Sports and casual shoes manufacturer Pegasus International plans to set up an assembly operation in Hong Kong to circumvent anti-dumping duties and quota restrictions against mainland imports in Europe.
Chairman Thomas Wu Chen-san said the plan followed a rule change by the Hong Kong Trade Department allowing certain locally assembled shoes to be exported to Europe with a certificate of origin from Hong Kong.
'We aim to serve existing customers which are currently sourcing from other countries in the region due to trade barriers in Europe,' vice-general manager Derek Lee Yiu-ming said.
Pegasus hopes to start assembling shoes locally on a small scale using parts from the mainland by the end of this year, with a target of 500,000 pairs in the first year of operation.
The company yesterday reported a 37 per cent slump in attributable profit to US$9.86 million for last year. Turnover dropped 18 per cent to $115.92 million.
The greater percentage fall in profit compared with turnover was partly due to an increase in depreciation expenses from $5.5 million to $8 million, Mr Wu said.