The first R&D center in Leica settled in Foshan

You may have heard of Leica cameras from Germany's top luxury camera brand, but you may not know that the world-famous textile giant is also called Leica! Lycra fiber has become the most active element in people's clothes. From bicycle clothing to swimwear, denim to knitwear, sports shoes to suits, and even high fashion, Lycra fiber is everywhere.

Recently, Lycra's fourth R&D laboratory and the first domestic research and development center, Advanced Textile Innovation Center (ATIC), were officially put into use at Foshan Sanshan Science and Technology Innovation Center. The Innovation Center will focus on the application innovation of functional yarns and the design, development and research of textiles to meet the functional and fashion needs of apparel and fabrics in the global market.

As the world's leading brand in the spandex industry, Leica has now operated in 14 countries around the world, including 4 R&D centers, 8 production plants, 17 offices, more than 1,000 patent applications, more than 2,300 registered trademarks and approximately 250. A unique brand and logo, occupying the global spandex market for innovation and leadership for more than 61 years.

With the arrival of the Advanced Textile Innovation Center, what new developments will Leica have in the Chinese market? Steve Stewart, vice president of clothing business at Lycra in Leica, said in an interview with the 21st Century Business Herald that the Chinese market is the most important country for apparel and fabric production and the most critical market for Leica. Sales in the Chinese market have consistently maintained double-digit growth, which will encourage the company to continue its efforts.

Going deep into China

Back in the late 1950s, Dr. Joseph C. Shivers, a chemistry expert at DuPont in the United States, invented spandex fibers and used Lycra as its trade name. Lycra fibers were born. In 2002, DuPont established a wholly-owned subsidiary, INVISTA, and became the world's largest and most experienced producer and seller of integrated fibers, fabrics and surface coatings. Under the leadership of INVISTA, Lycra Fiber maintains a strong development trend and continues to occupy a monopoly position in the spandex market.

With the expansion of the Leica fiber's influence on a global scale, it has also formed an indissoluble bond with China. According to Tianxue data, INVISTA established a spandex joint venture in Qingpu, Shanghai in 1995, marking the entry of Lycra fiber into the Chinese market. Subsequently, INVISTA established branches in Beijing, Shanghai, Qingdao, Foshan and other places. In 2004, it established a large-scale spandex plant in Foshan Sanshui Southwest Industrial Park with Foshan Plastics Group.

“In the past 15 years, we have invested heavily in improving production and innovation capabilities, one of which is also to anticipate the transfer of fabric and apparel production to Asia, especially China.” Steve Stewart, President of Lycra's apparel business in Asia, Speaking at the opening ceremony.

On January 31, 2019, Shandong Ruyi Woolen Garment Group Co., Ltd. (002193.SZ), the leading enterprise in the competitiveness of China's textile and garment enterprises, completed the acquisition of Leica in the United States. The target of the transaction included INVISTA apparel and The fiber and brand portfolio of the Advanced Fabrics business includes the production of a variety of fibers including LYCRA® fiber, LYCRA HyFit® fiber, COOLMAX® fiber, and other important assets such as related technologies and R&D.

Upon completion of the transaction, the new company was named the US Leica Group and wished to become the controlling shareholder of the Leica Group, which will operate as an independent subsidiary, maintaining its unique positioning, corporate vision, development strategy and organizational structure. Ruyi Group stated that it will continue to maintain close cooperation with INVISTA's original shareholder, Koch Industries Group, to establish a new paradigm for economic cooperation between Chinese and American companies under the new situation.

Qiu Yafu, Chairman of the Board of Directors of Shandong Ruyi Holding Group, said that Ruyi always maintains a clear development path. INVISTA's leading assets and technologies and consumer-recognized brands will have significant synergies with the fabric apparel business.

Bob Kirkwood, Global Chief Technology Officer of Leica, said in an interview that the handover process between the company and Ruyi Group is going smoothly, and the company will continue to lead the growth of the global business. As a strategic investor in Leica, Ruyi Group will continue to support the company's investments in research and development, innovation, branding and consumer brand cooperation. “Overall, we are an independent company that continues to focus on the future development and business growth of Leica.”

Looking for new growth opportunities

In the field of spandex, in addition to the rapid development of Lycra in China, the local spandex enterprises have also developed rapidly, and initially formed a situation in which many leading companies go hand in hand.

In 2018, Huafeng Spandex (002064.SZ), the largest domestic spandex producer, achieved operating income of 4.436 billion yuan, a year-on-year increase of 6.89%; net profit of 445 million yuan, an increase of 15.49%. By the end of 2018, the domestic spandex production capacity of Taihe New Materials (002254.SZ), the first spandex producer in China, reached 786,000 tons, an increase of about 11% year-on-year; the demand was 585,000 tons, an increase of about 10%.

In the face of industry competition, Leica has been looking for new growth opportunities. In addition to focusing on strategic markets and opportunities, the company is also actively expanding the application of stretch fabrics. Currently, Lycra is working on the Chinese market to develop new men's shirt fabrics that are comfortable, easy to handle, free of iron, and wrinkle-free. "These are our new growth opportunities. We will use our LYCRA's freefit technology platform for such products," said Steve Stewart, president of Lycra's apparel business Asia.

As a brand, innovation is at the heart of the Lycra brand. Currently, Leica's innovative strategy is still to understand customer and consumer needs, creating new products, creating value for customers based. With the arrival of ATIC, the company will increasingly cooperate with local clothing brand brands to enhance mutual understanding.

“The ATIC team will work with Asian customers to find new product opportunities and develop innovative polymer, fiber and textile technologies.” Bob Kirkwood, Global Chief Technology Officer of Leica, said the establishment of ATIC will further strengthen the company's global R&D capabilities and create Opportunities to work with customers in Asia to provide consumers with more innovative products and technology solutions.

At this stage, Leica has 9 brands including LYCRA HyFit, LYCRA T400, LYCRA L, COOLMAX, THERMOLITE, ELASPAN, SUPPLEX, TACTEL and TERATHANE. Among them, LYCRA is the brand of spandex, and the most important brand for consumers. COOLMAX and THERMOLITE are polyester fiber brands, and the rest are B2B brands.

In April this year, there were media reports that Ruyi Group was starting to apply for an IPO in the United States for its newly established US Leica Group. At present, Ruyi Group is working with Goldman Sachs Group to study the feasibility of the transaction. It is expected that it will raise 500 million US dollars and will complete the IPO as early as this year. If Leica successfully completes its IPO, will it welcome more new development opportunities?

"We will cooperate with many Korean and Japanese fabric manufacturers and brands. Well-known brands, including Uniqlo, Victoria's Secret, Lululemon, a brand specializing in yoga clothes, should be known to everyone. Also included in China, there is pure Specializing in denim brands, Manifin, etc. All of them are able to make very good quality fabrics and garments, many of which are functional partners and apparel brands are our partners," Steve Stewart said.