South Korean outdoor apparel maker Youngone Corp. will invest $120 mn to build 12 factories in India, becoming the first Korean original equipment manufacturing (OEM) and original development manufacturing (ODM) company in the apparel and textile sector to advance into the market. The facilities will become the company’s sixth overseas manufacturing sites.
“We had received requests from the Indian government over the past decade, urging us to invest there by offering tax benefits and other financial support,” said Chairman Sung Ki-hak. “Our expertise in textile technology, especially in chemical fibers, is world-class.”
Sung noted that India is a country with a significant textile industry following agriculture but it lacks competitiveness in the field of chemical fiber clothing. “We began considering investment there in 2016, but it took six years to finalize the factory site due to the challenging environment,” Sung said.
The factories will be located inside the Kakatiya Mega Textile Park in Warangal in the State of Telangana.
Youngone decided to expand into India to “diversify investment destinations and reduce risks,” according to Sung.
The Chairman explained that the company was compelled to explore alternative investment options as their facilities in China had been closed.
“We entered China in 1995, investing approximately 50 billion won ($37.5 million) and employing 10,000 workers,” he said. “However, our Chinese factories have been virtually shut down since 2018.” He noted that unfavorable conditions for Korean businesses persist since the Korea-China conflict over a U.S. missile defense and that unless the Chinese government changes its stance, he doubts the feasibility of any further investment there. Sung further emphasized that the company would follow market demand.
“Our goal is to respond quickly wherever mass production or consumption is needed worldwide,” he said. “While markets have limits, production does not. We must pursue opportunities where they arise. India, with its substantial market, not only offers the potential for exports to neighboring countries but also to its domestic market with a population of 1.4 billion.”
Youngone plans to construct 8 out of the 12 planned factories and facilities by 2025. They are expected to create around 50,000 jobs, including 12,000 local employees and indirect employees. Sung expects the Indian factory to generate a production value of approximately $200 million to $300 million, accounting for about 10 percent of the company’s total production. When asked about additional overseas investment plans, Sung mentioned Uzbekistan.
“Uzbekistan is strategically located in the middle of Europe and Korea. Although we’re facing challenges at the moment due to the ongoing conflict there, we have been exploring markets in Eurasia. We are planning to make substantial investments to establish a significant production base there.” His global perspective is not confined to Eurasia.
“We are also pursuing a factory in Kenya, targeting the African and European markets,” he said. “Additionally, construction of factories is underway in El Salvador and Guatemala, and we will continue to invest in Bangladesh. With the exception of South America and Australia, where we lack in presence, we are actively pursuing investment opportunities worldwide.”
