Far Eastern Textile Expands Mainland China Operations

Extensive market research has convinced Taiwan's Far Eastern Textile that mainland China will be a favorable place for further investment in yarn spinning over the near to mid-term future.

The company's textile-operations investment over the next five years will be primarily focused on the expansion of its existing spinning plant in Wuxi, Jiangsu Province, where the total number of spindles will be boosted from the current 50,000 to 200,000, making the Wuxi plant Far Eastern's key production base. Investment in the project is estimated at NT$1.5 billion (US$44.12 million at N$34:US$1).

The expanded plant will focus on the production of multifunctional high-end fabrics with features that include resistance to viruses, odors, and flames as well as quick-drying and infrared effects.

Such multifunctional high-end fabrics now account for between 20% and 25% of Far Eastern's total textile output, and the ratio is expected to top 30% soon. The company's general manager, C.Y. His, reveals that its corporate strategy is to integrate the production of up-, mid-, and downstream plants in mainland China. In line with this strategy, the firm is enhancing the operation of its purified terephalic acid (PTA) plant in Shanghai and has acquired a DuPont plant in Suzhou, also in Jiangsu Province.

His notes that the sluggish global economy has kept the annual growth of the petrochemical industry down to about 5% in the past two years, while mainland China has enjoyed growth of more than 10% in the production of petrochemical fibers for both textile and bottle use. He predicts that the mainland will increase its textile exports by a massive amount after global textile quotas are abolished in 2005.

The general manager further points out that the number of spindles being operated in the mainland has dropped to 34 million, from the peak of 42 million in 1995. Japan has suffered a reduction as well, from more than 4 million a few years ago to just 2.74 million today.

Taiwan has lost spindles as well, as domestic textile manufacturers have moved their production facilities offshore. While global supply and demand are at the moment in balance, His expects market demand to soar as the global economy recovers.

While Far Eastern is putting its expansion priority on mainland China, it believes that Vietnam and Thailand are also good places for textile investment. Vietnam has the advantages of cheap labor, diligent workers, and relatively generous American import quotas, while Thailand enjoys a cheap currency and stable, democratic government.