Itochu Using Latest Tie-Up To Stitch Up Chinese Apparel Market

Itochu Corp. will buy a 30% stake in major Chinese textile manufacturer Shandong Ruyi Group, not for its leading interest in a Japanese clothing firm, but to tap the growing Chinese apparel market.
The alliance with Shandong Ruyi will speed up efforts to tap the high-quality apparel market, in particular. This is the trading house's second tie-up with a major Chinese textile company. In 2009, it purchased a 28% interest in Shanshan Group Co. The local apparel market is growing at a clip of 20% a year.

"We decided it would be good to team up with another major textile firm to tap the huge 12 trillion yen market," explains Itochu Managing Executive Officer Hitoshi Okamoto.

While Shanshan sells mostly apparel in eastern China, Shandong Ruyi specializes in woolen items and high-quality dress fabric and operates in northern parts of the nation.

"We'll exploit both firms' strengths to speed up development of the Chinese market from upstream to downstream operations," says a company official.

Meanwhile, Shandong Ruyi has its own reasons for a capital alliance with Itochu. The Chinese company swept struggling Japanese apparel firm Renown Inc. under its umbrella last year, in a bid to develop downstream operations, but it still lacks expertise in the apparel business. Ahead of an overseas push, an alliance with a foreign firm with global-standard controls also engaged in clothing brands proved alluring.

e.nikkei.com