Markham, Ontario-based supplier K & R (UPIC: K-AND-R) has acquired a 50-percent interest in a Chinese factory located in Dongguan Province, according to company president Merrick Falkenstein. The factory, which has not yet been named, has been manufacturing products for the supplier for more than 20 years.
With the acquisition, Falkenstein plans to change his business model to allow distributors to buy directly from the factory. “I want to open this factory to distributors,” he told PPB Newslink in an exclusive interview Monday. “For those who import, they can now buy directly from our factories in China. Goods can be ready within two weeks and will be FOB China.”
He says K & R will monitor the orders, make sure they ship on time and stand behind the products. The company has four offices in China, and representatives from K & R’s U.S. offices will make visits to the factory every eight weeks.
The factory will be 100-percent compliant,” adds Falkenstein. “If the customer requests it, we can send a compliance document with every single shipment and the distributor doesn’t have to pay for that.”
K & R, which sells bags, drinkware, umbrellas, watches and other promotional products, does 70 percent of its business in Canada and the remainder in the U.S. Falkenstein thinks his new model will help grow new business for the company worldwide; his goal is to sell two to three million bags in his newly acquired factory in 2013.
“This acquisition is phase one,” adds Falkenstein. “I have three other phases to achieve in next six months: a joint venture with another Chinese factory, a new product division and a possible company acquisition.”