North Face supplier Youngone to build R&D center in Bangladesh

Youngone Corp., a South Korean original design manufacturer (ODM) for foreign outdoor brands such as The North Face and Nike, will build an R&D center in Bangladesh by 2027 for weaving, printing and design, said Sung Ki-hak, the company's chairman and chief executive on Thursday.

The R&D center will be composed of seven divisions for textiles, design and other operations. It will hire 2,000 employees, including 20 professors and 30 researchers with master’s or doctoral degrees, by 2027.

Near the facility, it will establish a university-level educational institution with textiles to clothing design curriculums for its employees from the end of next year in commemoration of its 50th anniversary this year.

The institution will collaborate with Korean and foreign universities to develop cutting-edge technologies, Sung said in an interview with The Korea Economic Daily.

Later on, it will open the doors of the education center to those from the outside.

Youngone manufactures clothes for global sportswear brands, including Patagonia, Adidas and Lululemon, under licensed agreements.

PRODUCTION BASES OVERSEAS 

It built its first overseas factory in Bangladesh in 1980 to cope with export quotas imposed by its top export countries. Some 60% of its products are manufactured in Bangladesh.

In the following years, it set up a factory in China to maximize its cheap labor costs and then one in Vietnam to diversify its manufacturing base as part of a speed-to-market strategy.

It also runs production lines in India and Kenya, as well as in El Salvador and Ethiopia.

Named after the Young Ones, a chart-topping song in the 1960s sung by Cliff Richard and the Shadows, it has never suffered losses since its inception in 1974. It produces all its products abroad.

CENTRAL AND SOUTH AMERICAS

It also plans to make a heavy investment in building a new factory in Guatemala where it already operates a plant.

“To expand into Central and South Americas, we will make an additional big investment in Guatemala bordering El Salvador,” Sung said.

To boost its sales in Europe, it is considering establishing production lines in Morocco, Tunisia and Bosnia.

The North Face achieved the 1-trillion-won ($725 million) sales mark for the first time as a single brand sold in South Korea.

Sung said it will continue to specialize in the ODM business rather than starting its own brand, despite feeling threatened by low-price Chinese competitors in the e-commerce era.

To expand into the sports equipment brand market, it acquired domestic bike and ski maker Scott North Asia Ltd. for 154.5 billion won between 2013 and 2014. But that business has accumulated losses.

Sung said it will take more time for Scott North Asia to clear inventories piled up during the COVID-19 pandemic period.

Write to Sul-Li Jun and Hyung-Joo Oh at sljun@hankyung.com

Yeonhee Kim edited this article.