HOT SOX GETS FOOT IN MANY DOORS IN ASIA

Byline: JOSEPHINE BOW, with contributions fromJOANNA BOBER, New York

HONG KONG--Hot Sox began looking about a year ago to the Far East to expand its business, and in the past several months, its strategy has been gaining momentum.
In July 1993, the legwear manufacturer named Fashion Asia Ltd., based in Hong Kong, the exclusive master distributor for Hot Sox in the Far East and Australia. Fashion Asia was formed for this venture by Mark Schatten, a former dealer in Asian art and a longtime friend of Gary Wolkowitz, president of Hot Sox, and Mark Gordon, its executive vice president.
"We broke into the market with sheer tenacity," said Schatten in an interview here. "At first the stores were tentative, but sales have been phenomenal, and reorders since December and for the spring collection have been substantial."
Since March, Schatten noted, Fashion Asia has signed on six major department stores in Japan--Seibu, Tobu, Isetan and Marui in Tokyo and Diamaru and Hankyu in Osaka--adding to its roster of retail outlets that started out with the Barneys New York stores there and Socks Appeal, a Hong Kong-based specialty hosiery chain.
By the end of 1994, Fashion Asia hopes to account for 5 percent of Hot Sox global sales--now topping $40 million, of which over 90 percent are U.S.-generated--and 10 percent by 1995, said Schatten.
In the next three to five years, Fashion Asia should account for 25 to 30 percent of Hot Sox total business, added Wolkowitz, interviewed at Hot Sox headquarters in New York.
In Australia, Hot Sox is carried by two department stores--David Jones and Coles Myer, both in Sydney and Melbourne.
In Hong Kong, Hot Sox is selling at several department stores, including Lane Crawford, Sogo, Seibu, Daimaru, U.S.A. Co. and Mitsukoshi, as well as Socks Appeal and at Hong Kong's Duty-Free Stores. Those placements also led to entry into the Singapore market, where Hot Sox will be selling at Duty-Free Stores, the soon-to-be-opened Lane Crawford and Takashimaya, the Japanese department store that opened last year.
"Without personal connections and assistance from the Japanese, it would have easily taken us two years to get in [to Japan]," said Schatten, who business pattern includes the setting up of subdistributors. In Japan, subdistributors include Kutsushita and Gunze Sanyo.
"Schatten identifies people to subdistribute the line because it is too large a geographic area to handle alone," Wolkowitz said. "Culturally, it's difficult to break into the marketplace as an outsider. It's Schatten's challenge to forge new partnerships with other distributors. In Japan, it is tremendously helpful to have the Japanese speak on your behalf," he added.
In less-sophisticated markets, such as Singapore, Schatten added, resourcefulness is required. "We've created traveling kits that allow us to make a professional presentation in a closet-like space," said Schatten, of selling in Singapore. "A lot of buyers we show to initially are very young, not really in a decision-making position."
"We help the buyers shape their orders. We explain why we make what we do each season, and out of all the basics and fashion styles, we put together different shipments for different clients," he said.
Upon delivery, Schatten follows up closely. "I'm all over the shops with service, finding out how things are moving, what else they need."
The 45-year-old Schatten, who has worked in Asia for more than two decades, pointed out an ongoing presence is vital. "A lot of U.S. companies trying to make it in Asia have failed in the past, because they're not here--they're not giving the necessary support."
Schatten is optimistic about targeted growth. "Hong Kong is already doing 500 dozen pairs monthly and can probably reach 1,000 dozen," he said. "Japan should be able to do one container monthly--about 4,000 dozen pairs." Purchasing terms may vary by country.
"In Hong Kong, we do only outright sales," explained Schatten. "In Singapore, because of tough retail conditions, everybody's non-risk oriented, so even though the sales are so-called 'outright,' there are still a lot of return clauses.
"In Japan, we're dealing with both a wholesaler and an importer, so sales are conditional with serious credit terms."
Asian sales are breaking down to 80 percent women, 20 percent men, about the same as in the U.S. Women's hosiery retail prices start at $7.50 for basic socks and range to $18 for fancy tights, with prices slightly higher in Japan after a 10 percent import duty.
Sizing for Asian women is standard, but men's socks will probably have to be downsized, Schatten said. The same collections are presented worldwide, and trends receiving the greatest reactions for fall include thigh-highs and over-the-knee socks, as well as patterns and textures, according to Schatten.
The biggest difference is in colors. "The Asians really go for the darker colors," said Schatten. "We're trying to present a greater range, to get people into a 'socks are fun' mentality."
Schatten now is exploring further moves into Asia, buoyed by response gotten at the Hong Kong Fashion Week trade show in January.
"We got good feedback from the areas we're looking to get into next--South Korea, Taiwan, Indonesia and the Philippines," said Schatten. "The Asian-Pacific market is huge--Japan is handled separately--and Hong Kong is the axis."
Wolkowitz said that for 1995 and 1996, the company's sights are set on expansion into China, especially in targeting a younger market. "With China's emerging middle class, they will want fashion, brands and novelty."

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