Komatsu Matere scraps 2nd textile plant project in China

05, Feb. 2020

Photo by Siora Photography on Unsplash
Photo by Siora Photography on Unsplash

TOKYO, NNA – Komatsu Matere Co. has scrapped a plan to double its production capacity with the building of a second plant in China following slowing demand from the local and European textile market.

The Japanese company, which produces fabrics for fashion clothing, swimwear and fitness attire, said in a statement on Tuesday it will liquidate a wholly owned textile dyeing entity established in May 2019 in Jiangsu Province in eastern China.

“We do not see as much demand as we had initially expected,” its company spokesman told NNA on Wednesday.

Komatsu Matere had allocated $20 million capital for the Haian plant in Jiangsu, but had not started its construction, said the spokesman. The company expects the liquidation to have little impact on earnings in its current financial year, according to its statement.

The plan to build a second plant in China was aimed at catering to surging demand in China and serving the European and Japanese markets. It was scheduled to begin operation in or after 2021.

The idea to double production came after its first plant, Komatsu Seiren (Suzhou) Textile & Dyeing Co. located in the same province, was running at full capacity.

But the expansion plan had to be scrapped after Komatsu Matere began posting double-digit negative growth in sales in Europe, its largest market, starting from the April-June quarter of 2019. It also saw sales stagnating in Asia during the same time, according to its financial statement.

The Suzhou plant, which began operation in 2004, has annual processing capacity of 24 million square meters in materials, mainly for the fashion and sports wear markets. They are shipped largely to Europe apart from supplying to the domestic market, the spokesman told NNA.

Komatsu Matere uses cutting-edge technologies to produce its products. It is known for its highly-functional fabrics that could be water-repellent, moisture-permeable, windproof or antibacterial. It also produces a new ecological material that absorbs water and contains air.