Taiwan Paiho Ltd (台灣百和), which manufactures shoelaces and elastic tape, said it plans to invest US$50 million to build a new plant in Vietnam, which is scheduled to start operations in the fourth quarter of next year.
The Vietnam plant would be operated by Paiho’s subsidiary, Paiho Shih Holdings Corp (百和興業), and the plant would produce mainly jacquard warp-knitted fabrics for global customers, the firm said.
Paiho Shih earlier this month signed US$60 million of syndicated loans with KGI Bank (凱基銀行) and 13 other lenders for its investments and related business in Vietnam.
Manufacturing jacquard warp-knitted fabrics is expected to help the company expand its presence in the shoe material market, given the rising demand for lower-cost products, like jacquard warp-knitted fabrics from global shoemakers, Paiho Shih chairman Cheng Kuo-yen (鄭國?) told an investors’ conference on Thursday last week.
After analyzing transportation costs and tariffs, the company decided to build the new plant in Vietnam instead of another Southeast Asian country.
One of Taiwan Paiho’s major customers, Taiwanese footwear manufacturer Pou Chen Corp (寶成工業), also has factories in Vietnam, Cheng said.
Taiwan Paiho said it will install 42 machines at the Vietnam plant next year and expects to increase that to a total of 350 machines within five years, but did not disclose a capacity target.
The company has spent more than NT$140 million (US$4.3 million) on capacity expansion projects this year, including building a new plant in Indonesia.
The company saw sales increase 13.8 percent annually to NT$914 million last month, due to robust demand for its four-way stretchable elastics and two-sided embroidery for sports shoes.
From January through last month, combined sales totaled NT$9.7 billion, an increase of 13.4 percent year-on-year, according to a company filing with the Taiwan Stock Exchange.
Another footwear maker, Feng Tay Enterprise Co (豐泰鞋業), which supplies about one-sixth of Nike’s footwear, earlier this month said it has no expansion plans in its core production base in Vietnam.
Feng Tay’s seven plants in Vietnam account for 51 percent of its total capacity, company data showed.
Instead, Feng Tay said it plans to increase capacity at its two production bases in India and Indonesia in the near term, in a bid to diversify operation risks, a company representative said.
Feng Tay reported consolidated sales of NT$4.99 billion for last month, representing a 2.72 percent decrease from a year earlier.
ln the first 11 months of this year, accumulated sales increased 5.6 percent to NT$53.2 billion from the same period last year.
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