Ningxia Zhongyin Becomes First Chinese Firm To Take Over A UK Cashmere Company, Eyeing Growth Of Domestic Market In China
Cashmere, a major contributor to the economy in China’s mid-western Ningxia Hui Autonomous Region, has quickly become big business in China, as more companies in Ningxia attempt to move beyond producing raw cashmere and into the much higher profit-margin sector of finished product exports. Of the major cashmere producers in Ningxia, in the last few years the Ningxia Lingwu Zhongyin Cashmere Company has emerged as the most ambitious, with executives making it clear that the company wants to not only capture the lucrative Chinese domestic market but also the even more lucrative overseas market.
To secure both groups of customers, the company has set out to acquire marquee foreign brands, which have the brand history and pedigree to appeal to Chinese luxury consumers. Last year, Zhongyin made its first moves to try to acquire the Scottish firm Dawson International, a deal that ultimately fell through but showed Zhongyin’s intentions to break into the Scottish cashmere market. From China.org:
In 2008, the Ningxia-based Lingwu Zhongyin Cashmere Company entered into negotiations to take over 120-year old Dawson International, widely regarded as the world’s number one cashmere business. Although the takeover talks were called off on June 4, the bid was an indicator of the ambition of Ningxia’s emerging cashmere giants.
This year, Zhongyin’s luck seems to have changed, as it recently announced its acquisition of another Scottish cashmere giant, 142-year-old, Kinross-based Todd & Duncan — the first takeover of a British cashmere firm by a Chinese company.
This week, at a ceremony at the Todd & Duncan headquarters, top executives from Zhongyin were joined by Scottish Foreign Minister Alex Salmond as the FM lauded the importance of foreign investment in the Scottish cashmere industry — particularly as demand tightens around the world and as top-quality cashmere producers have to fight harder to compete with mass-produced product coming from lower-quality manufacturers in China and elsewhere. With the acquisition of Todd & Duncan, Zhongyin has shown that China’s major cashmere producers are looking more to establish a reputation for premium quality cashmere both at home and abroad.
[Scottish FM Alex Salmond said,] “Scotland’s cashmere industry employs approximately 4,000 people and contributes almost £200 million to the economy. This acquisition ensures a bright future for Todd & Duncan as one of the world’s leading spinners of quality cashmere yarn and strengthens Scotland’s global reputation as a leader in luxury fabrics, cashmere knitwear and designer brands.
“The Scottish Government welcomes this £6.1 million investment in the Kinross firm. This investment marks a positive step towards China and Scotland strengthening relationships and working closely to exchange ideas, knowledge, and to develop business opportunities.”
Ningxia Zhongyin Cashmere Company Ltd is a cashmere fibre, yarn and garment producers and for the last five years have been Todd & Duncan’s biggest fibre supplier. Todd & Duncan was previously owned by Dawson International.
Todd & Duncan formed in 1867 in Alva, Clackmannanshire. The company’s key products are Cashmere yarn spinners, supplying a number of high value cashmere garment producers across the world.