Sitoy Group Holdings Ltd., which makes Coach Inc. and Prada SpA handbags, plans to boost production capacity by 50 percent over two years as luxury brands move more manufacturing to China to cut costs.
The company is building a new plant in Yingde, Guangdong province and aims to boost capacity to 24 million handbags in 2014 from 16 million last year.
Demand for high-end purses is climbing in China, defying slower global economic growth and prompting bagmakers to localize more production, cutting transportation costs and delivery times, Yeung said June 25 in Hong Kong. The global market for outsourced manufacturing of luxury bags and small leather goods is likely to grow to $6.8 billion in 2015 from $3.8 billion in 2010, Sitoy estimated in its initial public offering prospectus last year, citing a Frost & Sullivan report.
The manufacturer, whose prospectus also lists Michael Kors Holdings Ltd., Fossil Inc. and Tumi Holdings Inc. as clients, expects rising demand will hold up amid a dip in economic growth. China yesterday cut benchmark interest rates for the second time in a month to combat a slowdown in the world’s second-biggest economy.
Sitoy raised about HK$736.3 million ($95 million) in an initial public offering last year, according to data compiled by Bloomberg. Italian fashion house Prada owns 4.9 percent of the company
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