Scottish Government’s Country Plan for China and International Framework
We move on to agenda item 4. Helen Eadie and Roderick Campbell will feed back on their visit to Todd & Duncan, which is a textiles company in Kinross.
I will let Roderick shine first.
Funnily enough, Helen, I was going to ask you to shine first.
A major problem is that the visit was quite a while ago and it has sunk into the recesses of my mind. My main impression was of a company that had come back from the dead courtesy of being owned by the Chinese. The Chinese management seemed somewhat distant, which the company liked. Because yarn is being obtained and cashmere spun in China, the company is—to a degree—in competition with the firm that owns it. The company was keen to keep to itself its trade secrets on how it managed the process, so it was a bit odd.
The strongest message that I received was that Chinese exporters of yarn and garments can obtain a 16 per cent export rebate, whereas Todd & Duncan cannot access any such rebate, so it is at a competitive disadvantage. In trying to sell the spun yarn on the market, it has to rely on its quality, expertise and, in particular, the wide range of sophisticated colouring with which it dyes the yarn. We had the opportunity to see what is an impressive process.
The company exports a lot of yarn to Italy and makes regular overnight trips with spun yarn to Hawick. It is a specialist area, the business is relatively small and it seems to be working well. Obviously, we should take our hats off to the Chinese for rescuing a business that was in difficulty. The work also provides a job market in Kinross.
Those are probably the main points that struck me that I can recall. Helen might wish to carry on from there.
I want to return to the 16 per cent export rebate, because that is an important issue. Under World Trade Organization rules, the rebate rate was meant to be reduced to nil. However, the rate in China increased at the time of the economic downturn, which has placed our Scottish companies at a disadvantage. Perhaps we could write to the appropriate minister to say that we are concerned about that and to ask them to raise the matter with the Westminster Government. Somebody somewhere should be shining a torch on that matter. If World Trade Organization rules are ones that we should all be signed up to—and apparently China agreed to those rules at some stage—China should be party to that agreement, too, but it would seem that it has not followed those rules.
10:45
The other issue that struck me from the visit related to the Scottish Government’s regional selective assistance grants, although I know from my general knowledge that some of that is governed by European Union rules and guidelines, so there is perhaps not a lot that the Government can do. The company competes mainly against Chinese and Italian-owned textile firms, which have benefited from regional selective assistance, whereas our indigenous Scottish companies cannot benefit in any shape or form from that. There is an issue there, which we should perhaps reflect in our report when we come to write it. Todd & Duncan said that it has never been able to qualify for any assistance from any Government agency, due to the size of the company, its turnover and the number of staff that it employs. Perhaps we can think about that.
Representatives of the company said that it had worked with a university on training but that, because of the resources issue, it had to pull back from that. The company highlighted its previous relationship with the job centre. The way in which things used to work was helpful for the company, as it could phone up and get workers on tap almost immediately. Now, the remoteness of the job centres has led to a loss of the personal contact and understanding that the management used to have. We were asked to consider some of those key factors, which the company has to cope with in developing its work.
The company would like to have its own label so that it could have a much higher profile. I saw some of the products when company representatives took us to the factory shop. Anybody can visit the factory shop, and there are good prices there. It would be really good if the company could develop its own label—a Todd & Duncan label of origin, which its representatives thought might help the company to strengthen its market hold.
The issue of language was raised, which was the primary purpose of our visit. We heard that the company found it a disadvantage not to be able to converse in a variety of languages, particularly Chinese. It had to rely on local people in China for help.
The visit was worth while, though short, and the management were helpful and forthcoming. I hope that we can pursue some of the lessons that arose, and that we can perhaps help the firm in some way.
There are a lot of things to consider there, and a number of issues that we can raise with the minister when he comes before us and that we can include in our report. We should follow up all those points in our evidence taking.
One thing that sprang to mind in relation to language learning is that, if Todd & Duncan is not currently a member of the collective learning partnership, we should perhaps encourage it to join, as the partnership offers the teaching of foreign languages to staff. Other companies that I know have benefited greatly from that, with Spanish being one of the languages that has been taught. Perhaps we can get the relevant contact details to Todd & Duncan so that it can train its staff, or so that its staff can receive training via the local college.
Helen Eadie said that Todd & Duncan wants to use its own label. What label does it use in the factory shop? Why can it not use a Todd & Duncan label?
My impression was that it uses a Loch Leven label at the moment. It sells the yarn back to the parent company in China, which then negotiates with a whole spectrum of hand knitters and others. Italy is one of the places where the knitted products are sourced and another is Hawick in the Borders. It is down to the parent company to determine that.
At the factory shop, the label just says—
Loch Leven, I think.
Yes. A lot of the stuff that is exported indirectly—from Hawick or Italy—has Hermès or Chanel labels on it.
And it will be priced accordingly.
Yes.
The prices were phenomenal. I pointed to one garment and naively gave the price that I thought it might be, but I was miles away from the mark. The price was $1,000. It looked superb, but that is another world from Scotland.
We can note all those points and take them forward in the course of our inquiry.