Apparel maker Hansae sets sights on auto parts business as growth driver

HO CHI MINH CITY – South Korean apparel maker Hansae Yes24 Group has set its sights on the auto parts business as a new growth driver to diversify its business portfolio currently focused on clothing and books.

During the 2024 investor relations session on Wednesday, Hansae executives said the group will actively seek mergers and acquisitions while focusing on core, profitable sectors such as activewear goods.

The session was attended by senior executives, including Hansae Yes24 Holdings Co. Vice Chairman Kim Suk-hwan and Hansae Co. Vice Chairman Kim Ik-whan – two sons of group Chairman Kim Dong-nyung – and Hansae MK Co. CEO Lim Dong-hwan.

“I’m confident that our expected acquisition of Erae AMS will provide the needed boost for our growth,” said Kim Suk-hwan while unveiling the group’s business strategy.

In August, Hansae Yes24 Holdings was named the preferred bidder for Erae AMS Co., a Korean auto supplier with its 140 billion won ($103 million) offer.

Erae’s parent, Erae cs Co., put a controlling 80.6% stake in the lucrative auto parts unit up for sale in April.

Erae AMS, formerly Korea Delphi Automotive Systems Corp., supplies auto parts to GM Korea Co., General Motors Co.’s Korean operation, and Kia Corp.

The company posted 10.9 billion won in operating profit on sales of 576.6 billion won in 2023.

Hansae Yes24 Holdings hopes the auto parts-making company can act as a buffer during a slowdown in its mainstay garment business.

The group also has online bookstore Yes24 Co. under its wing.

Kim Suk-hwan said he expects Hansae Yes24 Holdings to post 193.8 billion won in operating profit on sales of 2.8 trillion won this year.

“We expect our sales to rise above 3.4 trillion won next year with the acquisition of Erae AMS,” he said.

Hansae Yes24 expects the vast global network it has built around its apparel business for decades will help its fast penetration into the global auto parts business with Erae AMS.

OEM LEADER HANSAE

Hansae Co. is an unfamiliar name to many Koreans but among original equipment manufacturing (OEM) companies in the apparel industry, it is a big name that produces nearly a third of all clothes Americans wear.

Hansae counts global fashion brands such as GAP, H&M and Zara among its major clients, for which the Korean company makes clothes under an OEM contract.

Its clothes, manufactured under OEM schemes and bearing labels such as GAP, Banana Republic, Old Navy, Carhartt and Pink, are mostly sold at large retailers such as Walmart and Target in the US and Coles in Australia.

Globally, Hansae has about 30 casual wear companies as clients.

Hansae Co. Vice Chairman Kim Ik-whan said at the investor relations session he expects 1.74 trillion won in sales this year and 1.78 trillion won in 2025.

Last month, the company acquired Texollini Inc., a California-based textile manufacturer, to strengthen its activewear business.

Texollini’s major clients include global sports brand New Balance, casual brand Champion, outdoor brand Patagonia and athleisure fashion brand Alo Yoga.

Hansae's largest overseas production base is in Vietnam.

Globally, the company operates 20 subsidiaries and 10 overseas offices in nine countries, including the US, Vietnam, Myanmar, Indonesia, Nicaragua and Guatemala.

“In preparation for the global economic recovery next year, we are making preemptive investments exceeding 400 billion won in key regions,” said Hansae Co. Vice Chair Kim Ik-whan

He said the company recently completed the construction of the C&T Plant 3, a fabric manufacturing facility in Vietnam, and expects the Ecospin yarn manufacturing plant in Guatemala in the fourth quarter of next year.

Write to Hyeong-Ju Oh at ohj@hankyung.com

In-Soo Nam edited this article.