ECCO plans to set up four shoe factories in an industrial compound at Tong-An, just outside the Chinese city of Xiamen, each with an annual capacity of about one million pairs, opening one after the other over the next four years. Work on the first module began a few days ago with a ground-breaking ceremony led by Dieter Kasprzak, president of the Danish group, and should be completed in the 1st quarter of 2005. The last module should be built in 2007, but the program may be accelerated if needed.
In addition to that, ECCO plans to build within the next two years a factory whose production will be primarily intended for the Chinese market. It will start in 2006 the construction of an ultra-modern tannery there, with the likelihood that it will add a beamhouse for the conversion of raw hides. Overall, ECCO will invest between 250 and 500 Danish crowns (€33-67m-$41-82m) in Xiamen within the next 5 years.
IFU, an industrialization fund for developing countries, will take a 20 percent stake in ECCO’s Chinese production facilities, as it has already done for its production plant in Slovakia. According to company officials, the current strategy is to keep the group’s existing production capacity in Portugal, Slovakia and Thailand unchanged, tapping on its new Chinese facilities to take care of future planned increases in global sales. The new complex in Xiamen will not handle the special sports models of ECCO’s fast-growing Receptor range, which will continue to be made by third-party contractors in China like those of the other major international sports brands.
Each of the four planned footwear production modules will employ about 450 workers. Including the other facilities, the total staff in China may reach 3,000 people in 5 years’ time. Like in Thailand and Indonesia, ECCO plans to set up its own technical school in Xiamen. Flemming Brönd, who has been ECCO’s production director for many years, is moving to China this month to run the new project as chairman of ECCO Xiamen. Siegfried Meier, the former production manager of Elefanten in Portugal, was designated one year ago to take over Brönd’s global responsibilities in view of his planned retirement.
Like many other Western executives, Karl Toosbuy, the founder of ECCO who died a couple of months ago, has been frequently in China lately. He first visited China 10 years ago to check whether the conditions were ripe for the group’s first own plant in the country. He personally traveled throughout the country to find the most suitable location. The establishment of a factory in China was an integral component of a business plan that he made public early last year, which calls for a doubling in sales over the next 10 years, but the timing of the Chinese investment was left open then.