Related Party Transactions

12 Months Ended

Dec. 31, 2011

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 12 - RELATED PARTY TRANSACTIONS

Mr. Kang is the Company’s Chairman and Chief Executive Officer. Ever-Glory Hong Kong is the Company’s major shareholder. Mr. Xiaodong Yan is Ever-Glory Hong Kong’s sole shareholder. All transactions associated with the following companies controlled by Mr. Kang or Mr. Yan are considered to be related party transactions, and it is possible that the terms of these transactions may not be the same as those that would result from transanctions among unrelated parties. All related party outstanding balances are short-tem in nature and are expected to be settled in cash.

Other income from Related Parties

Included in other income for the years ended December 31,2011 and 2010 is rent revenue from entities controlled by Mr. Kang under operating lease agreements with various terms though 2015 as follows:

	2011		2010
EsCeLav	$	11,783	$	11,095
Jiangsu Heng-rui		22,151		20,859
Nanjing Eight-One-Five Hi-tech (M&E) Co.,Ltd.		15,710
Total	$	49,644	$	31,954

Purchases from, and Sub-contracts with Related Parties

In connection with the Company’s tax planning strategies relating to VAT, raw materials are sourced by the Company in the PRC and shipped to related party contract manufacturers in Vietnam and Cambodia. The raw materials were originally purchased by the Company, and, through a series of transactions, were sold at cost to, and repurchased at cost from, Jiangsu Ever-Glory. These transactions amounted to approximately $1.2 million (RMB7.5 million) and $4.5 million (RMB30.0 million) during the years ended, 2011 and 2010, respectively, and have been netted against each other for financial reporting purposes.

The Company purchased raw materials of $3,206,064 and $4,004,040 during the years ended 2011 and 2010, respectively, from Jiangsu Ever-Glory.

The Company purchased raw materials of $3,549,501 and $2,994,784 during the years ended 2011 and 2010, respectively, from Nanjing Knitting.

In addition, the Company sub-contracted certain manufacturing work to related companies totaling $7,911,034 and $4,067,286 for the years ended December 31, 2011 and 2010, respectively. The Company provided raw materials to the sub-contractors and was charged a fixed fee for labor provided by the sub-contractors.

Sub-contracts with related parties included in cost of sales for the years ended December 31, 2011 and 2010, are as follows:

	2011		2010
Nanjing Knitting	$	56,916	$	-
Nanjing Ever-Kyowa		842,055		1,065,741
Ever-Glory Vietnam		4,420,490		1,711,630
Ever-Glory Cambodia		2,517,925		588,671
EsC'eLav		60,675		-
Jiangsu Ever-Glory		12,973		701,244
	$	7,911,034	$	4,067,286

Accounts Payable – Related Parties

The Company purchases raw materials from and subcontracts some of its production to related parties. Accounts payable to related parties at December 31, 2011 and 2010 are as follows:

	2011		2010
Nanjing Knitting	$	661,139	$	713,581
Nanjing Ever-Kyowa		436,030		369,837
Ever-Glory Vietnam		1,305,696		365,569
Ever-Glory Cambodia		330,047		14,133
Kunshan enjin		26,091		-
Total	$	2,759,003	$	1,463,120

Amounts Due From Related Parties

The amounts due from related parties at December 31, 2011 and 2010 are as follows:

	2011		2010
EsC'eLav		23,565		-
Jiangsu Ever-Glory		17,600,147		10,102,559
Total	$	17,623,712	$	10,102,559

Jiangsu Ever-Glory is an entity engaged in importing/exporting, apparel-manufacture, real-estate development, car sales and other activities. Jiangsu Ever-Glory is controlled by Mr. Kang. Because of restrictions on its ability to directly import and export products, the Company utilizes Jiangsu Ever-Glory as its agent to assist the Company with its import and export transactions and its international transportation projects. Import transactions primarily consist of purchases of raw materials and accessories designated by the Company’s customers for use in garment manufacture. Export transactions consist of the Company’s sales to foreign markets such as Japan, Europe and the United States. As the Company’s agent, Jiangsu Ever-Glory’s responsibilities include managing customs, inspection,

transportation, insurance and collections on behalf of the Company. Jiangsu Ever-Glory also manages transactions denominated in currencies other than the Chinese RMB at rates of exchange agreed between the Company and Jiangsu Ever-Glory and based upon rates of exchange quoted by the People’s Bank of China. In return for these services, Jiangsu Ever-Glory charges the Company a fee of approximately 3% of export sales manufactured in China and 1% of export sales manufactured overseas. For import transactions, the Company may make advance payments, through Jiangsu Ever-Glory, for the raw material purchases, or Jiangsu Ever-Glory may make advance payments on the Company’s behalf. For export transactions, accounts receivable for export sales are remitted by the Company’s customers through Jiangsu Ever-Glory, who forwards the payments to the Company. The Company and Jiangsu Ever-Glory have agreed that balances from import and export transactions may be offset. Amounts due to (from) Jiangsu Ever-Glory are typically settled within 60-90 days. Interest of 0.5% is charged on net amounts due at each month end. Interest income for the years ended December 31, 2011and 2010 was $635,479 and $77,704, respectively. Following is a summary of import and export transactions for the years ended December 31, 2011and 2010

	Accounts Receivable			Accounts Payable		Net
As of January 1, 2011	$	16,497,257		$	6,394,698	$	10,102,559
Sales/Purchases		13,463,009			3,206,064
Payments Received/Made		(9,960,893	)		(7,201,536)
As of December 31, 2011	$	19,999,373		$	2,399,226	$	17,600,147