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Chinese textile maker set to control Renown

source: china textile 2010-05-26  

Renown, one of Japan's best-known clothes makers, is set to come under the control of a Chinese textile maker in what would be the biggest investment by a Chinese investor in a public Japanese company.

The investment by Shandong Ruyi, one of China's leading makers of high-quality cotton and wool, highlights Chinese manufacturers' move up the value chain to acquire well-known brands.

Ruyi will pay about Y4bn ($44m) for a 41 per cent stake in Renown, which runs brands such as D'Urban and Anya Hindmarch, although the deal is subject to approval by the Japanese group's shareholders.

The investment is one of a small but growing number of Chinese investments in Japanese technologies and brands. Last year, Suning Appliances paid about Y800m for a 27 per cent stake in Laox, a well-known consumer electronics retailer.

In the first three months of this year there have been nine investments in Japan by Chinese investors, including two by investors based in Hong Kong, according to data compiled by Recof Data, which provides M&A information.

While small, the number represents 27 per cent of all foreign mergers and acquisitions in Japan in that period, Recof said.

Qiu Yafu, Ruyi's chairman, said the Chinese company had been looking for a company that has famous brands, networks and management expertise.

"D'Urban already has several stores in China, is well-known among high earners and is very popular. We have chosen about seven brands that Renown owns [to build up in China]," he said.

Minoru Kitabatake, Renown's president, said the tie-up would allow the struggling 100-year-old Japanese group to boost its capital and expand overseas, particularly in fast-growing China, as well as reduce its cost base.

Last year, Renown sold Aquascutum , the 158-year-old luxury clothing brand, to a company run by Harold Tillman, the entrepreneur who owns British clothing chain Jaeger, for an undisclosed sum.

Renown, which has been forced to sell some of its best assets to stay afloat, has been under pressure from Neoline Holdings, its largest shareholder, to raise capital and expand overseas. The investment by Ruyi, which would be the first by a Chinese company in the Japanese clothing industry, highlights the changing fortunes of Japanese clothing groups.

Japan's Fast Retailing, which owns the Uniqlo brand, has used low-cost Chinese suppliers successfully to rapidly expand its global presence. But more traditional clothing groups such as Renown have struggled to stay competitive.