F&F Co., a South Korean outdoor fashion retailer, has notched a success selling US Major League Baseball (MLB) apparel in China. This comes despite Chinese young people's growing preference for homegrown labels amid the ongoing trade war between the world’s two biggest economies.
Domestic demand has been recovering in China following its post-pandemic reopening. But US brands like Nike Inc. have struggled in the world’s top consumer market as a Chinese fad favoring locally made products known as guochao — a combination of the Chinese word “guo” meaning nation and “chao” meaning fashion — gains steam. In recent years, it has become an industry buzzword as China's millennials and Gen Z'ers embraced the trend en masse.
Last year, F&F logged sales of 1.2 trillion won ($903.3 million) from MLB apparel in China, according to fashion industry sources in Seoul on Sunday.
The Korean apparel firm reported such success only three years after starting to sell products there. Global investment bank Goldman Sachs said F&F has been posting a growth rate unmatched by any other foreign brand in China's fashion market over the past decade.
This comes despite Chinese customers being well aware that MLB apparel is manufactured by a Korean firm. F&F launched its MLB line back in 1997 through a licensing agreement.
Goldman Sachs forecasts the brand growing at an annual average of 30% over the next five years. MLB apparel was forecast to generate sales of 1.5 trillion won in 2023 as its number of stores in China are expected to grow from the current 880 to 1,100, according to industry sources in Seoul.
CREATION OF K-FASHION WITH NON-APPAREL BRANDS
Company Chairman Kim Chang-soo founded the company in 1992, naming it after the words fashion and future.
F&F Chairman Kim Chang-soo (File photo)
Kim was famous for his noteworthy turn in the domestic fashion industry's brand licensing business: He avoided importing popular foreign apparel brands for the local market.
Instead, he inked licensing agreements with non-fashion brands and created F&F styles based on its own concepts. F&F developed MLB, which in the US had focused on baseball gear, into a broader apparel brand that included fashion items such as swimming suits.
In 2012, F&F signed such an agreement with Discovery Inc., a US-based multinational mass media TV conglomerate, to launch the outdoor fashion brand Discovery Expedition.
Kim tried to capture the stories of successful players who focused on their favorite sports through MLB apparel, while weaving the identity of an outdoor lifestyle fashion that derives value from nature into Discovery Expedition.
PORTFOLIO DIVERSIFICATION
F&F’s operating profit in 2022 surged 62.7% on-year to 524.9 billion won with sales up by two-thirds to 1.8 trillion won on a consolidated basis. Its revenues are expected to top 2 trillion won this year, analysts said.
The company is likely to face risk, however, from its heavy reliance on the two licensing brands. F&F's success may prompt MLB and Discovery to pursue their fashion businesses independently, industry sources said.
To prepare for such a potential threat, F&F is diversifying its portfolio through acquisitions of foreign brands.
The company took over Duvetica, an Italian down jacket brand, in 2018, and last year added Sergio Tacchini, a New York-based luxury sportswear brand. 23SS Sergio Tacchini Collection (Courtesy of F&F) F&F has also launched an entertainment business to create a synergy of fashion and K-content. F&F Entertainment is preparing a global audition project to promote a girl group by selecting band members from around the globe who dream of becoming K-pop stars. The show is set to air in the second half of 2023 through Korea's major broadcast networks.
