China’s Shangying Global Co. Ltd. has acquired One World Star International for $280 million, in a deal that allows the manufacturer to move from industrial plastics to trendy fashion.
Based in Shanghai and breaking into the U.S. market for the first time, Shangying manufactures mostly plastics, sheets and pipes. Effective Monday, the acquisition covered three companies owned by Los Angeles-based One World Star, which is led by chief executive officer Yongbin “Rainbow” Luo: Apparel Production Services, Star Group and Unger Fabrik/One World Apparel.
Based in Chatsworth, Calif., Apparel Production Services handles design and production for high-performance activewear companies, including Under Armour, in its factories in Latin America. Star Group is a sourcing company with offices in Hong Kong and Shanghai. Headquartered in Los Angeles, Unger Fabrik/One World produces clothing for girls, teens and women under labels such as One World Apparel, Rules of Etiquette, Weavers and Rad Clothing.
Now folded into Shangying, “we have significant funding to do further acquisitions, to do investments, to grow the infrastructure further both in the U.S. and China,” said Richard Sneider, chief strategy officer of One World Star. “All of the existing strategies, relationships and supply chain — we not only expect to keep that but increase it by providing further efficiencies, further growth, further product lines.”
Shangying used to be called Ningxia Dayuan Chemical Co. Ltd. until August 2015. According to Reuters, Shangying revealed plans this past August to purchase apparel manufacturer Joyful Ocean Enterprises Ltd. in a cash deal estimated at $17.6 million, but it scrapped the deal two weeks later. Last month, it also canceled plans to restructure its assets.
A publicly traded company on the Shanghai Stock Exchange, Shangying said the purchase of One World Star pumps its market capitalization to $2.4 billion, furthering its strategy for future acquisitions all the way from the supply chain to the retail base. “Brand acquisition is certainly part of what we’re looking for,” Sneider said. “We’re always looking for the opportunity to build the production capability.”
However, that excludes fortifying manufacturing operations in the U.S. “Certainly we’re always looking to grow the product development in the U.S. and by attracting talent,” he said.
The U.S. apparel industry has grappled with a lackluster retail market that has faced ongoing challenges, starting with the Great Recession, that have profoundly changed the way consumers shop and leading up to the present trend that emphasizes experiences over clothes. Conversely, as energy and labor costs have risen in China, the manufacturing powerhouse has faced escalating competition from lower-priced rivals in countries such as Vietnam and Bangladesh.
“We have had some years where growth has been challenging in the area for apparel and retail has been soft,” Sneider said. “But everything is in cycles. As consumer confidence gets a little more grounded, it’ll be one of those cycles that will come back.”