Royale Furniture to establish new production base in Nanchang

The company signed agreement with Jiangxi government for its aim to increase production capacity to tap consumers’ rapidly growing spending power.

Leading PRC furniture designer, manufacturer and distributor Royale Furniture Holdings Limited (“Royale Furniture”) on Thursday signed an agreement with the People’s Government of Jiangxi Province to purchase land for its Nanchang project to build a new plant expanding production to meet the growing market needs in central China.

Demonstrating strong support for the project, Mr. Hong Lihe, Vice Governor of Jiangxi Province and other Jiangxi provincial officials attended the signing ceremony. To be acquired at a consideration of approximately HK$63.6 million, the two parcels of land in Nanchang occupy an area of 230,000 sq m and 200,000 sq m respectively, according to a Royale Furniture report.

Mr. Jackson Tse, Chairman of Royale Furniture, said, “We are glad to participate in the Nanchang development project and contribute to the development of the local economy. We would also like to thank the People’s Government of Jiangxi Province for supporting our investment project.

In view of the rapidly growing economy and accelerating urbanisation in Jiangxi Province boosting domestic consumption, we decided to set up a new production base in the province to better serve our customers across central China, which not only expands our business effectively but also lowers transportation costs.”

Located in Xiang Tang Development Zone in Nanchang, Jiangxi Province, the Group’s new production base has been planned in two phases. Involving an investment of approximately HK$200 million to be covered by internal resources, the first phase that occupies an area of 230,000 sq m is constructed to manufacture panel furniture, sofas, and mattresses with an annual production capacity worth up to HK$1.2 billion. Production of the first phase is expected to start in the second quarter of 2012. The second phase is targeted to expand the production line of the first phase and further increase the annual production capacity of the new production base worth up to HK$2.4 billion in total. The estimated aggregate investment amount for both phases will be approximately HK$390 million.

Together with the Group’s current maximum production capacity valued at HK$2.0 billion (including the outsource production capacity) and the potential maximum production capacity of the planned Tianjin plant worth HK$1.2 billion, the Group’s total maximum annual production capacity is expected to reach a value of approximately HK$5.6 billion.

Mr. Gary Ma, Chief Executive Officer of Royale Furniture, commented on the location of the new production base in Jiangxi Province, “Situated at the hinterland in the heart of the Yangtze River Delta, the Pearl River Delta and the South Fujian Delta, Jiangxi Province offers proximity to major cities such as Shanghai, Nanjing, Wuhan and Changsha. With established logistics infrastructure and more than 2,200 km of well-connected highways, the province boasts a favourable business environment, added with the advantages of urbanisation, effective government and amenities.”