K&R Acquires Stake In Chinese Factory

Financial Terms Were Not Disclosed

K&R Acquires Stake In Chinese FactorySupplier firm K&R Precision (asi/63770) has acquired a 50% interest in a Chinese factory in Dongguan Province, the company has announced. Financial terms of the deal were not disclosed. The factory, which is now open for business and accepting orders, will manufacture bags and provide them directly from China to customers, with inventory and raw materials kept on site as well.

"This is a factory we've been working with for 20 years," says Merrick Falkenstein, president of K&R. "I've been to the factory and we've done our due diligence. Everything shipped out of the factory will be 100% compliant and documentation will be sent out with every order. It will make life easier for distributors."

Falkenstein hopes K&R's factory-direct strategy will dissuade the company's distributor customers from buying direct from Chinese factories – something he says is happening more frequently. Through its Chinese facility, K&R will accept all responsibility for service, orders and product quality, with the goal of removing risk from distributors who may be frustrated with Chinese vendors. "We will stand behind the products and be providing North American standards," Falkenstein says. "We will make sure the products are high quality, compliant and shipped on time."

The agreement is part of a multi-phase K&R expansion plan, which Falkenstein says will potentially include additional factory partnerships, an acquisition and the launch of a new company division in the coming months. As part of its 2013 initiatives, K&R will also advertise globally, instead of solely focusing on the U.S. and Canada.

Sales at K&R, which supplies drinkware items, bags, watches and multifunction tools, among other products, are up 12% in 2012, according to Falkenstein. "This year's been pretty good," he says. "We're definitely moving in the right direction."