A major strategic partnership has been finalised between Chinese textile and garment manufacturer Shandong Ruyi Technology Group and Israel-based Bagir Group.
Bagir Group is a manufacturer of high-quality men’s and women’s tailored fashion.
Under the partnership, Shandong Ruyi will invest around US $ 16.5 million in Bagir Group to acquire 54 per cent of its issued share capital.
The investment received from Shandong Ruyi will be utilized to expand trouser and jacket production lines of Bagir Group in Ethiopia. The funds will also be used to enhance research & development and provide working capital to support growth.
The acquisition will help Shandong Ruyi to get access to cheap labour in Ethiopia as production cost in China is rising due to increased minimum wages of the workers.
It is also being reported that setting up a new garment production plant would have taken quite a long time, thus acquisition has helped Shandong Ruyi to have an already established manufacturing unit.
The Ethiopian production plant also enjoys exports to the US and Europe markets without paying any customs duties.
It will be a win-win situation for Shandong Ruyi as a company based in China cannot export to the US and Europe free of customs duties.