It is virtually impossible to talk about the fashion industry of Korea without mentioning the name Kim Chang-soo. Kim is a fashion mogul who struck a series of mega-hits for the past 30 years after founding F&F with his distinct IP strategy business sense that started the craze for long-padded coats and also such as participating as the most important partner in the M&A with global golf brand.
A priest kissing a nun, the dying moments of an AIDS victim, a white baby suckling at a black breast, and a blood-soaked uniform of a soldier.

These are the images the Italian fashion brand Benetton used in its ad campaigns in the 1990s. They stirred up shock, fear, disgust, and anger by encroaching on the boundaries of taboos. Provoking controversies with striking images, those pictures are now remembered as wildly successful marketing campaigns as they engraved Benetton’s brand identity onto the minds of consumers.

It was around 1982 when the Italian fashion photographer Oliviero Toscani became the advertising director of Benetton. With Toscani at the helm, Benetton bid goodbye to its image-making strategy typical of a fashion brand that chose to show what’s only glamorous, handsome, and pretty. Instead, Benetton started to talk about hatred and discrimination juxtaposed with equality and peace. The green logo that says UNITED COLORS OF BENETTON had in itself become a cultural sensation, a story or a message adorned with the layer of fashion.

In 1992, Benetton landed in Korea. Its fearless and radical ad campaign also brought a culture shock and triggered controversy in the Korean fashion world. Back then, the globalization trend was sweeping across the country after its first civilian government took office, and the hip cultural products from the Western world with the green label “Benetton” on them instantly became a sensation, growing more than four folds in just three years. Soon after, Benetton occupied the best spot in every department store of Korea. All of this had happened in just a few years after F&F Chairman Kim Chang-soo made a debut in the fashion scene by acquiring the domestic distribution network of Benetton .

Kim hit home runs by introducing licensed foreign brands such as Benetton and Sisley right after he founded F&F in 1992. He went on to hitting more home runs by launching renoma sports, Elle Sports to be recognized as No. 1 hit-maker in the Korean fashion industry. Buoyed by the winning streak, Kim brought MLB in 1997 and Discovery Expedition(“Discovery”) in 2012, solidifying his reputation as the Hand of Midas.

Last September, F&F made another headline by participating in the bid to acquire the global golf brand TaylorMade Golf as a strategic investor. F&F also announced it would take over the management right of TaylorMade as a major investor who has the largest stake in the M&A deal.

Fashion as the face for brand value and philosophy

F&F’s success strategy from Benetton to MLB and Discovery can be summed up as getting the license of famous foreign brands with proven track records and make them fully entrenched into the Korean market. However, after bringing MLB to Korea in 1997, Kim started to diverge from his tested licensing strategy and tried a new approach, which was to import a brand and utilize the brand’s IPs proactively rather than just selling the existing products. In other words, he bought brand IPs seemingly unrelated to fashion and then adorn them with a unique concept designed by F&F to develop brand-new fashion products.

He got the licenses of MLB from the biggest professional baseball organization, and of Discovery from the documentary channel of the US. In the US, all the fashion items based on the MLB brand are just baseball caps and unforms since its merchandising business is just confined to putting team logos on a few items which target baseball fans. Because of this reason, the MLB clothes popular in Korea based on its IPs cannot be found in the US, the country of the brand’s origin. The same goes for Discovery. It has the identity as documentary channel with outdoor contents in its home country, but has become a fashion brand in Korea. Kim and F&F are the only ones who adopted this strategy not only in Korea but also across the global market.

Taking brands not related to fashion and turning them into fashion brands by reinterpreting their identities is the recipe of success for F&F. This modified strategy certainly has solidified the company’s position in the market. When met for an interview in the F&F headquarters in Gangnam, Seoul last September, Kim shared the Benetton story first, before he even talked about the success of MLB and Discovery. From the moment he founded F&F to selling off his stakes in Benetton Korea in 2016, his experience with Benetton “was a journey to rethink and redefine what it’s like to manage a fashion business”, recalled Kim.

“Benetton has succeeded by throwing a message to society. With its ad campaigns, it constructed a brand image of unity and harmony between diverse cultures and races. It went beyond simple styling to delivering the value and philosophy it wants to have through fashion. By looking at Benetton, I realized the key to success is to incorporate the brand value into a product in a genuine and authentic way.”

He applied Benetton’s brand philosophy to MLB after acquiring its brand license but added a refreshing new story. “I wanted to tell the exciting stories of baseball through fashion,” said Kim and it became the initial brand concept of MLB.

“I was determined to express the brand stories with fashion. I couldn’t settle for just making and selling nice clothes. I focused on delivering its brand philosophy through fashion. That is how I define my fashion business. For example, sacrificing yourself with a fly ball; players who made it big by being obsessed with what they love; heroes who just kept going no matter what and made it to the top at the end. Telling their stories through fashion, that is the concept of MLB brand. We extracted such life stories based on the values of baseball.”

The Asian financial crisis that hit Korea in 1997 was an opportunity to engrave MLB’s brand and image to the public. During the darkest days, Korea’s pride, Chan-ho Park joined the US major league as a pitcher and showed a great performance, shining a ray of light to Koreans suffering from the ramifications of the severe economic crisis. They rallied around Park who saved them from misery and by extension his team, the LA Dodgers, as he single-handedly repaired the broken pride of the nation as a “fellow Korean” who made it big in the world’s biggest and most competitive baseball league. The LA Dodgers became a household name in Korea, and more and more people turned into avid fans. So in early 1999, the shelves of MLB store in Apgujeong, Seoul were emptied out repeatedly as people flocked to get pieces of Park and the major league baseball.

“Looking broadly, I think fashion is about expressing your value through clothes. Chanel led female emancipation with its corset-free clothes; Armani visualized a genderless society and Yves Saing Laurent expressed female empowerment. I believed MLB and Discovery should follow in their footsteps by staying true to their unique brand identity, and communicating their values through fashion. That strategy worked.”

”Korea is best at mixing everything”

It has been 29 years since he entered the fashion business by founding F&F in 1992. Looking back on his career, Kim started to talk about the cultural difference between East and West, which is related to how a fashion company in a small Asian country leveraged IPs that go beyond the original brand and become hit products.

“To be honest, our strategy would not have worked if we had tried it in the West where sports are just sports and a TV channel is just a TV channel. Western minds like to dissect and analyze based on scientific standards to neatly categorize and organize things. The modern science revolution started in the West for a reason. East is different. Easterners put unity before individuality, harmony before conquest. They believe everything in this world is connected to each other. I’ve been born to and raised in the Asian culture, so I wanted to blend the thoughts and philosophy of East with the Western brands. With F&F, I found the middle ground, a hybrid of East and West. Pursuing globalization by harmonizing East and West has been the path F&F has taken so far.”

Kim’s approach of fusing values of East and West was more clearly demonstrated when he launched Discovery. After hitting the market in 2012, Discovery turned around the outdoor fashion trend of Korea. Before Discovery, overseas brands that dominated its market just emphasized how enduring and protective they are under extreme conditions such as the peaks of Himalayas, but Discovery changed the storyline into casually enjoying outdoors in our everyday life.

“Before Discovery, all the outdoor brands talked about heroes who survived the extreme hardship, which is a textbook portrayal of the Western humanism. The bright and strong should venture out to the wild and persevere to conquer. Such belief has been acted on throughout the Western history, filling it with records of conquests and domination. But do we really climb mountains in Seoul, such as Cheongye and Bukhan to conquer their peaks? Do we have the records on who first conquered Baekdu Mountain in our history? No. We see nature as a partner to live with, not as the object to conquer. Discovery has this brand identity which espouses an outdoor lifestyle to discover the values of nature. It had this totally different concept from the start. What happened afterwards? All the other outdoor brands started to talk about lifestyle rather than conquest.”

Kim gave credit to the “hybrid nature” of Koreans for his unique ideas and business strategy. It refers to the ability to blend disparate parts into a brand-new concept. The success of MLB and Discovery was only possible by meshing occidental value with oriental philosophy.

“K-wave is sweeping across the world these days. Look at K-pop. Its popularity is now global, but it doesn’t put the traditional culture of Korea at the front. Instead, it brings the Western tunes and choreography and integrates them with the Eastern value set. K-contents are not as provocative and strong as the Western ones. Korean movies like Parasite and Minari became successful as they have “family” as the central theme intersecting with other layers of class conflict or American dream of immigrants to become true success cases of globalization. MLB and Discovery are also the hybrid contents. Koreans love mixing different elements. They mix different types of alcohols, and love stews that have a variety of ingredients in them; their favorite dish is rice mixed with meat and assorted vegetables. They even invented a menu like a Kimchi burger which puts Kimchi into a hamburger. They are geniuses at mixing. By fusing different elements, they create what’s never seen before but remain relatable to both East and West. Building a fashion brand with just sports IPs? That’s hard to imagine in the West.”

Craze for long-padded coats brought by digital revolution

▎MLB is now one of the hottest global fashion brands in China.

The inventive strategy of F&F is being recognized highly not just in Korea but across Asia. MLB opened its first store in Mongkok, Hong Kong in 2017 for a full-scale expansion into the overseas market. Now it operates seven stores in Hong Kong, three in Macao and nine in Taiwan. Its growth is explosive especially in mainland China. After entering the market by opening its online channel on Tmall China and two brick-and-mortar stores in 2019, it has managed to open stores in more than 80 locations despite the pandemic, operating more than 300 stores in China as of now. Kim plans to increase MLB stores in China to more than 400 by the end of this year.

“In China, the MLB is not so popular as the NBA which has become so famous thanks to the star player Yao Ming. But the MLB brand started to build some awareness with the explosive growth of Chinese tourists visiting Korea. This means our unique recipe of blending East with West is also appealing in other Asian markets as well. Blending sports with life, and active with fashionable seems to be working. I think MLB should be seen as part of K-wave in the broader sense.”

Analysts say the sales at the duty-free channel and Chinese stores of MLB have increased 162% and 599% year-over-year to reach KRW 93.6 billion and 60.5 billion respectively. In the 2Q alone, it sold approximately KRW 150 billion just in China. If we include the estimates for the 4Q which is the beginning of the high season, the company is expected to earn KRW 305 billion this year and more than KRW 500 billion in 2022, which is a huge increase from KRW 74.5 billion last year.

Kim believes digital transformation is another great enabler that helped make F&F into a global company. He came to realize the boundless possibility of digital transformation by witnessing an unexpected trend. It was the craze for long-padded coats that just started out of nowhere in the winter of 2017. The fashion world is known for developing sudden enthusiasm for different things – mini-skirts, cropped shirts or leggings – but the craze for long-padded coats certainly brought tremendous repercussions.

“We in the fashion business call this phenomenon insane. In 2017 alone, Discovery sold 400,000 long-padded coats with one specific style selling more than 200,000 pieces to generate KRW 100 billion in sales. It created a whole new market all of a sudden. It was an unprecedented record in the retail fashion. Why did they sell so much? I had no clue at first,” said Kim.

He later found what caused this phenomenon. The sudden craze for long-padded coats which started in the end of 2017 was traced back to the digital world. It turned out that “Discovery long-padded” appeared as the top search word at the biggest portal site of Korea. The combination of top search words on the portal site grabbing the attention of the entire nation to create an “it” item, and the emergence of a digital community not constrained by time and place came to start a revolution that upended the conventional marketing strategy.

“I was really surprised to see the explosive power of the digital ecosystem. Before the fad, long-padded coats were just worn by athletes at the bench during the games. Then all of a sudden, it was transformed into a fashion item for everyone, driven by the online search words. And now other leading fashion brands of the world are following us to adopt the item we’ve pioneered with success. This is unprecedented,” said Kim.

After having a revelation about what digital transformation could bring, Kim realized having a digital platform is key to leading the globalized era. He immediately established a corporate division dedicated to digital transformation. He introduced a solution from the global CRM platform Salesforce and Microsoft 365 to digitalize the entire work environment. He also directed to generate data on fashion trends, consumption patterns and purchase process by analyzing big data. Communication between functions has been reinforced with the assistance of digital tools. The communication process is shared throughout the company, and data on the revenue and inventory status by brand is available on a real-time basis.

“It was impossible to measure consumer reaction to the offline ads. We just had to rely on our hunch and experience. However, in the digital world, we can have thorough technical analysis on consumer reaction, which boosts the efficiency of ads and makes much more accurate sales forecasts. Big data enables you to have clear and specific targets for product development and marketing. It is all thanks to opening data to flow freely.”

Acquisition of TaylorMade, the best solution for global expansion

F&F is also fully leveraging the power of digital transformation when driving global expansion with MLB. MLB now receives orders from across the globe, produces at its global production base and distributes across the global market on a real-time basis. Having a Shanghai office make a call to the plant in Vietnam to check the shipping status has become a thing of the past.

“K-fashion couldn’t enjoy as much popularity as K-pop or K-drama due to the inadequate management of inventory and supply chain. It is a challenge for the fashion business to build a smoothly working online ecosystem. Our production and logistics system didn’t quite measure up to those of global brands before, but now the situation is different. We are developing a digital system for K-fashion with a great success,” said Kim.

His aspiration to establish a world-class fashion company was clearly manifested in the decision to acquire TaylorMade. In early August, F&F announced it closed an acquisition deal with TaylorMade, a global golf equipment company of the US. F&F was the only strategic investor in the deal. Kim plans to complete the deal worth KRW 2 trillion with the private equity fund Centroid PE, deciding to put in KRW 600 billion as investment. Asked about the bold bet to take over such a big global brand, Kim said “it was not financially straining as we have such a good cashflow.”

F&F’s digital capability overwhelming competitors in Korea is another driving force behind betting on the golf business. “Only a few years ago, the golf business was seen to be on a downward trend,” said Kim. Golf is not an easy sport – you have to endure especially long hours of practicing and tutoring to actually enjoy the game, so it used to be dismissed as the sport for retired people who have lots of leisure time and money. However, digitalization also seeped into this domain to open indoor screen golf ranges across the country, which has turned golf into the national sports for everyone.

“In the screen golf range, you can check your swing posture and head speed easily and right away. You can also find numerous videos on how to play golf by professional players on YouTube. On top of this, you have this so-called ‘flex culture’ fueled by the social media that propels you to share your golf activities with friends and followers. Golf is the biggest beneficiary of digital transformation. If we can combine TaylorMade’s reputation with F&F’s strength, we will be able to create globalization synergy on a different level.”

At the end of the interview, Kim once again emphasized the fundamental meaning of operating a fashion business. His definition of fashion is “values I pursue, a medium to express myself and a vehicle to reveal desire to influence society.”

“Humans are the only animals that wear clothes. I think fashion is what makes us humans. The West believes free will is what shapes us as humans, but the East believes we are shaped by our surroundings. That is why Mencius’ mother relocated home three times to find the right environment for her son’s education. Fashion is a medium that enables humans to acclimatize themselves to the given environment and interact with it. Both East and West have it and need it. Fashion is what makes their values coexist with each other by fusing the shared elements. Fashion is indeed the most fabulous inheritance of the mankind.”

Acquiring TaylorMade for global expansion

After signing the acquisition deal with TaylorMade, F&F is working with Centroid PE to complete the takeover process. The company made it clear that the deal is not about securing the rights to sell clothes in the domestic market but about acquiring the right to manage and control “the US headquarters”, showing its determination to expand to the global market.

TaylorMade has a market presence in more than 200 countries across the world. Its overseas sales from North America, Europe, Japan, Oceania and others account for more than 90% of its total sales. By category, golf clubs and balls account for 90%, other items 8% and apparels 2%. With F&F at the helm, its apparel business looks to grow further.

F&F disclosed a plan to maximize TaylorMade’s brand value by fully leveraging its fashion know-hows after completing the acquisition of its headquarters while strengthening the controlling company to grow into a global business.

- By Jang Jinwon, Photograph by Jeon Mingyu