Contract production and licences in Korea — turning casual shoes into an SPA business (1990)

From borrowing the rights to making the goods

At the centre of this decision is a question about where the profit in an import-wholesale business is actually decided. The method of finding an unknown brand abroad and locking up exclusive rights turns the finder’s eye for goods into profit. But holding the rights does not change the fact that the other side determines where the goods are made and what they cost, and a stronger yen shaves the gross margin. Miki moving his orders to Korean factories, buying the right to produce under licence, and finally acquiring the trademark itself can be seen as the work of taking back, one piece at a time, the parts that had been left in someone else’s hands.

Vertical integration was not, however, a cure-all. With the power to make and the power to sell concentrated on a single brand, when the Hawkins boom passed the results fell by the same amount. The company then turned to retail, holding its own selling floors, and moved to a stance of lining up several brands alongside its own products. What the 1990 decision left behind was not the success of one brand but a condition: that the company could decide for itself where, by whom and at what cost its goods were made. Nearly forty years on, that condition can still be seen supporting its gross margin.