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ZURICH (Reuters) - Switzerland's Freitag, the maker of colorful trendy bags made out of recycled truck tarpaulin, opens a new store in Tokyo next month and is also pushing into other Asian countries as it seeks to become less dependent on European markets.
The company, which recently moved to a new bigger factory in Zurich, has seen double-digit sales growth over the last years and has accelerated store openings but is currently suffering from the negative impact of the strong Swiss franc.
"We want to expand further and conquer new markets, also in Asia. We are ready for that now," Chief Executive Monika Walser told Reuters in an interview.
The company was set up by two brothers, Daniel and Markus Freitag, who sewed their first bag in a small student apartment back in 1993, using recycled truck tarpaulin, second-hand car seat-belts and used bicycle inner tubes.
The ingredients have not changed much since, but the production facilities and scale of the business have come some way. Today Freitag's popular messenger bag sells for 220 Swiss francs ($248.5) on its website.
"Our first investment was a sewing machine and we used to wash truck tarps in the bathroom, which annoyed my flatmates (housemates)," said Markus Freitag, adding he sewed about 1,000 bags himself.
The firm currently employs over 130 people, runs eight stores and is about to open a ninth, and works with more than 400 retailers who sell the 300,000 bags and accessories the company makes per year. The Freitag brothers work as creative directors.
Freitag was present in Japan, where the brand has many fans, for 15 years via other retailers before deciding to open its own store. Another store opened its doors in New York this year.
"We are ready to open more stores but that is only useful when you can actually deliver the products," Walser said, adding Freitag had also started to work with retailers in South Korea and was looking at Singapore and possibly China.
"But we have to examine what makes sense there. You do not only have to look at the economic growth but also at people's purchasing power. In Brazil, for example, growing wealth has not yet reached the middle class where we find our customers."
As is the case for many Swiss companies which produce in Switzerland and sell mainly in the euro zone, the strong appreciation of the Swiss franc versus the euro over the last few months is a source of concern for Freitag.
"We would have to open 66 new stores to make up for the appreciation of the Swiss franc," Walser said, adding that Freitag had so far abstained from raising prices in the euro zone in order not to frighten off customers.
Geographical diversification would help reduce exposure to the euro-Swiss franc exchange rate, Walser said.
Asian consumers' different tastes might also help ease one of the company's main problems: sourcing old tarps in the most popular colors. Black, brown and pink tarpaulins, which are favorites with European Freitag fans, are very rare.
"Asians prefer different colors. Even men like bright colors there and wear voluminous bags," Walser said.
Freitag cuts and assembles truck tarpaulins in Switzerland but the sewing is mainly done abroad. "It is just impossible to find the know-how in Switzerland. We had to move abroad," Markus Freitag said.
The company, which generates about 20 percent of its sales via its online shop (www.freitag.ch), recently launched a more upscale Reference collection that offers, for example, single-colored traveling bags for about 500 francs.
"The Reference line is particularly suited to our Swiss customers who have grown up with the brand," said Daniel Freitag, adding that the brand turned 18 this year.
$1 = 0.885 Swiss Francs