Collins Obtains Right to Market 'Francfranc' Products in Taiwan

Last year Collins Co., Ltd., a trading firm with a long history in Taiwan, obtained the right to become the sole agent for marketing "Francfranc" products on the island. Francfranc, owned by BALS Corporation, a company listed in Japan, is a Japanese brand famous for household items.

As a Francfranc agent, Collins is planning to become actively involved in the household retail market in Taiwan with the goal of selling mainly upscale, design-oriented leisure furniture, upholstery, and a variety of other household items. Lee His-lu, chairman of Collins, indicates that the company' s products sold under the Francfranc brand will be focused on younger consumers, working people, and small families.

Founded in 1969, Collins is one of the leading exporters in Taiwan and has diverse business operations in the areas of sundry goods and garment exports, retail fashion apparel, and car leasing and installment sales financing. The Francfranc acquisition indicates that the company is now going after the household market.

Lee discloses that, within five years, Collins intends to set up some eight or nine sales outlets in famous department stores around the island to promote Francfranc products. Each of the outlets will have a relatively large area of about 150-200 pings (1 ping = 36 sq/ft). Collins has decided to completely adopt the operational concepts used in Japan' s Francfranc stores for its management of the outlets.

Francfranc is one of the two leading brands for household items in Japan, with retail sales of about NT$2.5 billion (US$73.53 million) per year. Collins has recently received small orders from Francfranc, and orders from the brand will increase in the future, Lee believes, since Collins has become Francfranc' s agent here.

Moreover, Collins will receive first priority when Francfranc agency rights are awarded in mainland China in the future. If Collins can successfully open the market for Francfranc products in Taiwan, it will likely use the same model to tap the market in the mainland within three years.

"We have already obtained a license issued by the mainland Chinese authorities for conducting external trade in the mainland, " Lee discloses, "and we have recently established a couple of offices and product showrooms in Shanghai and Shenzhen of Guangdong Province."

Collins attributes the growing market demand for delicate and small-sized household items to the growing numbers of single people and small families in Taiwan. The company feels that Francfranc' s products exactly meet this new market' s needs because they are design-oriented and have high quality.

Collins intends to rent space in such famous department stores as Pacific Sogo, Shinkong Mitsukoshi, and Breeze Center in order to market its Francfranc products. In the next five years, the company estimates it will spend NT$200-250 million (US$5.88-7.35 million at US$1 = NT$34) to set up the projected sales outlets. "The investment capital is based on spending NT$20-30 million (US$588, 235-882, 353) for each sales outlet occupying an area of 150 pings, " Lee explains.

The first Francfranc in Taiwan will reportedly be located in either the Hsinyi district or the Tienmu area of Taipei. Francfranc Japan has already sent two ranking officials here to help Collins set up the first store.

Other than the projected Francfranc sales outlets, Collins now owns a total of 170 stores, boutiques, and booths for its existing garment brands. Of the company' s total sales outlets, 105 are for the G2000 brand, 25 for MEXX, 29 for U2, and 11 for Nike.

To keep up with the expansion of its sales outlets, Collins recently doubled its production capacity in Vietnam by purchasing a local garment plant there. The company has also cooperated with a garment manufacturer in mainland China to increase its clothing production there. In the future, Collins also plans to invest in a local furniture manufacturer in the mainland to expand its furniture operations there. (JL, February 2006)

Performance of Collins Co., 2002-2005 Unit: NT$100M
Year	2002	2003	2004	2005
Combined revenue	109.11	109.17	103.83	107.60
Pretax profit	4.68	4.39	4.53	4.23
After-tax profit	3.54	3.07	3.44	3.31
Pretax EPS (NT$)	1.36	1.25	1.19	1.24
After-tax EPS (NT$)	1.05	0.93	1.02	0.97