CHINA: Ultrasonic invests $65.8m expanding shoe production
Ultrasonic AG, the German holding company of the Chinese footwear maker and domestic shoe brand of the same name, is planning to invest EUR50.5m (US$65.8m) over the next five years in ramping up its production capacity.
Among its immediate plans is the EUR10.5m acquisition of a new factory complex through its Chinese subsidiary Fujian Suoli Shoes Co Ltd to ease capacity constraints on its current facilities, and bring the production of its Urban Footwear leisure shoes line in-house for the first time.
The Fujian Junhui Sport Wear Co facility in Xingtai Industry Park in Changtai County, near Xiamen is no longer operational, but will give Ultrasonic around 80,000 square meters of land, four new production buildings and staff apartments.
The company is planning a two-phase extension of the complex, the first of which will be to construct 15 production plants and staff housing on the site.
In a second phase, an additional 53,000 square meters of development land could be acquired from the regional real estate authorities, allowing further expansion of production capacity.
Urban Footwear production is currently outsourced, and bringing it in-house should allow it help raise both quality and margins.
Production capacity for shoe soles, sandals and slippers will be increased by 35-45% by 2017 in the final construction phase following this acquisition.
The Urban Footwear business generated sales of around EUR36.4m in 2011, accounting for over 30% of the group's total. In the first half of 2012, sales have surged 34.2% to EUR24.0m.
"Through the acquisition of the new production facilities and further scope for expansion we believe we will be well-positioned for further growth," explains Qingyong Wu, founder and CEO of the Ultrasonic Group.
"In future, we will not simply be able to meet rising demand from international brands and our customers in the Chinese sports footwear industry. We will also be able to ensure timely supply of Ultrasonic products for the high-quality branded footwear market, which is growing by about 30-40% a year, without resorting to external producers."
The Ultrasonic Group designs, produces and sells sandals, slippers as well as shoe soles and established the Ultrasonic brand for its premium urban footwear collection, targeted at the domestic Chinese market.
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