Joan Fabrics signs jac joint venture in China

Carole Sloan, Staff Staff, May 5, 2003

Tyngsboro, MA — Joan Fabrics and The Cha Textile Group of Hong Kong have signed a letter of intent to form a joint venture company in China for the manufacture of jacquard flat goods.

The products, primarily for the home furnishing market, will be manufactured for sale and distribution worldwide.

The project initially envisions finishing, cutting and sewing of home upholstery fabrics. As the project develops further, it will lead to the production of woven greige goods in China.

Initially, "we will have the fabrics manufactured in China on a commission basis with our design and finishing and cut and sew done by our joint venture," explained Elkin McCallum, chairman and ceo of Joan, the country's largest home furnishings fabric mill.

"Once we build the business to a critical mass where it makes sense — with a certain amount of production of yards per month, we will build our own plant. We will look at the payback of a comparable outside facility vs. owning our own manufacturing. We already have identified a piece of land."

The first shipments of fabric from China to U.S. customers will probably not be before June, McCallum said. Cut-and-sew products will come later "and will depend on the specific customer's needs," he said.

Initial products will focus on the company's Home Fabrics division and will be created by Wesley Mancini Ltd. which designs the Home Fabrics lines that are domestically produced. "We will not make specific distinctions between the Chinese products and the U.S.-made products," McCallum emphasized.

"We will be peppering in the fabrics as part of our overall styling package with high-pick, high-style fabrics — not commercial jacquards. We've been doing those in our Mexican plant for six months now.

The joint venture, according to McCallum, "is another step in Joan's strategy to establish a manufacturing presence in the United States, Mexico and now in the Far East." Last year, Joan acquired Industrias Textel S.A. de C.V. in Tlaxcala, Mexico, a producer of woven jacquards.

Looking ahead, McCallum said, "We will continue to manufacture in the United States where it makes sense. But we are in the business of designing and marketing fabrics. Yes, we will be a combination of a converter and manufacturer of fabrics; we will not only be a manufacturing mill."

Joan joins a growing cadre of American decorative fabric companies with Chinese relationships in production, marketing and distribution. "It's an evolution in our business to do this. [Joan and Cha have] taken our time to do it and to get to know each other as people and companies. We have good partners, and we've each identified our roles."

Last month, Culp announced a joint venture in China to produce yarns and fabrics as well as finishing and cut-and-sew operations for global distribution.

Madeline Wong, chairman of the management board of The Cha Group with manufacturing facilities in Mainland China, Hong Kong, Africa and throughout Europe said, "We are delighted to be joining Joan in what we expect to be a long and prosperous relationship." McCallum called The Cha Group "leaders in their field with a broad range of capabilities in textile manufacturing."

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