It seems that European footwear brands are turning more to Asia than to Eastern Europe these days for production, and the stronger euro is making Asia even more attractive than before as an output source. One major Chinese producer, Kingmaker, is focusing on Europe to increase its revenues.
The Chinese shoe company, which is Timberland’s largest supplier, added in the last 12 months to its roster of OEM clients two big Italian companies, Geox and Stonefly, which also manufacture in Eastern Europe, while trying to establish their own brands in China. GBMI’s Nautica and Pony collections are also new for the company. Its other major existing customers include Skechers, Clarks, Stride Rite and Wolverine.
The company, which is publicly listed in Hong Kong, has reported rising sales and orders from Europe. During the 6-month period ended Sept. 30, while its sales to the USA grew by only 1.3 percent to HK$461.4 million (€48.0m-$59.4m), sales to Europe rose by 16.1 percent to HK$195.6 million (€20.4m-$25.2m) and sales elsewhere went up by 2.8 percent to HK$35.1 million (€3.7m-$4.5m). Its total revenues rose by 5.2 percent to HK$692.1 million (€72.0m-$89.1m), but net profit fell by 8.3 percent to HK$66.4 million (€6.9m-$8.6m).
By category, its revenues for casual footwear were up by 16.6 percent to HK$226.2 million (€23.5m-$29.1m); and its sales of baby and children’s footwear grew by 2.5 percent to HK$311.6 million (€32.4m-$40.1m); while those of rugged footwear remained basically flat at HK$147.0 million (€15.3m-$18.9m). The group is targeting a 40-40-20 ratio for these 3 categories. Orders for its premium casual line from both existing and new European customers suggest the segment will grow more strongly than the mild growth expected from baby & children’s models. Kingmaker indicates that demand for dress casual and athleisure models is rising as well.
Kingmaker is well known to the management of Stonefly, which expects to get about 20 percent of its total requirements from China this year, as some of its members are also involved in the management and the ownership of Lotto, which belongs to some of the same people. Kingmaker distributes Lacoste products in Hong Kong and Lotto products in China.
Most of Kingmaker’s shipments to Europe come from its Vietnamese production lines. The company has a total of 35 lines in China, Vietnam and Macau, employing about 20,000 people, and they are set to grow to 40-42 lines by 2005. During the first half of last year, 4 new lines were added in Vietnam and 2 in Zhongshan, China. Training expenses for new staff and higher leather costs depressed the bottom line.