(Yicai Global) June 8 -- China’s Huafu Fashion plans to add a new CNY1.5 billion (USD212 million) yarn plant in Vietnam as it looks to expand production while skirting Asian trade tariffs imposed on Chinese clothing.

The Anhui-based firm, which exports middle- and high-end dyed yarns to buyers worldwide, will build the 500,000 spindle factory in Vietnam’s Long An province, it said in a statement yesterday. The first phase of the factory will produce 300,000 spindles of yarn a year, including producing high-end cotton and materials for sports clothing.

The global apparel supply chain is gradually shifting to Vietnam and Southeast Asia, and the move can help Huafu improve its local service capabilities and make it more competitive among the Southeast Asian of Nations, it said. The factory will also mean more of its products come from Vietnam, allowing it dodge tariffs imposed on countries not involved in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Shares in the company [SHE:002042] closed down 2.1 percent at CNY6.05 (86 US cents).

Huafu plans to raise money for the factory through a private placement of 459 million shares via the Shenzhen Stock Exchange, less than 30 percent of the company’s pre-issuance share capital.

The company currently has five plants in China and Vietnam, with annual output of nearly 1.9 million spindles. Its existing Vietnam factory produces 280,000 spindles of yarn a year, according to the statement.

Editor: James Boynton