GREENSBORO — As he promised last month, Wilbur Ross has expanded his Gate City-based International Textile Group into China in an attempt to tap the growing Asian market.
On Friday, ITG announced the first of several China initiatives the company plans to unveil before the end of the year.
This one involves a partnership with China Ting Group, a leading manufacturer and retailer of textile products based in Hong Kong.
The two companies will build a plant in Hangzhou, China, to dye and finish interior fabrics. The plant, plus a warehouse and a distribution center, will be operational by the end of 2005.
ITG will put $20 million into what company officials describe as “a joint ownership deal.”
Ross says the Chinese plant will focus primarily on supplying customers in Asia.
“It really doesn’t change the outlook for what we are doing in Greensboro at all, except to the degree that it provides us profits to make the overall company stronger,” Ross said. “These moves are not in place of anything we do in the U.S., but are in addition to it.”
But some of the fabric could make its way back to the United States.
“It could be both,” said Delores Sides, an ITG spokeswoman. “The new facility in China will provide us the opportunity to supply the growing Asian markets and to supply customers who are looking to source products out of China.”
That second approach worries some domestic textile manufacturers.
“If you are setting up business in China to export to the United States then what you are basically doing is destroying North Carolina jobs,” said Lloyd Wood, a spokesman for the American Manufacturing Trade Action Coalition in Washington. “If you are setting up businesses in China to sell to the Chinese or another East Asian nation ... that’s not a bad thing to do at all.”
Ross said Friday that some of his future Chinese initiatives are designed to take advantage of the end of the 40-year-old textile quota system, which is to expire on Jan. 1.
Many U.S. textile leaders fear that when quotas end, China will come to dominate the world textile market, a development they say will force millions of people out of their jobs worldwide.
Many textile observers say Ross is smart to take advantage of the low-cost manufacturing opportunities China offers.
“If you are a major company in textiles and apparel, I think you probably need to be in China or have a China strategy,” said Sam McNeil, managing director of River Capital Advisors, a Charlotte firm that works with financially distressed companies. “If textile companies don’t have either a China and/or a Carribean/South American strategy, they probably aren’t going to be in business in three to five years.”
As the world of textiles changes, manufacturers must change with it, McNeil and others say.
They believe that companies have two choices: either go where they can make products competitively or be undercut by those who do.
“The center of gravity of textiles has shifted to Asia,” said Peter Kilduff, an associate professor of textile product design and marketing at UNCG. “If companies don’t see (that) writing on the wall and don’t react to it, they may be out of business. It’s better to keep something than to lose everything.”
Ross sees China as a place to win. He quickly rattles off the country’s population: 1.3 billion people.
He knows that many of them will want to buy the products that his plant in Hangzhou will help produce — things like bedding, window treatments, accent decor and upholstery.
“Even a small percentage of (1.3 billion) is a heck of a big number,” he says.
Part of ITG’s entry into China will involve an agreement with China Ting Group, a $150 million a year company, to develop 25 home furnishings stores by the end of 2005.
They will be called Burlington House Retail and are named for the unit of ITG that designs and produces interior fabrics.
The Chinese market for home furnishings has been growing at 10 percent a year, Kilduff says
China Ting Group produces a broad range of apparel products and sells them through hundreds of retail stores across China.
The Hangzhou plant is located in one of China’s leading textile manufacturing centers, a city of some seven million people about three hours southwest of Shanghai.
Ross, a New York financier, formed ITG last March by merging Burlington Industries and Cone Mills, two Greensboro companies he bought out of bankruptcy.
Last month, Ross told Bloomberg TV’s Morning Call that he was on the verge of announcing several joint ventures in China, saying, “We’ve been out there for months and months and months. It takes a bit of a while.”
ITG already has joint ventures in Turkey, Mexico and India and is planning a plant in Guatemala.
Contact Donald W. Patterson
at 373-7027 or donpatterson@