Shanghai Challenge Textile Company, a Chinese company, has purchased 14.6 million shares of Pakistan’s Masood Textile Mills. This is a first-of-its-kind deal in Pakistan in which a Chinese group has acquired a majority stake in a local textile company. Chinese investors hope to have the advantage of better cotton prices and cost-effective labor by investing in a Pakistani company.

Masood Textile Mills is a vertically-integrated textile manufacturing company with in-house yarn, knitting, fabric dyeing, processing, laundry and apparel manufacturing facilities. It posted a pre-tax profit of Rs1.1 billion in 2013, which was 13 per cent higher than its pre-tax earnings in the preceding year. It produces value-added textile products, whose exports to the European Union are expected to increase due to the GSP Plus status that Pakistan has received.

Shanghai Challenge Textile Company is engaged in the production and distribution of high-graded outdoor fabrics and apparels. The company operates its business through weaving, dyeing and processing of knitted fabrics as well as the production and distribution of apparels, accessories and specialty textile products.

China is investing billions in Pakistan. These are mostly centered around the energy sector. Pakistan suffers from chronic electricity shortages and has long sought investments in coal-fired power stations. Chinese companies will help build at least four new power stations in Pakistan, while the deals also cover the supply and mining of coal.

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