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Jan. 29, 2004 — Raymond Chui, deputy CEO of U-Right International Holdings Ltd., wants consumers to think of Texcote when they think of water- or stain-repellent fabrics — the same way that soda refers to Coca-Cola.
But U-Right might have to settle for being Pepsi.
The garment industry is one of the first consumer markets in which nanotechnology has really taken off, and the battle for shares already seems to be taking a page from the cola wars — where similar products depend on branding to increase sales.
In the United States, Nano-Tex LLC (Profile, News, Web) has made great progress in selling nanocoatings like Nano-Touch and Nano-Dry, which make fabrics resistant to stains without changing their feel. Nano-Tex is already entrenched in the retail market in a big way, with partners such as Eddie Bauer.
U-Right is placing its bet on a similar fabric-enhancing nanotechnology called Texcote. Developed by Swedish scientists in the 1990s, Texcote’s difference lies in the fact that the coating is applied to the entire garment, not just the fabric; so everything, including zippers, seams, and linings, is protected.
The most pressing question both these companies face is how big the market is for high-tech fabrics, since the special processing makes the garments more expensive. Yet, in an industry where profits are feeling the squeeze more and more every year, manufacturers are increasingly turning to high-tech products to improve the bottom line.
“More and more Chinese producers are manufacturing the basic product, so Hong Kong companies have to add technology to their products to stay competitive,” said Alan Wong, an analyst at GK Goh Securities.
And nanotechnology is only one of the promising new technologies and processes entering the fabric market. Some companies are trying corn fibers; others are focusing on different types of finishes, which variously claim to resist ultraviolet rays, mosquitoes and dirt.
But the area where customers are most willing to pay more is in sports clothing, Wong said. Activewear most easily makes use of durable and multifunctional fabric. Indeed, the U-Right, which designs, manufactures, wholesales and retails clothing, produces its own line of Texcote-processed clothing, NANOECO sportswear. They were so impressed by sales that they decided to expand vertically by buying a majority share in Texcote Technology International Ltd. in 2002.
Moreover, to keep up with demand and improve processing power, the company broke ground on a (U.S.) $6.5 million plant in Shunde, China in September. When completed in 2005, the 170,000-square-foot plant will have 10 new lines for processing Texcote technology. Building a plant in China takes advantage of cheap land and labor, but makes it more difficult to hire skilled labor. So U-Right is starting a six-month in-house training course for technicians. Moreover, security is tight to prevent information leaks, and the group closely monitors all aspects of the technology, including importation, processing and waste removal.
Despite these obstacles, Chui believes that it is advantageous for U-Right to be in “one of the largest garment manufacturing bases in the world, which supplies a majority of the world’s garments and fabrics.”
The mainland China market accounts for 77.8 percent of U-Right’s clothing sales revenue. In 2002, its first year of operation, Texcote products achieved a turnover of (U.S.) $2 million, which increased to $ 6.7 million in the first half of 2003, based on interim results.
Selling garments, however, is only one prong of the company’s strategy. U-Right is also intent on selling the Texcote technology as a stand-alone brand and is licensing rights to other manufacturers. “We regard Texcote Technology as a commodity, which will contribute significantly to the group’s future turnover and profitability,” Chui said.
Thus far, U-Right’s quest to achieve brand awareness is focused mostly on Asia. The company, which employs a mix of Chinese and Swedish scientists, is working on improving its market share by applying the technology to other commodities such as paper, glass, tiles, paint and wood products. Meanwhile, it is already expanding the Texcote-processing treatment to other textile products, such as toys, surgical masks and protective apparel. Last fall, the group signed a contract worth $1 million with Guangdong Da Zhong to jointly make and distribute textile medical products, such as surgical masks.
Wong believes there is “high potential” in the market for high-tech textiles and apparel. “Right now you only see these new fabrics at the high end, but they will gradually penetrate the entire market.” The only question is which new fabrics will end up at the top.