South Korea could be a leading force in the 21st Century world economy. This article profiles its apparel producers, its accessory suppliers, and its increasingly strong machinery manufacturers. The country seems well supplied internally and is increasingly exporting its goods. Domestic costs are low, ensuring price competitiveness, and provided it offers quality there should be an expanding market for its exports.

Korea is in a state of flux compared with a few years ago. But the changes are very positive and are creating a more important country in world terms.

The changes stem from the country's economic crisis of 1997 when the government had to call on the International Monetary Fund for a rescue package of $58 billion, the largest ever made by the IMF. This request had a profound effect on the country, resulting in legislative changes and sweeping moves to improve the financial system and attract foreign investment. In 1998, for example, textile imports were 42 per cent down on 1997 at $4 billion. Today, the economy has stabilized and Korea has seen a record amount of inward investment in the last year and a half.

It is now the world's 15th largest economy and third in Asia behind Japan and China. It is the world's number one shipbuilder, fifth biggest carmaker, sixth largest steel producer and home to the world's biggest semiconductor manufacturers.

Textiles are Korea's second largest industry. The sector forms 14 per cent of the nation's total exports and employs 16 per cent of the workforce. But sales in its domestic market are becoming polarized between high and low-end brands, with a gap in demand in the middle.

The Korean government has recently invested $318 million in the Milano project, which will help create a new fashion complex in the country's third largest city, Taegu. It plans to invest $600 million in total with a series of projects that include designer exchanges, joint fashion shows and integration of several fashion colleges into a Taegu campus.

Global Outlook
Korea has long been regarded as a difficult market to export into but the current government outlook is regarded as very positive and globally orientated. The whole economy is in a period of strong growth and one specialist considers the country could emulate Japan's pre-crisis growth rate. The two countries are only 70 miles apart at the nearest point but have an uneasy relationship. Japan has invaded Korea many times over the centuries and razed Seoul to the ground at least three times.

Within the country, the Democratic People's Republic of Korea occupies the northern half of the Korean peninsula, above the 38th parallel, while the Republic of Korea occupies the south.

Comparable in size to Portugal, the south has a population of some 46 million with 11 million living in Seoul, making it one of the 10 largest cities in the world. English is a common second language and most companies have at least one English-speaking employee.

North Korea has been classed on a level with the poorest third world countries while the south is considered a first world country. The two have not yet negotiated a peace treaty following the Korean War of 1950-53.

But personal relationships are still vital for companies that wish to trade with Korea. The convention is still for long-term relationships, so potential exporters to the country must take a long-term view.

This is a legacy of the chaebols, large, traditional, family run conglomerates which believed that big is best and which rated turnover and market share above profits. Seven of the top 30 chaebol went insolvent in 1997, a major factor in the loss of international confidence that precipitated the foreign exchange crisis.

Cultural Features
In common with many countries around the world, Korean culture has specific features that must be accepted by people wanting to do business with the country. Direct contact or cold calling is unwise. It is important to have an intermediary, known to both parties, who will make a formal introduction.

Business cards are vital. Korean businesses have a very structured hierarchy with everyone's position clearly understood. Their staff will not feel comfortable at any meeting until they know the position of visitors in similar detail.

Korean decision-making is often a collective activity and may take longer than expected. Confrontation is out, as is causing Koreans to lose face. Entertainment is important in business relationships and should always be accepted, and returned in due course.
Legal documents are not as important as human relationships. Contracts may be left flexible to allow for future changed circumstances. This can be uncomfortable for people from countries where the fine detail of a contract is everything.

An ideal time for visitors from the clothing industry to see the country is during Seoul Fashion Week, which takes place in October and is arranged by the Korea Fashion Association.

Apparel Production
South Korea is rapidly becoming a potential force to be reckoned with in the clothing industry. A brief survey of manufacturers in South Korea shows a wide diversity of products. Textiles are the major product of the country but all other needs of the clothing manufacturer can be catered for from within. Many of the major companies are young, established in the last decade, but their position and size today indicates a very strong growth rate in that time.

The leading companies all have sites on the Internet and export to several countries in Asia at least, with many also exporting to America and Europe. The finished goods market is very strong with quality, designs and prices that attract many shoppers from Japan, who fly in on day trips.

Companies that manufacture fashion garments include Costa Commons Co, which specialises in 100 per cent pure silk fabrics. Victor Lee, manager, says the company's range also includes denim jeans, women's casual wear, silk ties and scarves.

The company exports worldwide under the bran names TMX201, Cocolee and Pachamama. The price range for jeans is currently US$13.58 to $25.00, with a range of sizes on offer. Samples can be delivered in five days with large orders in 15 days.

Hansu Corporation manufactures all types of outerwear and has factories in Vietnam and China. Fabrics are mostly cotton, nylon and wool and it exports products mainly to France, Germany, Italy and Japan. Makerup is a company manufacturing ladies T-shirts, jackets, skirts, slacks and gents' shirts and jumpers.

Specialist garments are manufactured by Baekdoo Co, which produces antistatic gloves, gowns, smocks and shoes for clean rooms in the electronics and semiconductors industries. Home customers include Samsung and Hyundai, while Baekdoo exports to the US.

Manufacturing Strength
South Korea is very strong in textile production with a whole range of companies producing all types of fabric. Woo Young, for example, was established in 1965 as a small textile-retailing store. Since then it has developed along with the textile boom in Korea and says it is now one of the most important and reputable textile suppliers in the country. It offers a wide range of warp knit, tricot products focusing on velvet, velboa, allova, nylex and velour. Production is based on 28 knitting machines that output over 1.5 million yards of fabric a month. Last year's exports to the US, Europe, Japan, China and South America totalled US$30 million.

The country is also strong in its machine companies. Korea Sewing Machine Industrial Co manufactures industrial sewing machines under the SunStar brand name. It also manufactures automatic embroidery machines through its affiliated company Hankuk Special Precision Co, and electric motors through Hankuk Electric Co.

Current prices are US$1,000-30,000 for sewing machines, US$30,000-80,000 for embroidery machines and US$400-500 for electric motors. Delivery is 30 days. The company says it is Korea's largest industrial sewing machine supplier while its subsidiary, Hankuk Special Precision, claims 30 per cent of the global market for automatic embroidery machines. It started production in 1996 and aims for a 70 per cent market share within the next few years.

Hankuk says the global market has changed in its embroidery machine needs. The company originally produced only multi-head models with more than 12 heads. But embroiderers have recently wanted greater flexibility of production and, last year, Hankuk introduced single, four- and six-head machines. A two-head model was unveiled earlier this year.

But it still manufactures multi-head machines and has recently introduced a tubular type 12-head model. The current SWF/B series has up to 24 heads and can handle 6-12 colours of thread. Stitch length is 0.1 - 12.7mm and its memory can store 2 million stitches. Machines run at 250-850spm, using servo-motors, while an LCD screen provides full information on machine status.

The new four-head, 12 needle model, SWF/A-UK 1204-45, is ideal for embroidering T-shirts, tubular knit fabrics and hats. It runs up to 1,000spm.

Export Marketing
For exporting, Korea Sewing Machine markets through Hankuk. It offers drop-feed, upper- and lower-feed and synchronised-feed types. Very popular are the single needle lockstitch machines with edge trimmer and automatic thread trimmer while the basic model enjoys steady demand.

Latest developments include electronically controlled, bar tacking machines, the SPS/A-B1201 series; electronically controlled pattern sewing machines, SPS/A-1306 series; and high speed single needle unison feed lockstitch machines with automatic thread trimmer and large bobbin hook. The 1201 series can store up to 99 patterns with a sewing area 40mm x 20mm and sewing speed of 2700spm. Stitch length is 0.1-10mm.

Pattern-sewing machines feature a seam guide mechanism to ensure straight lines while the large bobbin hook ensures reliability of stitch formation. An LCD panel provides full information for operators. Machines can store up to 691 patterns, covering an area of 180mm x 110mm and sewing at 2,500spm on the largest machine. Hankuk also offers the KM-1060BL-7 for sewing heavy materials such as bags and soft furnishings. It runs at 3,500spm and the presser foot lifts to 16mm.

Rhee Youn-Hee, export sales director, says this year's export should exceed $120 million, double last year. This has been helped by the new, innovative models that are rivalling Japanese machines. Major markets are China, South East Asia, Latin America, Middle East and Europe. The company has offices in the US, Hong Kong, Indonesia and Vietnam and could shortly open a European office and warehouse to provide improved sales and service to Europe, North Africa and the Middle East.

Sewing Machines
Unicorn brand industrial sewing machines offers a wide range of products including the LS2-H5100 UK single needle ultra high-speed lockstitch sewing machine with thread trimmer. The range offers a variety of driving motors.

The LT2-H6250 M twin needle lockstitch machine features a split-needle bar and needle feed with other options on machines in the range. The CB3-H303 is a single needle chain stitch button sewing machine with thread trimmer, while the DB2-H310 is a single needle high-speed lockstitch sewer. All ranges feature a number of motors and accessories for the complete sewing service.

Dong Yang Garment Machinery manufactures automatic sewing machine systems under the brand name Lastar. These are exported to many countries worldwide while the company also has a US office. Machines include a waistband lockstitch sewer, automatic belt-loop attacher and jeans pocket-hemmer, hem-rolling machine, jeans turner and pocket-former. The jeans leg seam sewer features a dual press foot designed to cope with the different thicknesses of denim either side of the seam. Dong Yang also manufactures fusing and pressing machines with automatic, rotary, belt loop and mini options.

Taewoo Co manufactures and markets support equipment for the sewing room. This includes 21 models of automatic strip cutting machines, knit tape cutters and thread winders.

Mr Jong Bong Park, Taewoo president, says the TBC-47 series is the most popular machine worldwide. The company exported 63 per cent of its products last year. It says that a strong development programme has given it 80 per cent of the home market with two competitors sharing the rest.

Taewoo's latest development is the TBC-98 series as a replacement for the TBC-47. The new series includes a belt loop cutter, printed and woven label cutters, ribbon tape cutter and a webbing cutter for such applications as seat belts and haversack straps.

Park says the new series features a thumb wheel switch instead of a keyboard to simplify its operation and to reduce training time. Traction power is adjustable in both speed and acceleration to avoid slippage of heavier materials. Automatic sensing can be incorporated to stop machines when materials run out. Cutting speed is between 120 and 140 cuts per minute in 50mm tape-width. A new knit tape cutter, TC-38A, is easy to operate and can handle a range of materials without changing parts such as the rollers. In-built protection stops the machine in the event of jamming.

Trimmings
Amongst the many companies supplying ancillaries to the clothing industry, trimmings company Hanil Button Land says it is one of the largest manufacturers and exporters of buttons. It specialises in urea, polyester, corozo-nut and buffalo-horn types.

Hwacheon Trade Co says embroidered and Raschel lace is its major product, mostly for ladies' outer and underwear. It exports to a number of Asian countries including Japan and China.

Elsewhere in the industry, Mation Korea manufactures children's shoes and is selling to Wal-Mart Korea under its brand names Cuddles, Cuddly Kids and Mation. It says its products support the growth in children's feet and provide a simple, compact, cute and active design. It will manufacture custom designs under customers' own labels. And to price up all these products, Korea Labeller System's Kola labellers, tagging guns, tape cutters and writers are used worldwide, says the company.

Business Information
For further information on Korean companies, there are Internet directories from KaKang International (e-sewingmachine.co.kr) covering machines and equipment; and Korea Textile Communication, Texcom (www.texcom.co.kr), which provides detailed business data on producers, products, order inquiries, news and market trends besides other information. It works with organisations such as the Korea Textile Newspaper, Korea Export Association of Textiles, Korea Trade Association, Korea Federation of Textile Industry and Korean Apparel Industry Association.

For textile producers, the Spinners & Weavers Association of Korea (SWAK) now has 19 member companies operating a total of nearly 2.2 million spindles and 2,500 looms. It helped set up the Korea Cotton Textile Export Association, the Korea Federation of Textile Industry and the Korea Textile Inspection & Testing Institute. General business services are provided by the Korea International Trade Association, KITA.

South Korea' clothing industry seems well supplied internally with all its needs and it is increasingly exporting its goods. Provided it offers quality, there should be an expanding market for its exports. Domestic costs are low, ensuring price competitiveness, but sales activity is very low. Few companies have web sites and those that do are limited in their selling aspects. Brochures are factual rather than eye-catching, and buyers will have to work hard to find out background information when choosing suppliers.

This outlook is somewhat traditional in that Asian business relationships are expected to be long-term and there is not the constant reviewing of suppliers that typifies western business. But there are signs this is changing and, if the issue were addressed so that sales literature made the strong pitch to customers as it does in the west, then South Korea would become an increased force to be reckoned with.

By Eric Russell