High-end fabric maker soon found pitfalls in mainland China plant

Singtex Technical Fabric, a designer of material for high-end sports and outdoor clothes, in 1991 did what was then in vogue for Taiwanese companies: it moved some of its operations to mainland China. After buying raw materials there for two years, Singtex backed out.

After shipping the cloth to South Africa, the client discovered that when the mainland-produced fabric got wet, the colours bled, Singtex chairman Jason Chen said.

Five years later, the company set up a production plant near Shanghai - until it discovered that its local partner was angling to control Singtex technology.

"As soon as you gave them the technology, they would want to be the boss," Chen said.

Singtex pulled out again in less than year, after remodelling the never-opened facility, at a loss of NT$6 million (HK$1.51 million). Since then, the 26-year-old company has expanded in Taiwan, and had revenue of US$50 million last year.

It is a model for the Taiwanese government drive to bring investment back from mainland China. "Although labour is cheap in China, our clients are Nike and The North Face. There's no way we can give them material with quality problems," Chen said at his headquarters in the suburban Taipei district of Xinzhuang.

"We never quit Taiwan. We've always been expanding here."