In June 2006, the Group entered into a strategic Letter of Intent with Dow Chemical (China) Investment Co Ltd, the world's leading chemical player, to co-develop new generation of elastic fiber XLA(R) technology and products. Texhong will benefit from Dow Chemical's highly efficient sales and marketing strategy and unrivalled brand awareness as well as strong clientele in the international fashion market.
The Group's new production base with 100,000 spindles in Suining County, Xuzhou, Jiangsu Province has commenced operation in the first quarter of 2006 and has quickly achieved high utilization rate of over 95%. Currently, it has 11 production bases in China with approximately 470,000 spindles and more than 1,100 shuttless looms, representing an increase of 16.8% and 14.4% in production capacity of yarn and fabrics respectively, as compared to the Group's production capacity at the beginning of 2006.
Looking ahead, the Group will further strengthen its sales and marketing efforts both in the domestic market as well as overseas markets. Its regional headquarters in Shanghai has been successfully established as an international operating platform. It will act as the sales window of the Group's core-spun yarn and fabric products in the PRC market starting from the fourth quarter this year.
In addition, the Group will gradually expand its export sales team in Hong Kong. It is expected that its export sales and marketing arm will be further strengthened.