South Korean outdoor clothing retailer F&F Co. is expected to post 1.1 trillion won ($807 million) in sales revenue in China this year, emerging as the highest-grossing Korean brand in the world’s top consumer market.
The rosy sales prospect comes as other well-known foreign brands such as German sportswear company Adidas and its US rival Nike struggle amid China’s COVID-19 lockdown and the rising trend in China, particularly among young people, to favor homegrown labels.
The Korean apparel retailer, which entered the Chinese fashion market in 2020, said it expects its annual sales from the MLB apparel business in the mainland to reach 1.1 trillion won in addition to estimated sales of 107 billion won from Hong Kong, Macau and Taiwan combined.
The company has also introduced Italian clothing brand Benetton and French apparel maker Renoma to Korea in licensing contracts.
German sportswear company Adidas SIGHTS SET ON CHINA
And two years ago, the Korean company set its sights on China for overseas expansion.
F&F launched outlets in big cities such as Beijing and Shanghai to appeal to people enthusiastic about trendy clothing, shoes and other fashionable items.
The number of the company’s MLB outlets in China has risen to 779, up 56% from 500 in January. F&F aims to raise its MLB outlets to about 900 by year-end.
Goldman Sachs said in a research note that F&F has been showing a growth rate that no other foreign brand has achieved in the Chinese fashion market over the past 10 years.
A man walks past a Nike brand store MLB is forecast to post a compound annual growth rate (CAGR) of 30% over the next five years in China, according to the US investment bank.
In China, MLB shoes sell between 800 yuan and 999 yuan ($110-$137), compared to the Nike Air Force, which sells at 749 yuan ($103).
Nike saw its first-quarter sales in China fall 16% from the year-earlier period to $1.65 billion, while Adidas also posted a double-digit sales dip in the country.
Weighed down by sluggish Chinese sales, shares of Nike and Adidas have fallen 44% and 58%, respectively, so far this year.
CHINA-US CONFLICT, GUOCHAO
Industry watchers said Korean fashion brands are benefiting from the protracted China-US conflict as well as the burgeoning Chinese fashion fad, known as guochao, which has pushed out or significantly reduced the popularity and influence of Western brands.
Korean apparel retailer F&F's MLB brand Guochao, a combination of the Chinese word “guo” meaning nation and “chao” meaning fashion, has become an industry buzzword in recent years, as Chinese millennials born between 1980-95 and Generation Zers born between 1995-2010 became the main followers of the trend.
F&F’s Chinese sales amounted to 305.4 billion won last year, accounting for 28% of the company’s total sales of 1.89 trillion won.
F&F said it is also striving to expand its business in Asian nations other than China.
After entering Hong Kong, Macau, Taiwan and Thailand in 2018, the company has opened outlets in Vietnam, Malaysia and Singapore. Next year, it plans to open stores in the Philippines, Cambodia and Indonesia.
Write to Jeong-Cheol Bae at bjc@hankyung.com In-Soo Nam edited this article.
