyle, fashion and beauty is not limited to the Chinese. Korea is the first market that fashion houses launch their latest seasonal lineups to gauge Asian tastes. If products work in Korea, they will do well elsewhere in Asia. Korea is a trend-setter in Asia. The international fashion industry believes Korea excels in commodity planning, designing and retail.
Despite its established image, exports and investments in our fashion industry remains lackluster. Lack of marketing skills is one reason. Korean companies are poor in pitching how their brands can sell in other countries. They also don’t know how to sell the synergies that can be produced through partnerships. The beads are abundant but Korea does not know how to string them. That is partly because government support remains at a rudimentary stage. The government mostly sponsors textiles development and trend surveys. It has not turned its eyes to the marketing stage. Exports have fallen sharply because of reduced prices.
The world is mostly concerned about bolstering domestic demand. We can no longer rely on exports of raw and subsidiary materials. To go overseas, we have to directly target consumers. Infatuation with Korean ways and entertainment may not go on forever. We do not have an infinite amount of time to sell our brand. The government should turn its attention to helping companies market better overseas.
*The author is an editorial writer of the JoongAng Ilbo.
by Yang Sunny