Exceed Company Ltd., the owner and operator of “Xidelong” brand and one of the leading domestic sportswear brands in China, disclosed that it paid $313,800 per acre for a 98-acre industrial site in Jiangxi Province where it will build a new factory.
As previously disclosed, the company had entered into an agreement with the municipal government of Ruichang City, Jiangxi Province, for the investment and construction of a sportswear manufacturing base on a parcel of land in Ruichang city, Jiangxi Province, PRC. Under this agreement, the company would purchase a 98-acre parcel of land in Ruichang city, for a total consideration of RMB198,000,000 ($31mm) subject to municipal and administrative approvals. This parcel of land will be used for the construction of a new production facility, which is expected to be completed by the end of 2013.
The parcel of land is a prime piece of real estate within Ruichang Industrial Park West, located within close proximity to the office of the municipal government of Ruichang city, the Ruichang train and bus stations and the Ruichang Aimin Hospital. Given its prime location in the center of the city, the parcel of land is priced at RMB330,000 per Chinese acre, which translates to $313,800 per U.S. acre. In addition, the city will incur costs in relocating current residents, conducting environmental cleanup, conducting surveys and rezoning the land before it will be available for development.
As previously announced, the company has made a deposit of RMB46,800,000 (approximately US$7.4 million) as a performance bond in conjunction with the signing of the agreement. The land will be officially purchased at an auction that will hopefully take place sometime later in 2012, after the government settles with the existing residents of the land. The company intends to establish a new operating subsidiary in Jiangxi Province and construct a new production facility on the purchased land in order to increase its internal manufacturing capacity and expand its control over the product development process from setting up the supply chain of raw materials, moulds and supplementary materials, to in-house production, to delivery.