Fashion Export Orders Overcome COVID-19... "ODM Revived the Spark"

[Asia Economy Reporter Yujin Cho] Due to the spread of the novel coronavirus infection (COVID-19), foreign fashion buyers' design and research activities have been restricted, and domestic Original Design Manufacturing (ODM) companies meeting this need are benefiting.

According to the related industry on the 8th, fashion company Shinwon recorded approximately a 28% increase in export orders compared to the same period last year (based on cumulative figures up to August). This is the result of an increase in ODM export orders, which comprehensively entrust everything from design planning to production. It is interpreted as the emergence of a new market meeting the needs amid the adverse effects of COVID-19 restricting overseas fashion buyers' design and research activities.

ODM refers to outsourcing companies being entrusted with everything from product design to production. Large overseas fashion buyers such as Gap, Adidas, and H&M entrust external ODM companies with design and production, and sell the products under the buyer's brand label. The orderers can reduce direct and indirect costs related to design and production, increasing demand from large fashion companies seeking cost reduction due to COVID-19.

Among domestic ODM companies, Shinwon's new order performance was outstanding. A Shinwon official cited know-how related to eco-friendly technology as a growth factor. The official explained, "Providing various options for garment dyeing, which has recently been gaining strength, through the development of various eco-friendly fabric dyeing (garment dyeing) techniques seemed to appeal to buyers." The appeal of assets such as eco-friendly certifications (OEKO-TEX 100) including the use of organic cotton and recycled polyester was also effective.

Hansee Apparel, the largest fashion ODM company in Korea, is also overcoming the order cliff crisis caused by COVID-19 by utilizing its research and development (R&D) capabilities. Of the total workforce of about 600, 150 are R&D personnel. Major overseas large clients, including Gap, have recently increased ODM demand as they reduce the number of designers for cost-cutting after COVID-19 and convert to outsourcing. A Hansee Apparel official said, "We are expanding our business by proposing items that reflect fashion trends, colors, and designs through analyzing fashion trends."

Although the OEM and ODM markets have been dominated in major overseas markets such as the United States and Europe, which are strongholds for Korean companies, competition has intensified recently as Chinese companies rapidly increase their presence. A fashion industry official said, "It is meaningful as an achievement made while the domestic fashion industry is struggling due to a sharp decline in overseas demand and worsening domestic sales caused by COVID-19," adding, "Domestic fashion ODM companies are focusing on building differentiated competitiveness against China triggered by COVID-19."