Hansae Yes24 mulls beauty business amid diversification efforts

(From left) Kim Ik-hwan, Vice Chairman of Hansae Co., Kim Suk-hwan, Vice Chairman of Hansae Yes24, and Lim Dong-hwan, CEO of Hansae MK. (Hansae Yes24 Holdings)

South Korea’s Hansae Yes24 Group is mulling an entry into the beauty market via its global fashion subsidiary, Hansae MK, which currently manages NBA and Nike Kids brands. This move aligns with the group’s broader strategy to diversify its business portfolio beyond fashion, following its recent participation in the bidding process to acquire auto parts supplier ERAE AMS.

Hansae Yes24 Holdings highlighted the group’s intention to pursue M&As and new business initiatives during a press conference held in Ho Chi Minh City on October 16th, 2024. The event, attended by key executives including Hansae Yes24 Vice Chairman Kim Suk-hwan, Hansae Co. Vice Chairman Kim Ik-hwan, and Hansae MK CEO Lim Dong-hwan, emphasized the importance of portfolio diversification to position the group for a second phase of growth.

Hansae Vietnam, a core subsidiary responsible for 62 percent of Hansae Co.’s total production, operates its largest manufacturing hub in Vietnam. As global apparel consumption weakens, Hansae Yes24 Group is seeking new growth opportunities beyond the fashion industry to offset stagnating sales.

Hansae MK is particularly focused on capitalizing the blurring boundaries between fashion and beauty, a move that aligns with current market trends. “We are working to expand into skincare while pursuing larger flagship stores for our brands, such as adult clothing line Buckaroo and children’s wear brand Moimln,” CEO Lim Dong-hwan said.

Hansae MK officially added cosmetics and alcoholic beverage sales to its business portfolio during the 2023 shareholder meeting and is now considering collaborations with original equipment manufacturers (OEMs) to develop in-house brands. Other strategies include incorporating curated beauty brands within existing apparel stores or acquiring brands that offer both apparel and skincare products.

Hansae Yes24 Group’s diversification efforts also extend to the automotive sector, and the group was selected as the preferred bidder for ERAE AMS, a mid-sized auto parts supplier, in August 2024. If the acquisition is finalized, the group aims to strengthen its presence in both internal combustion engine and electric vehicle markets.

The acquisition is expected to reduce Hansae’s reliance on its apparel original design manufacturing (ODM) business, which currently accounts for 62 percent of its total revenue. Once the auto part supplier’s integration is complete, the group’s ODM share is projected to drop to 51 percent while the automotive components business could increase to 17 percent.

While some industry watchers expressed skepticism about Hansae’s move into the automotive sector, the group believes that its extensive global network and experience with major buyers will provide a competitive edge.

“We will leverage our global network to expand our buyer base beyond our key client GM Korea,” Hansae Yes24 Vice Chairman Kim Suk-hwan emphasized.

Hansae’s recent acquisition of U.S.-based textile manufacturer Texollini is also drawing attention for its potential synergies with the company’s apparel business. Hansae Co., which supplies major global brands like Target and Gap, plans to enhance its offerings using Texollini’s advanced technologies.

Vice Chairman Kim Ik-hwan outlined plans to expand Hansae’s customer base in the activewear segment, revealing ongoing discussions with brands such as Alo Yoga, DSG, Lululemon, and Nike. “Texollini will play a crucial role in penetrating the U.S. market, especially given the rising emphasis on domestically produced goods,” Kim said, noting that products manufactured in the United States are expected to offer both quality and price advantages.

Hansae Yes24 Group is making strides in artificial intelligence in addition to its efforts in fashion and automotive sectors. The group plans to launch a news portal service, powered by a proprietary large language model (LLM) developed by its Yes24 unit, in November 2024. The LLM is also slated to be integrated into the group’s ERP systems later in the year or in early 2025.