Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 11 RELATED PARTY TRANSACTIONS

Mr. Kang is the Company’s Chairman and Chief Executive Officer. Ever-Glory Enterprises (HK) Ltd. (Ever-Glory Enterprises) is the Company’s major shareholder. Mr. Xiaodong Yan was Ever-Glory Enterprises’ sole shareholder and sole director. Mr. Huake Kang, Mr. Kang’s son, acquired 83% interest of Ever-Glory Enterprises and became its sole director in 2014. All transactions associated with the following companies controlled by Mr. Kang or his son 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 transactions between unrelated parties. All related party outstanding balances are short-term in nature and are expected to be settled in cash. 

Other income from Related Parties

Jiangsu Wubijia Trading Company Limited (“Wubijia”) is an entity engaged in high-grade home goods sales and is controlled by Mr. Kang. Wubijia has sold their home goods on consignment in some Company’s retail stores since the third quarter of 2014.

	2021			2020
	(In thousands of U.S. Dollars)
The Company received from the customers	$	3			16
The Company paid to Wubijia		(3	)		(16	)
The net income recorded as other income	$	-		$	-

Included in other income for the years ended December 31, 2021 and 2020 is rental income from EsC’Lav, the entity controlled by Mr. Kang under operating lease agreement with term through 2021. The rental income is $25,596 and $23,945 for the years ended December 31, 2021 and 2020, respectively.

Other expenses due to Related Parties

Included in other expenses for the years ended December 31, 2021 and 2020 are rental expenses due to entities controlled by Mr. Kang under operating lease agreements as follows:

	2021		2020
	(In thousands of U.S. Dollars)
Chuzhou Huarui	$	221	$	207
Kunshan Enjin		93		87
Total	$	314	$	294

The Company leases Chuzhou Huarui and Kunshan Enjin’s warehouse spaces because the locations are convenient for transportation and distribution. 

Purchases from, and Sub-contracts with Related Parties

The Company purchased raw materials of $1.85 million and $1.10 million during the years ended 2021 and 2020, respectively, from Nanjing Knitting.

In addition, the Company sub-contracted certain manufacturing work to related companies totaling $25.1 million and $17.0 million for the years ended December 31, 2021 and 2020, respectively. The Company provided raw materials to the sub-contractors and was charged a fixed fee for labor provided by the sub-contractors.

Purchases with related parties included in cost of sales for the years ended December 31, 2021 and 2020 are as follows:

	2021		2020
	(In thousands of U.S. Dollars)
Ever-Glory Vietnam	$	17,962	$	11,335
Chuzhou Huarui		1,659		2,240
Fengyang Huarui		1,963		1,352
Nanjing Ever-Kyowa		1,636		948
Nanjing Knitting		1,851		1,096
EsC’Lav		50		39
Total	$	25,121	$	17,010

Accounts Payable – Related Parties

The accounts payable to related parties at December 31, 2021 and 2020 are as follows:

	2021		2020
	(In thousands of U.S. Dollars)
Ever-Glory Vietnam	$	395		1,727
Fengyang Huarui		161		150
Nanjing Ever-Kyowa		-		384
Chuzhou Huarui		59		1,234
Nanjing Knitting		668		257
Jiangsu Ever-Glory		49		12
Total	$	1,332	$	3,764

Amounts Due From Related Parties – Current Assets

The amounts due from related parties at December 31, 2021 and 2020 are as follows:

	2021		2020
	(In thousands of U.S. Dollars)
Jiangsu Ever-Glory		220		567
Total	$	220	$	567

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. During 2021 and 2020, the Company and Jiangsu Ever-Glory purchased raw materials on behalf of each other in order to obtain cheaper purchase prices. The Company purchased raw materials on Jiangsu Ever-Glory’s behalf and sold to Jiangsu Ever-Glory at cost for $3.4 million and $0.9 million during 2021 and 2020, respectively. Jiangsu Ever-Glory purchased raw materials on the Company’s behalf and sold to the Company at cost for $0.4 million and $1.5 million during 2021 and 2020, respectively. 

Amounts Due From Related Party under Counter Guarantee Agreement

In March 2012, in consideration of the guarantees and collateral provided by Jiangsu Ever-Glory and Nanjing Knitting, the Company agreed to provide Jiangsu Ever-Glory a counter guarantee in the form of cash of not less than 70% of the maximum aggregate lines of credit obtained by the Company. Jiangsu Ever-Glory is obligated to return the full amount of the counter-guarantee funds provided upon the expiration or termination of the underlying lines of credit and is to pay an annual interest at the rate of 6.0% of the amounts provided. As of December 31, 2021 and 2020, Jiangsu Ever-Glory had provided guarantees for approximately $0.0 million (RMB 0.0 million) and $36.0 million (RMB 235.0 million) of lines of credit obtained by the Company, respectively. Jiangsu Ever-Glory and Nanjing Knitting have also provided their assets as collateral for certain of these lines of credit. As of December 31, 2021and 2020, the value of the collateral, as per appraisals obtained by the banks in connection with these lines of credit is approximately $4.4 million (RMB 28.2 million) which was provided assets as collateral by Jiangsu Ever-Glory, and $31.5million (RMB 205.5 million)which was provided assets as collateral by Jiangsu Ever-Glory and Nanjing Knitting, respectively. Mr. Kang has also provided a personal guarantee for $0.0 million (RMB 0.0 million) and $14.8 million (RMB 96.3 million) at the years ended of December 31, 2021 and 2020, respectively.

As of December 31, 2020, $3.1 million (RMB 20.0 million) was outstanding due from Jiangsu Ever-Glory under the counter guarantee agreement. During the year ended December 31, 2021, an additional $0.6 million (RMB 4.2 million) was provided to and repayment of $3.8 million (RMB 24.2 million) was received from Jiangsu Ever-Glory under the counter-guarantee agreement. As of December 31, 2021, the amount of the counter-guarantee had decreased to $0.0 million (RMB 0.0 million) (the difference represents currency exchange adjustment of $0.1 million), which was 0.0% of the aggregate amount of lines of credit. This amount plus accrued interest of ($0.3) million (2021) and $0.04 million (2020) have been classified as a reduction of equity, consistent with the guidance of SEC Staff Accounting Bulletins 4E and 4G. As of December 31, 2021and 2020, the amount classified as a reduction of equity was $0.0 million and $3.4 million, respectively. Interest of 0.5% is charged on net amounts due from Jiangsu Ever-Glory at each month end. Since January 1, 2019, the interest rate has changed to 0.3625% as the bank benchmark interest rate decreased. Interest income for the years ended December 31, 2021 and 2020 was approximately ($0.3) million and $0.04 million, respectively.