Shoemaker Achilles to sell loss-making H.K., China units on rising labor costs
TOKYO, NNA – Japanese shoemaker Achilles Corp. has decided to divest itself of a loss-making wholly owned Hong Kong trading subsidiary and its China unit due to rising labor costs and tightening environmental regulations in mainland China.
The company will transfer all the shares in Supatra Ltd. in Hong Kong alongside Supatra's 100 percent manufacturing subsidiary in Guangzhou later this month, it said in a statement on Wednesday. The head of the accounting division did not disclose a buyer or transaction value.
The manufacturing unit in the southern Chinese city in Guangdong Province, established in 1992, had produced children’s shoes for the Japanese market, the statement said.
The China arm halted production in 2016 as the Tokyo-based firm had judged it would not be able to turn the operation profitable because the local arm was no longer benefiting from low labor costs in China.
The company, which also manufactures plastic products and industrial materials, had sought a chance to convert the China operation into a new business but faced difficulties in abiding by tougher environmental rules, according to the statement.
It will book an extraordinary profit of about 2.1 billion yen ($19.5 million) in the April-June quarter of this year.
The Japanese firm runs six plants at home, and a plant in both Shanghai and the United States, according to its website.