Fashion retailer U-Right International Holdings has taken on the trappings of a hi-tech company after licensing fabric technology that can make clothing and other items waterproof and stain-resistant.
Since April, the company had collected $18 million in licence fees from manufacturers that had used the technology in their products, deputy chief executive Raymond Chui said. That figure would increase in the months ahead, he said, coming against a backdrop of an otherwise difficult trading year.
The company's net profit fell to $23.8 million in the fiscal year to March from $37.6 million the previous fiscal year, due to increased costs.
Mr Chui said the licensing of the technology, known as Texcote, fitted with the goal of taking a value-added approach to business, given reduced margins in deflationary times.
'A few years ago, we saw the retail sector will have more competition with foreign companies coming to China. How can we sustain prices instead of just cutting prices? We needed to add value to our products,' said Mr Chui.
Four companies have licensed the Texcote technology, for which U-Right charges a one-time licence fee of $5 million to $10 million each. The four companies are toymaker Kiu Hung Industries, shoemaker Onlen Fairy's Land, Guangdong Da Zhong Medical Products Plant and Maytron Enterprise, a Hong Kong distributor and manufacturer of leather goods.
In addition to the licence fees, U-Right takes a share of the profit - from 30 to 50 per cent - from each Texcote-applied product sold.
