Yarn-spinning venture out of trade row loop

United States and European Union trade restrictions on Chinese textiles will not stop Yangtzekiang Garment from expanding its yarn-spinning mills in China.

The Hong Kong-listed textile firm's joint venture in Wuxi city, Jiangsu province, would increase sales to 1.6 billion yuan next year from 1.4 billion yuan this year after a new yarn-spinning mill began production at the end of this year, Yangtzekiang managing director Chan Wing-kee said.

The joint venture, Wuxi Talak Investment, is 49 per cent owned by Yangtzekiang and 46 per cent by the Wuxi government.

It had total investment of $1.4 billion, including bank loans and $468 million of paid-up capital, Mr Chan said. "It doesn't matter that the US and EU have restrictions on Chinese textiles. The restrictions will not affect us."

The joint venture was primarily a yarn-spinning operation, while garments were the main target of US and EU quotas, he said. "If China has a temporary problem with garment restrictions, we can send our yarn to any other country that makes garments."

The Wuxi joint venture, one of the biggest in the world, is the largest producer in China of compact yarn, a high-end yarn used to make fashion garments.

"The Italians used to produce this yarn, but many Italian plants have been closed. Italy now needs to import a lot of high-quality yarn. We are currently expanding in this area," Mr Chan said.

Wuxi Talak was established as part of the restructuring of Yangtzekiang's multiple joint ventures in Wuxi.

The restructuring would improve efficiency and reduce connected transactions by putting all operations under one management, Mr Chan said.