Apparel manufacturer Makalot Industrial Co (聚陽實業) yesterday said it plans to invest NT$500 million (US$16.7 million) a year over the next four years to double its production volume and accommodate the needs of its clients.
The company aims to increase its production volume to 23 million dozens in 2017 from 11 million this year, chairman Frank Chou (周理平) said at an investors’ conference.
“Client demand, especially from non-US ones, is expected to grow significantly in the coming years, so we have to ensure we have sufficient production capacity,” he said.
Makalot’s non-US clients — such as Japan’s Fast Retailing Co, known for its Uniqlo brand and Spain’s Inditex Group, famous for its Zara stores — account for 12 percent of its sales, but Chou said that is expected to rise to 20 percent in 2017.
The company also plans to increase production in Vietnam to account for 35 percent of its total capacity in four years, from 27 percent this year, as it eyes the high possibility of the country joining the Trans-Pacific Partnership (TPP) in the near future, he said.
“If Vietnam joins the TPP, tariffs for its textile product exports to the US will be reduced significantly from the current rate of 30 percent,” Chou said.
The company aims to establish a supply chain in Vietnam, he added.
Makalot’s production in Indonesia will remain at 33 percent in 2017, as exports from the country to Japan are exempt from tariffs because it is a member of ASEAN, Chou said.
However, it plans to lower its Chinese production to 3 percent of total production from 7 percent this year, in the face of rising wage pressures there, he said.
The company reported pre-tax profit of NT$813.85 million in the first seven months of the year, up 4.94 percent annually from NT$775.51 million.
Its revenue totaled NT$9.9 billion from January through last month, up 12.08 percent from NT$8.83 billion in the same period last year.
Chou said the company expects profits will be significantly higher in the second half of the year than in the first, without forecasting a specific figure.