TT: How did Makalot Industrial Co (聚陽實業) start its branded business? How has Fisso been performing so far?
Sam Yen (嚴聖育): Our chairman [Frank Chou] always encouraged us to think about creating a new clothing brand. So several colleagues and I proposed the idea to him and got his approval. We used our own money and an investment from Makalot to form the initial capital for Fisso. We operate independently from Makalot and my team will take full responsibility for the brand.
The Fisso business has been growing steadily since March 5, with 2,000 people in our memberships already.
According to Yahoo and Google, our advertisements have received an average click-through rate of 0.3 to 0.4 percent, indicating that of every 1,000 people browsing a Web page with our advertisement on, three to four click on the advertisement. The click-through rate is higher than the average rate for a new brand, which is 0.2 percent.
Frank Chou (周理平): We acknowledge that it is difficult for a brand to turn a profit within one or two years of its launch. However, clothing brands are the locomotives of the apparel industry and creating a successful brand requires long-term effort. Fisso is part of our strategy to increase profit margins by stepping into the brand business. It is also one of our efforts to develop new apparel materials, such as those suitable for breathable polo shirts.
TT: Makalot launched another brand called Pica Pica a few years ago, but later discontinued it. Why did the company decide to launch a new brand again?
Chou: The business models of these two brands are different. Costs for Pica Pica clothes were higher in terms of design and manufacturing, and the clothes were sold in stores, on which we had to pay rent. Pica Pica clothing sold for NT$1,500 on average, a bit high for people of the younger generation. We stopped production because we thought the market for the brand in Taiwan was small.
Yen: As for Fisso, we will focus on casual and comfortable clothes ranging from NT$300 to NT$500 per item, which we think have a larger market. Also, Fisso’s products are only being sold online. We also try to reduce average costs by manufacturing our products in larger quantities.
TT: How is Fisso different from its online competitors?
Yen: We observed that there are two types of clothes sold online. Some people buy the most fashionable clothes from South Korea or Guangdong, China. These clothes are usually of lower quality and are out of fashion in about two weeks. Others buy clothes in classic styles sold in large quantities. They seldom change the styles of their clothes.
We try not to chase the latest fashion trend and neither do we just produce clothes in classic styles. Fisso’s products have a simpler style that is more similar to the style of clothes in Japan instead of South Korea. Furthermore, we try to make our clothes easily go well with other clothes.
To guarantee the quality of our products, we do the design, platemaking and make samples of every garment Fisso sells by ourselves, utilizing the resources we can get from Makalot. We also obtained information about the body shape of Taiwanese people from Taiwan Textile Federation (紡拓會), which enables us to manufacture the most comfortable clothes for people in Taiwan.
TT: Since you just launched Fisso and might need funds for this new investment, why is Makalot still distributing a cash dividend of NT$6.2 per share, the highest among companies in the textile industry, to shareholders?
Chou: Our earnings per share have always been higher than NT$5 per share, except in 2008, when the global financial crisis happened. The basic principle for us to distribute the dividend is that we always give our shareholders what we earned a year ago. Furthermore, because the logic of running a brand and a manufacturing company are different, we want to make Fisso more independent from Makalot. Thus, we did not retain our earnings and increase investment in Fisso.