LONDON -- Dawson International PLC has announced plans to invest $8 million (5.2 million pounds) at current exchange rates in a joint venture in China to produce cashmere knitwear.
The joint venture is with the Luyuan Cashmere Group, which is one of Inner Mongolia's leading cashmere processors from raw fiber to finished garments. The venture is called Baotou Luda JiLi Cashmere Products Ltd. Nick Kuenssberg, Dawson's managing director, said the venture already has begun operating.
"This will enable us to sell into segments of the market we do not currently service," Kuenssberg said. "The venture will not compete with our existing cashmere labels and will get us into much lower price points. There are hundreds of thousands of such sweaters sold into Japan and the U.S. and now we can supply that demand."
Dawson first revealed it was planning a joint venture in China in its announcement of a $72.2 million (47 million pounds) rights issue in late May, but gave no details.
Kuenssberg declined to say whether the knitwear would be sold under private labels or a Dawson label. Dawson currently produces cashmere under the Ballantyne, Pringle, McGeorge and Barrie brands.
Dawson initially will buy 15 percent of Luda JiLi for about $1.1 million (700,000 pounds). It will increase this to 25 percent at a cost of $768,000 (500,000 pounds) by the end of the year. It also will invest $6.1 million (4 million pounds) to acquire 25 percent of Luyuan Cashmere Group by late this year.
One of the world's largest manufacturers of cashmere and fine lambswool knitwear, Dawson has up to now concentrated manufacturing in Hawick, Scotland, and surrounding areas.
It has been examining the potential of manufacturing in China for several years, but has been cautious in entering that market because it wanted to make sure it found a reliable partner. It remains one of the largest buyers in the world of raw cashmere from China, which it sells in both yarn and finished garment form.
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