SEGREGATING SARS: Jewelry manufacturers in countries with outbreaks of SARS are once again being targeted by international exhibition organizers. Citing worries over the spread of SARS, organizers of the JCK Show in Las Vegas ordered that exhibitors from countries with SARS outbreaks would be required to show in a venue separate from the main hall.
This story first appeared in the May 13, 2003 issue of WWD. Subscribe Today.
The Hong Kong Jewelry Manufacturers’ Association (HKJMA) reacted with outrage to the demand, as did Henry Tang, commerce, industry and technology secretary for Hong Kong. Said Tang, “We think this is unnecessary as well as unreasonable.”
About 112 Hong Kong companies were originally slated to attend the show, which runs from May 30 to June 3. Patrick Luk, chairman of HKJMA, warned that Hong Kong might pull out of the show completely if not enough exhibitors agreed to the organizer’s demand. As of May 9, however, 71 companies had agreed to the terms, while 40 firms withdrew from the event and will be reimbursed.
Those Hong Kong companies that do attend will be isolated in a tent in the event’s car park. Under the terms, attendees from Hong Kong, Singapore and Canada will also have to arrive 10 days before the show and undergo health checks.
The JCK Show upheaval follows last week’s turmoil over Vicenzaoro2 at the Vincenza Fair in Italy June 7-12. Hong Kong’s exhibitors were forced to pull out of that jewelry show when hotel, bus and restaurant operators sent a letter informing them they were not welcome. — Constance Haisma-Kwok
SLOWER GROWTH: From the impact of SARS, the economic growth in the Asia-Pacific region is expected to slow down, according to the latest forecast by Asia Development Bank. The growth in gross domestic product of the Asian region, not including Japan and other industrially advanced countries, is likely to fall by 0.4 percentage point to 5.3 percent from the previous forecast of 5.7 percent made in September last year, ADB said.
The GDP growth in China is expected to slow to 7.3 percent (compared with 7.5 percent previously predicted); South Korea, 4 percent (5.8 percent); Taiwan 3.7 percent (4 percent), and Hong Kong 2 percent (3.5 percent), according to ADB. — Tsukasa Furukawa
JOINING FORCES: Seibu Department Stores and Sogo, two retailers that have been experiencing difficulties, will integrate their managements under the holding company Millennium Retailing as of June 1 in order to cut costs. The marriage will result in Japan’s second-largest department store group with sales of more than $8.6 billion. The largest group is Takashimaya, which generated $10.3 billion in consolidated sales for the fiscal year ended Feb. 28. Dollar figures were converted at current exchange rates.
The Millennium Retailing Group will have about 30 stores.
Sogo went bankrupt in 2000 with debts of $16.1 billion and is in the process of regenerating its business under the protection of bankruptcy law.
Seibu Department Store, the core retailer of the Saison Group that has been struggling with huge losses for 10 years, announced expanded net losses from the previous year’s $92.8 million to $2.1 billion for the fiscal year ended Feb. 28, while its operating profits dropped 23.5 percent to $83.8 million. Sales were down 3.5 percent to $4.6 billion. The extraordinary losses included a provision for losses from its restructuring plan of $1.9 billion.
In January, Seibu gathered 43 creditors to explain its restructuring plan and in February all the creditors agreed to the plan. — Koji Hirano
SNAPPING UP LACOSTE: Marubeni Corp., a major Japanese trading firm, is buying into the French sports casualwear brand of Lacoste in Japan.
Marubeni said it has purchased a 33.4 percent stake in Fabricant Co., a Japanese agent that owns manufacturing and sales rights for Lacoste branded apparel in Japan, from Seibu Department Stores Ltd., which had owned 50 percent of Fabricant’s equity. Seibu is selling the remaining 16.4 percent to Paris-based Devanlay S.A., which has the worldwide manufacturing and sales rights for Lacoste branded apparel.
The French company already owns slightly more than 50 percent of Fabricant’s equity, and the purchase brings Devanlay’s part ownership in Fabricant to 66.6 percent. Marubeni said the company has been supplying polo shirts, T-shirts and other apparel to Fabricant, noting it will provide its support to further promote the Lacoste brand in the Japanese market.
Fabricant’s sales, which are mostly to department stores and boutiques, are expected to reach $75 million in the current business year to February 2004, Marubeni said. — T.F.
CASHING IN: Major players in Hong Kong’s fashion industry sold their shares last week. Michael Ying, chief executive of Esprit Holdings, sold a 3 percent stake in the retailer, netting at least $47.6 million.
According to a Merrill Lynch memo to brokers, Ying offered 40.5 million shares for between $1.18 and $1.20 each. Prior to the placement, Ying owned 42 percent of Esprit Holdings shares. Two months ago, he sold 2.23 million shares of the company for $2.7 million.
Similarly, major shareholders in Yue Yuen Industrial Holdings, the giant contract footwear maker, placed 40 million existing shares with institutional investors last week. The placement was an effort to take advantage of the company’s upcoming entry in Morgan Stanley Capital International’s Hong Kong index.
The 40 million shares account for about 2.5 percent of the company’s existing share capital. About 30 million of the shares were sold by the Tsai family, the single second-largest company shareholder. — C.H.K.
FULLER FIBERS: Mitsubishi Rayon Co. Ltd. last month acquired the proprietary technology relating to acrylic filaments belonging to Asahi Kasei Corp., in addition to a portion of Asahi Kasei’s production facilities for the filaments. An agreement also has been reached to acquire Asahi Kasei’s related trademark rights for Pewlong, Tactus and Reecas, effective in July.
Mitsubishi Rayon is the largest manufacturer of acrylic products in Japan, ranging from wet- and dry-spun staple through filament to synthetic leather. It is currently constructing a production plant at Ningbo in China’s Zhejiang Province, scheduled to start operation in July 2005.
As part of a reorganization of its fiber operations, Asahi Kasei withdrew from manufacturing acrylic filaments at the end of March, leaving Mitsubishi Rayon as the world’s sole producer, according to Mitsubishi Rayon. “The acquisition of the know-how in question from Asahi Kasei will enable Mitsubishi Rayon to more firmly reinforce the technology that underpins its acrylic filament Silpalon, and prepares the way for a full-scale expansion of the company’s acrylic filament business, including the development of high-quality, high-performance products with a view to the eventual construction of additional production facilities,” said the firm.
Mitsubishi Rayon Co. Ltd. reported net profits of $51.7 million for the fiscal year ended March 31, against net losses of $8.3 million a year earlier. Operating profits increased 2.8 percent to $170.3 million, while sales dropped 1.9 percent to $2.6 billion. All figures were on a consolidated basis and converted from the yen at current exchange rates.
Sales from fibers, mainly acrylics, which represents 31.4 percent of the group, dropped 2.7 percent to $813.5 million. “In the domestic market, demand for the acrylic fibers stayed slow and imports of the finished products increased, which caused a drop in sales volume,” said the firm.
For the fiscal year ending March 31, 2004, the firm projects net profits of $86.2 million, operating profits of $206.9 million and sales of $2.6 billion dollars. — K.H.