How Did Chairman Kim Chang-soo Build a $2 Trillion Fashion Empire Without a Brand or Factory?

The Success Story of Chairman Kim Chang-soo in the Fashion Business

• Chairman Kim Chang-soo, the founder of FNF, has amassed a fortune of 1.6 billion dollars and 2 trillion won, making him the 22nd richest person in Korea according to Forbes.

• FNF, despite not manufacturing any products or having its own brand, has found success in the fashion business through licensing agreements with MLB Major League Baseball and Discovery Expedition brands.

• The strategy of using licensing agreements for established brands like MLB and Discovery has propelled FNF to great financial success in the fashion industry.

The Success Story of Chairman Kim Chang-soo in the Fashion Business

The Rise of FNF as a Fashion Brand

• FNF, known for its innovative approach, has reinterpreted the concept of a brand, turning it into a successful fashion brand rather than just a goods-like concept.

• Unlike traditional fashion licensing agreements, FNF has utilized logos of American professional sports leagues and channels like National Geographic and Discovery, achieving recognition as a fashion brand.

• In contrast to other fashion companies, FNF does not engage in production, adopting a strategy similar to technology giant Apple, which focuses on design and advertising, outsourcing production to other companies.

• Korean companies, with expertise in manufacturing, play a significant role in the consignment production for popular fashion brands, including those like Lululemon and Patagonia.

• FNF's unorthodox approach has paid off, with its sales reaching approximately 1 trillion won in 2021, marking an 80% increase from the previous year.

• Amid the challenges posed by the coronavirus pandemic, FNF has displayed exceptional growth, surpassing an operating profit of over KRW 520 billion in just one year.

• This remarkable performance sets FNF apart globally, as it has achieved unprecedented sales and profit levels, especially given the industry's recent struggles.

The Rise of FNF as a Fashion Brand

The Success Story of Chairman Kim Chang-soo in the Fashion Industry

• Chairman Kim Chang-soo played a pivotal role in bringing Benetton to Korea and achieving great success in the fashion industry during the early 1990s.

• Benetton's unconventional advertising and striking design made it a hip brand in Korea, resonating well with the tumultuous times after the Cold War and the transition of the Korean government.

• Using Benetton's success as a stepping stone, Chairman Kim Chang-soo introduced additional overseas brands such as Sisley, Renoma Sports, and Ellesport, expanding his success through licensing agreements.

• During the IMF bailout crisis, Chairman Kim Chang-soo seized the opportunity to sign a licensing agreement with the MLB brand, which proved to be a successful move despite the challenging economic climate.

• The MLB brand, initially known for selling hats, expanded into clothing, shoes, and bags, further contributing to Chairman Kim Chang-soo's success in the fashion industry.

The Success Story of Chairman Kim Chang-soo in the Fashion Industry

The Success of Discovery in the Korean Market

• The outdoor brand Discovery has achieved significant success in the Korean market, with MLB accounting for nearly 70% of FNF's sales share last year.

• Despite being a latecomer in the competitive outdoor fashion industry, Discovery implemented a successful strategy by focusing on high-performance and comfortable apparel for everyday lifestyle, which resonated well with the consumers.

• The brand's innovative approach and focus on lifestyle and outdoor concepts, rather than the traditional conquering the Himalayas narrative, have set it apart from the competition and contributed to its rapid growth.

• Discovery surpassed established brands like K2, Black Yak, and Netba Kolon, becoming the second-ranked domestic outdoor brand in just 10 years, with only North Face ahead of it.

• While FNF, the parent company, has seen remarkable success with MLB and Discovery, there are concerns about the brands reaching maturity and the need for new strategies to sustain growth.

The Success of Discovery in the Korean Market

The Impact of Brands in the Chinese Market

• MLB, perceived as an American brand, is not greatly affected in the Chinese market, unlike many Korean brands.

• FNF, a Chinese brand, sells its products at a higher price in China compared to Korea, with T-shirts being over 10% more expensive and shoes and hats about 30% more expensive.

• Discovery, restricted to selling only in Korea due to licensing agreements, is focusing on expanding its product range rather than geographical expansion like MLB.

• Discovery's shoes, particularly the 'ugly sneakers', have gained popularity and now contribute to 20-30% of the company's sales.

• The company is aiming to reduce reliance on licensed brands by acquiring its own brands, such as the Italian padding brand Duvetica and the American premium tennis brand Sergio Tacchini.

• It has heavily invested in TaylorMade, one of the top three golf brands globally, and aims to expand the brand's product range beyond golf clubs into clothing, shoes, and golf supplies.

• Chairman Kim Chang-soo emphasizes the importance of storytelling in the brand's success, aiming to reinterpret Western brands in an Eastern way.

• FNF, without its own brand or factory, is closely watching for new success stories in the future.

The Impact of Brands in the Chinese Market

Conclusion:

Chairman Kim Chang-soo's unconventional approach to fashion has led to the unparalleled success of FNF in the Korean fashion industry. Despite not owning a brand or factory, FNF's innovative strategies and licensing agreements have propelled it to the top, showcasing the power of a new approach to fashion business.