Will The Factory Be Frightened

- Mar 13, 2019-

Unlike many brands that strive for high-end, YKK Group, a Japanese company known for producing zippers, plans to make a big splash in the low-end market. Perhaps the biggest impact from this is the Chinese industry.

On March 2, Tadahiro Yoshida, chairman and CEO of YKK, the world's largest manufacturer of zipper fasteners, said it will invest more than 277 billion yen (about 16.7 billion yuan) in the next four fiscal years. More than half will be used for its zipper business.

According to the plan, YKK hopes to increase the global sales of zip fasteners to 12.9 billion pieces by the end of 2020, 1.5 times that of 2016. YKK said that low-end clothing and bags in China and Asia can be the main driving force for its growth.

Founded in 1934 as a zipper business, YKK Group was formerly known as Yoshida Kogyo Kabushikigaisha, one of the world's largest manufacturers of zip fasteners, covering 70 countries around the world. In the 1990s, YKK entered China and established production plants and sales companies in Shanghai, Shenzhen, Wuxi and Dalian. In addition to zip fasteners, building materials and industrial machinery are also the main pillars of the YKK Group.

High quality has always been a proud selling point for YKK zippers, claiming that their products can withstand more than 10,000 opening and closing. In terms of sales, YKK accounts for more than 40% of the global zipper market, but sales account for only 20% of the global market, reflecting the company's dependence on high-end products.

High-end products account for more than 80% of YKK's zipper business. From the sports jackets of Adidas to Levi's jeans, careful consumers can find these three letters on the zipper head. In addition to branded apparel, YKK zip fastener customers include manufacturers in the home and automotive parts industries.

With the development of the fast fashion industry, the compression of the procurement cost of the apparel industry has brought considerable challenges to YKK. In order to stay competitive in terms of price, YKK had to find ways to reduce costs in raw materials and production processes.

In FY2016, YKK's zipper fastener sales volume is expected to increase by 1.2 billion units compared to FY2012, but it has not yet reached the 10 billion target expected at the time. Inadequate sales of low-end products are considered to be the leading cause of failure. The products produced by Chinese manufacturers have advantages in the low-end market, which makes YKK feel a lot of pressure.

Investment in Asia will account for 60% of the total investment in YKK zipper business, including spending more than 13 billion yen (about 785 million yuan) to increase production capacity in Vietnam, India and Bangladesh, as well as new countries in China and other countries. Five R&D centers have been added to bring the number of overseas R&D centers to 15 and the number of overseas R&D personnel in Asia has increased by 40% to 460.

In addition, YKK will also set up a research and development center in Kurobe City, Toyama Prefecture, Japan to study how to use robot production. The Japanese company also plans to offer foreign engineers a three- to three-year training program to absorb production experience in Asian countries.