Japanese Fashion Innovator SB Planning Charts Sustainable Growth and Artistic Expression

I’d like to begin with a question more from a market outlook perspective. Japan has a deep history with its kimono and yukata, which are characterized by timeless lines through different areas of improvement over the years. Today, Japan is famous for its cultural heritage and craftsmanship, as well as famous designers such as Issey Miyake. Furthermore, the country has a highly integrated supply chain of OEM, ODM, and textile makers. How would you define the uniqueness of the Japanese clothing and fashion industry, and what are the strengths from your point of view?

First, speaking of the Japanese economy in general, it has been struggling with deflation for over 30 years, so the price of each individual apparel piece has gone down drastically. The huge price competition within the domestic market meant that only the companies that were able to survive are now still operating. Sourcing-wise, domestically, we have established a comprehensive sourcing and procurement system. But in terms of sales, that network is yet to be expanded, so that is the negative aspect that the Japanese fashion industry must overcome. At the same time, there are many new emerging companies that are now trying to add new value to this fashion industry.

It’s interesting that you mentioned the lack of marketing ability because, on top of that, last year saw 30% of imports of fabrics and yarns from various overseas clothing companies. Although Japan imports a lot of those textiles, over the last three years, it has been able to double its exports of clothing and accessory products. Why do you think Japanese products are getting more and more popular overseas?

These newly emerging companies in Japan that are giving new value to the fashion industry are maybe the ones that are driving this growth, and traditionally in Japan, there’s this notion of “God lies in the details,” so Japanese have been very particular about creating goods with minute details. That is the reflection of the Japanese manufacturing monozukuri mindset and characteristics, and this detailed mindset is welcomed and appreciated by high-fashion countries like France or Italy. So these special high-end products that have been well-received could be the driving force of Japanese apparel overseas.

Today, one of the big challenges facing apparel, clothing, and textile brands is how to lower the environmental impact of their operations. Fashion has one of the longest supply chains in the world, where raw materials are often taken from developing countries, processed in an advanced market, made into clothes somewhere else, and then shipped for selling somewhere else. Further to that, of course, the fast fashion phenomenon has attracted a lot of negative press from international media about the environmental impact of fashion. How is your company mitigating its environmental impact? What are some processes you put in place to be more environmentally friendly?

It is true that the environmental impact of the fashion industry is quite considerable. But as a person who’s been in the industry for quite some time, I’m now seeing the shift towards more environmental friendliness. This is actually a natural movement from consumers and our customers to require a reduction of carbon footprint by, for example, sourcing the materials or textiles from areas where the factories are located so we can reduce the transportation footprint. This type of locally contained production is a way to contribute to the lessening of environmental burden, which our company is also taking.

The apparel and textile market overall today is worth around JPY 1.7 trillion and estimates have it growing to JPY 2 trillion by 2027. If you look at some of the growth drivers in the industry, environmental and sustainable solutions are definitely a big one. Experts also expect to see big growth in the luxury segment, which is set to double within the next 5 to 10 years. From a regional perspective, however, we see that the two biggest markets remain the United States of America and China, which spend more than all other countries. How do you see the evolution of the apparel and textile industry over the next year and in the long term? What do you think will be the main drivers for revenue growth?

In terms of growth, as I mentioned, sustainability would be the keyword in the fashion industry. Speaking of the Japanese textile market, now there’s a campaign saying that the textile industry is the second most environmentally damaging industry after the oil industry, so people are becoming more aware of the environmental impact and trying to transform its way to sustainability. This would, therefore, be a new driving force that would change the producers’ as well as the consumers’ mindset. At the same time, from a macro perspective, luxury brands and more value-added products would be a growing market. But in terms of quantity, maybe middle-income apparel would have the most growth with growing middle-income populations in developing nations, but this fashion would not be a leading fashion, but more of a commodity.

It’s interesting that you mentioned that the textile industry was second to the oil industry because on top of that, there is another challenge that the fashion industry had to overcome and this was COVID-19, because it caused many physical retail stores to close and leverage their online stores. As a result, Japan became the fourth-largest e-commerce market in the world. How has your company endeavored to leverage this e-commerce platform opportunity?

At this moment, we don’t have any direct consumer or B2C business. Our main pillar of business is ODM/OEM and we have our own brands, but we don’t directly sell to customers. Our apparel customers have their own channels for selling the products that we produce, but we don’t have any direct e-commerce business. There is a discussion among young managers about whether we should enter the B2C business, but we’re trying to find out if e-commerce would be the most appropriate tool to do so.

SB Planning can trace its roots back to 2006 when you started as a wholly owned subsidiary of Nippon Steel Busan. Then, in 2022, you became a wholly owned company by MN Inter-Fashion. Could you run us through some of the key milestones of your company?

Our company is a spinoff of the Nippon Steel Trading Company. In 2006, we became their subsidiary as an independent textile division of the company. We have been conducting, as part of the trading firm operation, the textile import/export business, as well as the OEM/OEM business, but ODM requires a designing capability so having a separate entity would help it be more self-contained with more possibilities. We have put our emphasis on R&D, so one-third of our staff members are in the R&D department, and this ratio hasn’t changed since our establishment. Currently, we have 87 total members and 27 are in the R&D department.

It’s interesting that you mentioned that one-third of your staff is R&D. This means that you must be developing new designs and products. Can you share which ones they designed?

Please have a look at our collection. It’s casual clothes, mainly. There’s a kids’ wear exhibition at the very end, so that’s why it’s a bit clustered on this side. This place is a showroom and we constantly have exhibitions on kids’ or men’s or women’s apparel and design, and we conduct sales here. So, actually, design is an important part of our sales.

What’s really interesting about your business is that on the one hand, you have your OEM and ODM services, and on the other hand, you also have a series of brands run by yourself. The two are quite different when you talk about the selling technique or the marketing capabilities that you need to have between brand management and OEM or ODM; it’s two different worlds. How are you able to bridge the differences?

Maybe on the surface, an ODM business and a brand management business sound different, but actually, the output or the sales scheme are different. With OEM or ODM, you have an agreement with specific companies and you create products on their behalf, whereas for our brand business, we have to be mindful of the sales to the retailers, not only in urbanized areas but also in rural areas, finding as many outlets as possible. Having said that, the fundamentals are different, basically the creation of apparel products. We have staff members who really are inspired and who like to take this inspiration and convert it into ideas and products, applying the monozukuri spirit. Having those people as the foundation of the company, it is only a matter of diversifying the method of our sales.

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Before you mentioned that your company specializes in casual clothing and offering design, production, and licensing of products from bags to jeans. What type of clients or fabrics do you think have the most potential or that you would like to cater to in the future?

That’s a difficult question.

The management philosophy is to highly treasure what our staff members want to do, so it’s not that the company’s management is imposing a design strategy for certain products because it is growing. That’s not how we operate. We listen to the voices of the creators, understand what they want to create and convert that to a business. That is the role that the company is playing. So if the mindset of the creator changes, then what we’ll be producing will change.

You talked about your OEM and ODM business, but you also have your brands. A brand that stands out is Resolute, a provider of denim jeans based on designer Yoshiyuki Hayashi, with Japanese craftsmanship woven on exclusive looms in the Niimi sewing center in Okayama. These jeans are suited for the Japanese body type. However, in the market, there are also competitors such as Japan Blue or international competitors like Levi’s or Jigsaw. Could you tell us what differentiates your denim jeans from these competitors?

I am very happy that you have researched about Resolute.

The uniqueness of our Resolute jeans is that we only have four patterns, but they have different lengths. We have over 15 years of experience and we have simplified the pattern. The designer Hayashi has generated a pattern that best fits the Japanese body shape. Usually with jeans, you make them long and cut according to the length of the leg, but Hayashi was very particular about creating a perfect shape to the length of that person, so we have many lengths with fewer patterns.

This is actually a reflection of our company’s philosophy. We have let the designer, Hayashi, freely express himself through his patterns and jeans production. For example, we use the Niimi sewing center and there’s a separate factory that makes the yarn and another factory that weaves our fabric, so all these locations have been chosen to realize what Mr. Hayashi wants to create. In this way, we’ve been supporting Mr. Hayashi’s ideas and converting them into a business.

It’s very interesting to hear you explain how you basically choose a designer and you let the designer achieve his vision, providing to him all the support needed to make the final product. Looking at the future, are you looking to replicate this model? Are you currently looking to collaborate with more designers? And if so, in what segments or what type of clothes will you be looking to attract designers?

In Japanese culture, there’s a word called ichigo ichie. It’s like an encounter with fate. And we felt that meeting Mr. Hayashi was a very happy coincidence for both of us. We developed good terms and decided to start the business together to realize his vision, so if there is a good encounter like that, we are very open to working with designers. At the same time, we also are working with our in-house designers. For example, our new brand, Lantern, came out of the inspiration of our in-house designers since 2021 when the Lantern brand was launched. We now have over 27 designers. In addition to their new ideas, they found the best location for production and found the sales network. That’s how we were able to achieve the launch of a new brand.

Lantern came out of a designer’s wish to create fashionable heatwear. In Japan, there is a market for heatwear, but the fashion aspect has often been forgotten. So the designer wanted to make this fashionable heatwear that could be connected to a mobile battery to heat up during cold times.

Could you elaborate on how these padded garments work with this heating technology?

I’m not very familiar with the technology, but there’s a company that makes this heating device. We embed that in the design of outerwear. So please have a look later.

SB Planning has been part, through its brands, of a series of exhibitions such as the Winter London exhibition last month and the Manhattan Portage / Healthknit 24SS joint exhibition last summer in August. Are you looking to participate in exhibitions, more specifically overseas, and if so, which products would you like to showcase?

Our exhibitions are mainly in-house and we do a joint exhibition with MN Inter-Fashion, but we still consider that as in-house. For the outside exhibitions, every year with the Resolute brand, we attend Pitti Uomo, which helped us to grow the brand recognition overseas, and now we have about 30 to 35% sales overseas. So we want to soon launch Lantern and follow the same steps so we can increase the awareness of that brand overseas as well.

We saw that your Resolute brand had enjoyed overseas sales through the years and it’s interesting that you’re now going to launch Lantern. What regions are you targeting and do you think have the highest growth potential for these brands?

As for Resolute, we already have 30 to 35% overseas sales so we’re not expecting it to grow so much. How we conduct our overseas business is to have our products in well-known shops in well-known cities. For Lantern, especially in Europe, the winter is cold, so we see high demand in cold places for our warm-wear products.

SB Planning not only has operations domestically, and also internationally through MN Inter-Fashions overseas production sites, such as in South Korea and all over Southeast Asia, as well as providing your brands. Are you planning to extend your operations overseas, and if so, which specific markets or regions do you aim to strengthen through collaborations with international brands?

Let me first explain our production strategy. Producing in Japan is something we think is an important component of our business. For example, Resolute jeans are 100% made in Japan, so we are thinking of being selective in increasing domestic production. For ODM/OEM, our main producer has been China, but now China has been changing socially from more of a producer to a consumer so we would like to shift our production bases to other ASEAN countries, where the level of production is now increasing and getting better.

It’s called offshore production out of China, but having a non-Chinese production base and increasing the percentage is important in the overall growth of our company.

As for our sales strategy, we want to increase our overseas sales percentage. For example, with our OEM and ODM business, pre-pandemic, we had some business

with overseas companies, but that had stopped with COVID. Recently, we have been in talks with an American company to do OEM/ODM so we are now looking into expanding into the American market.

I have one more question for you today, and this may be more of a personal question to get to know your vision a bit better. Please imagine that we will come back to have an interview with you again in five years. What ambitions or objectives would you like to have achieved by then? Where would you like to see the company in five years from now?

What I’m trying to constantly achieve, and which is actually the reason for the struggle, is to create a comfortable working environment so our company members can freely express themselves. I highly value and appreciate those with the monozukuri mindset and I want them to be expressive through the company platform that we provide. From now on, there will surely be new employees joining our company, but I want to let them also have the same benefit of being expressive. As the president, I would like to be the one to provide this opportunity to our employees.

For more details, see: https://www.sb-planning.co.jp/