The world’s largest zipper company YKK has just moved its global business from Japan to Vietnam, a country that supplies about one billion zippers a year to leading fashion brands.
You are a fan of fashion brands such as Uniqlo, Nike, Adidas, Decathlon, Columbia but you may not know the name YKK. Simply because YKK seems to play a humble role, just a zipper on products.
This 89-year-old company has been at the top of the global zipper industry for decades. YKK zippers are everywhere in the world’s fashion industry from jeans, to jackets, handbags, wallets and were even used on the suits of the first astronauts to set foot on the moon more than half a century ago.
In Vietnam, YKK produces about one billion zippers a year, which, if connected together, would be 92 times the length of Vietnam’s coastline or 250 times the distance between Hanoi and Ho Chi Minh City. The company has two factories in the North and South (in Dong Nai and Ha Nam), 80% of its products are for “on-site export”, supplying its largest customers such as Uniqlo, Nike, Adidas, Decathlon and Columbia.
In 2023, for the first time in history, YKK will bring its global business division to a country outside of Japan, and Vietnam is the chosen name. Why Vietnam? “In Vietnam, there are not only Vietnamese companies but also multinational manufacturers. “Locate the global business unit headquarters in Vietnam to see the whole world,” Toru Shikita, vice president of YKK’s global business unit, told Forbes Vietnam in an exclusive interview at the company’s office in Ho Chi Minh City.
With textile and garment exports reaching US$44 billion in 2022, Vietnam is currently the third largest textile and garment exporter in the world. This has a positive impact on companies in the supply chain like YKK, which is why YKK moved its global sales headquarters from Japan to Vietnam.
Zippers are a B2B product, with the global zipper market size of about US$14 billion in 2022 and will maintain a compound annual growth rate of nearly 7.8% in the period 2023-2032, according to Market Research Future.
In addition to YKK, some prominent zipper companies in the industry include Riri (Switzerland), SBS (China), YBS (China). In the fashion industry, two major companies in Asia, YKK and SBS, are producing more than half of the zippers worldwide. SBS has risen to second place globally in terms of quantity and dominates the industry in China despite being founded 50 years later than YKK.
Currently, YKK has a network of operations in 72 countries. The group announced that it achieved nearly 353 billion yen in net revenue from zippers and buttons (about 3.2 billion USD) in fiscal year 2022 (April 2021–March 2022). With the slogan “Little parts, big difference”, the group’s two core businesses are zippers, buttons (contributing nearly 44% of net revenue) and AP (curtains, door systems).
Currently, 90% of YKK’s zipper production is produced outside Japan. In fiscal 2022, the group produced more than 10 billion zippers, which, if connected together, would be about three million kilometers long, 75 times the equator. In addition to producing some components such as copper wire, punching teeth, weaving threads, etc., YKK also manufactures zipper production equipment.
YKK has been present in Vietnam since 1998. A year later, the company built its first factory in Amata Industrial Park (Dong Nai). In 2006, Vietnam joined the WTO, a boost that attracted many global fashion companies to invest in production and expand their business, turning Vietnam into a fashion product processing center.
After the first factory, in 2018, YKK started building a second factory in Ha Nam to increase its ability to serve fashion industry partners. After 25 years of presence, YKK Vietnam increased its zipper production output 100 times, and the number of employees increased seven times, to 2,800 people. It is expected that by the end of 2023, YKK will complete the expansion of the factory in Ha Nam, gradually increasing the supply output to 1.3-1.5 billion products/year.
Vietnam is in the top three countries producing large quantities of YKK zipper products, along with China and Bangladesh. Mr. Toru Shikita said that YKK has factories in many countries, but few factories have a complete A-Z process, from manufacturing components to assembling finished products like in Vietnam.
Currently, YKK’s two factories can weave yarn into fabric tapes, punch the teeth of metal zippers or produce zipper heads themselves instead of having to import them like when YKK first entered the market. According to self-disclosure information, YKK Vietnam’s zippers have 30,000 colors, the minimum number of pulls up and down is 1,000 times depending on the product type, delivery time is from 5-10 days after order confirmation depending on whether the item is complex or simple, large or small quantity.
Mr. Toru Shikita said that in the past, YKK Vietnam had to import some zipper head products from foreign YKK companies to supply to domestic customers, but now, the factory in Vietnam produces most of YKK’s products.
In addition to “on-site exports”, products are exported to countries such as Cambodia and Myanmar. Vietnam is currently an important link in the global supply chain of fashion brands such as Nike, Adidas, Decathlon, and YKK Vietnam, which directly supplies products to factories and subcontractors for these brands.
More than 50% of Nike’s shoe output and about 26% of its total apparel products are produced in Vietnam. About 15% of Adidas’ sportswear in 2021 will be produced in Vietnam. Fast Retailing, the parent company of Uniqlo, currently cooperates with 69 subcontractors and 11 material suppliers in Vietnam.
“We focus on mid-range and higher-end products. Most of Uniqlo’s products use YKK zippers, while Nike and Adidas use about 70–80%,” said Toru Shikita. An article published in the Harvard Business Review in 2022 said that YKK has a 40% market share by value and a 20% market share by number of zippers globally.
In the textile industry, supply time is an important factor in evaluating a manufacturer’s capacity. For “fast fashion” brands, they need manufacturers to meet the right requirements in terms of design and output so that they can quickly bring designs from the catwalk to retail stores in just a few weeks.
Some of YKK’s major customers have higher requirements, such as printing their logos on zippers. Previously, the factory in Vietnam could not do this, so it took YKK Vietnam a month to import products. Since 2015, the company has established a product development department and can now directly receive orders from the above brands, producing and supplying within about 10 days.
Mr. Toru Shikita said that the peak production period of the garment industry in Vietnam lasts from March to May every year for autumn and winter products. In Vietnam, YKK has applied an automation system since 2018 to improve labor productivity, shortening delivery time by half. “Previously, employees received orders via email, then picked up each data and entered it into the order form. The total time from receiving the email to reporting to the factory took five days, but those five days are also an opportunity cost,” said Mr. Shikita.
He said that currently, most of the input materials for YKK Vietnam to produce zippers can be purchased from domestic suppliers, except for some special materials that must be imported such as copper wire, which YKK produces itself.
YKK was founded in 1934. Founder Tadao Yoshida invented zipper manufacturing equipment himself and continually improved the production machine over time. YKK’s own machines, which are not sold commercially, have helped to create the company’s global zipper brand. Today, the details of how YKK’s machines work remain a closely guarded secret.
In the factory, some machines used for painting and plating can be purchased from industrial machine suppliers, while the slider manufacturing equipment and zipper finishing machines are all made by YKK itself, said Toru Shikita. “With our own machines, engineers can research and improve them themselves, continuing to produce better machines. This is not only a technological secret but also a competitive advantage,” he said.
Since Vietnam opened its economy in the early 1990s, lower labor costs than other countries in the region have often been seen as an attractive factor for foreign investors. In 2011, Vietnam’s minimum wage was 76 USD/month/person, equivalent to 42.6% of Thailand; 71.7% of China, 72% of Indonesia.
After 10 years, Vietnam’s minimum wage has increased nearly three times, faster than labor productivity. As Vietnam’s labor costs have increased, some famous fashion brands have shifted production to some neighboring countries.
According to the 2020 Report of the Asian Productivity Organization (APO), Vietnam’s labor productivity is 40 years behind Malaysia, 10 years behind Thailand, and in Southeast Asia is only higher than Cambodia (twice as much), Myanmar (nearly 1.6 times as much). How can a world-leading zipper manufacturer like YKK avoid being caught in a competition with its peers, especially when labor costs are rising?
Automation is the key to increasing labor productivity and stabilizing product quality. According to Mr. Toru Shikita, simple, repetitive tasks such as loading and unloading goods from the warehouse to the production site can be automated.
People need to focus on product research and development and machine maintenance. YKK has also prepared for a scenario where cheap labor is no longer an advantage for countries like Vietnam. In the future, the company will use Internet of Things (IoT) technology to connect all factories around the world as well as link data, forecast customer demand and inventory, and optimize the supply chain. In early 2022, they will operate an automated production line in Japan.
Mr. Shikita, who has 13 years of experience in managing YKK Vietnam, was appointed as vice president in charge of YKK’s global sales division from April 2023. In 2009, when he was assigned the position of managing director of YKK Vietnam, at the age of 39, he was the youngest employee in the group to be assigned this position.
Currently, Mr. Toru Shikita believes in the long-term growth potential of the Vietnamese textile and garment industry when export turnover is expected to reach about 70 billion USD by 2030. He shared his observation that if invited to work in Japan, sales staff in the US may not be interested but will be ready when invited to work in Vietnam.
“It is difficult to find a country with stable politics and skilled and hard-working employees like in Vietnam. For YKK to grow in the future, Vietnam and ASEAN are very important,” said Mr. Toru Shikita.
According to Forbes Vietnam No. 121, September 2023
