Shoes and Hats Processing and Manufacturing Project in Dehong Area of China (Yunnan) Pilot Free Trade Zone

Name

中国（云南）自由贸易试验区德宏片区鞋帽加工制造项目

Shoes and Hats Processing and Manufacturing Project in Dehong Area of China (Yunnan) Pilot Free Trade Zone

Industry Involved

Textile processing

Site

Import & Export Processing and Manufacturing Base, Ruili Industrial Park, Dehong Prefecture

Project Description

Ruili Port is the largest land port for China's trade with Myanmar, with its trade volume with Myanmar accounting for more than 60% of Yunnan's trade with Myanmar and 30% of China's trade with Myanmar. The export commodities are mainly light industrial products such as clothing, shoes and hats. Ruili has the dual advantages of abundant domestic production materials and consumption markets in Myanmar and Southeast Asia. Relying on Ruili Port, the project is to build a garment processing factory in Ruili Import and Export Processing Base, giving full play to the advantages of low cost of Dehong and its surrounding factors, saving production costs, improving economic benefits, and building a garment processing and manufacturing base open to the southwest.

Content

Construction scale: The main construction contents include workshops for production and processing of clothing, shoes and hats, warehouses, comprehensive office buildings, staff restaurants and other auxiliary facilities. In the early stage of development, the project will rely on domestic famous clothing enterprises to carry out OEM production, and in the later stage, it will create its own brand. It is planned to process 5 million pieces of clothing, shoes and hats annually by 2021, and thus realize sales revenue of CNY 250 million. The production workshop of professional wear includes the production areas of suits and shirts, uniforms (for security guards, hotels, restaurants, schools, doctors, etc.), and overalls (for machinery industry, auto repair industry, construction industry, etc.). The special clothing production workshops include the production areas of Yunnan special clothing (Dai, Jingpo, Lisu, Achang, etc.), and South Asia and Southeast Asia special clothing (Myanmar sarong, Vietnamese gown, Thailand Panon and women's tube skirt, etc.). Other garment production workshops include the production areas of sportswear and leisure T-shirt. The production workshop of shoes and hats includes design and tailoring workshop, sewing workshop, printing/embroidering workshop, packaging workshop, and warehouse.

Construction period: 2020-2022

Land area: The project has a total land area of 100 mu, a floor area of 54,000 square meters, and a floor area ratio of 0.8.

Supporting Conditions

1. Ruili is 445km from Mandalay, 670km from Naypyidaw, 1,138km from Yangon and 866km from Kyaukpyu. It is 116 km from Ruili Nongdao to Bhamo, Myanmar. The product from Ruili, after a journey of about 1,000km via Lashio and Mandalay, can be directly exported to such ports as Yangon Port and Kyaukpyu without passing through the Strait of Malacca, thus entering the Indian Ocean.

2. The park guarantees the timeliness and safety of electricity, water and road use of the project. Generally, the industrial electricity price is CNY 0.47/kWh, the industrial water price is CNY 2.65/ton, and the industrial gas price is CNY 2.59/m3. Labor force: According to DRSF [2013] No.69 document, it belongs to the second category (CNY 1,130). It, enjoying the advantage of special border port, is adjacent to Muse and other cities in Myanmar where labor resources are abundant with low prices.

3. Advantages of industry development: Mianguang Hat Industry (Ruili) Co., Ltd, affiliated to China Everbright Industry Group Limited, is an enterprise mainly producing and selling baseball caps. As the sports equipment designated by American Baseball Professional League and American Rugby Professional League, its products have a wide market in the global high-end market.

4. The land index required for the construction of the project can be implemented, and the implementation of the project will not have obvious impact on the environment. The raw materials of the project are mainly purchased from surrounding cities.

Investment Estimate and Fund Raising

The total investment is CNY 160 million, including CNY 50 million raised by enterprises, CNY 70 million raised by financial institutions and CNY 40 million from other funds.

Preferential Policies Applicable

National and provincial preferential policies: Opinions of the Central Committee of the Communist Party of China and the State Council on Deeply Implementing the Western Development Strategy; Policies of the People's Government of Yunnan Province on Accelerating the Construction of Ruili National Key Development and Opening-up Experimental Zone; Notice of Ruili City People's Government on Printing and Distributing Preferential Policies for Investment Promotion in Ruili City. The project, after meeting the relevant standards of documents, can enjoy the policies such as: "One Discussion over Each Matter"; in terms of tax, “five-year free and five-year half” (i.e., "from the profit-making year, the enterprise income tax will be exemptible for the next first five years and half rate reduction for the next subsequent five years."), "three-year free and two-year half" (i.e., from the profit-making year, the enterprise income tax will be exemptible for the next first three years and half rate reduction for the next subsequent two years.), and deduction from personal income tax for senior executives; fund subsidy for standard workshop construction.

Market Prediction (Analysis)

Ruili has the dual advantages of abundant domestic production materials and consumption markets in Myanmar and Southeast Asia. Building a garment processing factory at the frontier of the port can save production costs and highlight its comparative advantages. It is estimated that by 2021, 5 million pieces of clothing, shoes and hats will be processed annually, and the sales income will reach CNY 250 million.

Profit Model and Preliminary Benefit Analysis

Economic benefits: After the project is put into operation, it mainly gains revenue through the sales of professional wear, ethnic costume and other clothing. It is estimated that the annual realizable profit will be CNY 25 million, and the investment payback period of the project will be 4 years (excluding the construction period).

Social benefits: The construction of the project is of great significance to improve the development level of Ruili clothing, shoes and hats industry, expand the markets in South Asia and Southeast Asia, and promote China-Myanmar trade.

Risk Analysis

Key points: The project may face certain risks in terms of policy, construction, market, interest rate (exchange rate), and operation, so reasonable preventive measures should be formulated.

Cooperation Pattern

Joint venture, cooperation, equity participation, PPP, etc.

Contact Information

Contact Unit: Investment Promotion Bureau of Ruili City

Contact Person : Yao Chenghu

Tel.: 13988252077

Fax: 0692 -4141253