Until five months ago, Italian leather goods factories run by Japanese businessmen in the Dingle peninsula were something of a rarity. But, as the managing director of Tionscail Faisiun na Gaeltachta Teoranta (TFGT) Mr Marc Nishi explains, his company chose Ireland not because of grants or tax incentives but because no major luxury goods manufacturer had targeted the Irish market.

"Italian leather goods companies are going east to look for cheaper labour. However, Italian and European leather goods manufactures can survive only by looking for their niche market while improving quality and services. "The Irish market has not been tapped seriously by major luxury companies," says Mr Nishi.

TFGT was established in May at Ballydavid, Co Kerry, about eight miles from Dingle and manufactures Italian leather goods including travel bags and small goods such as wallets, key holders and diaries. Materials are imported mainly from Italy and all manufacturing is carried out in Kerry.

The company employs 12 people from the local area who work under the supervision of Italian masters, Mr Sergio Giudici, the factory's director, and Ms Carla Bianchi, TFGT's technical director. The company is planning to increase the workforce to 40 over the next five years.

Mr Nishi first became involved in the luxury goods market when he moved from Japan to Italy 15 years ago, working as a production manager in an Italian clothing company which produced high-quality clothing for export to Japan. In 1990 he took over two Italian companies in Varese and established the leather goods company under the brand name Nish.

Udaras na Gaeltachta was responsible for attracting the Italian company to the Dingle peninsula, to an Udaras-owned site by Smerwick Harbour. Udaras. Udaras grants Udaras na Gaeltachta have enabled the company to train workers for up to five months without the pressure of producing goods for the market.

To date, TFGT - through Mr Nishi and another Japanese investor, Mr Atsuyo Yada - has invested £200,000 in the company and will commit a further £150,000 before the Kerry factory generates profit, according to Mr Nishi. Udaras has agreed to give employment grants of £5,000 per person, a training grant and a rent grant for the first five years. TFGT will pay £10 rent on the site for the first year and 40 per cent of the factory's £200,000 annual rent for the subsequent four years.

The Ballydavid factory, standing on more than 600 square metres, is larger than the company's only other factory in Italy, but the manufacturing process in both is similar. All local staff undergo an intensive five-month training programme "to guarantee the Italian quality and finish taught by our Italian staff who are experts in leather goods with more than 15 years' experience," says Mr Nishi.

TFGT plans to establish a leather goods industry in the area by training unemployed people to help them to set up their own businesses. "We don't want to make just craft shops, but build an industry in the area," says Mr Nishi. "We seriously consider contributing to the local economy," he says. The company is trying to source locally as many materials and services as possible. TFGT products range in price from £60 to £100 for small leather goods and up to £300 for women's handbags, £500 for business bags and £600 for travel bags.

TFGT's primary target in the Irish market is 25- to 50-year-old executives, managers and celebrities, according to Mr Nishi. "We see a large market in Ireland for our products because of its young population and its booming economy, by which more and more young people have disposable incomes for luxury goods," says Mr Nishi. "Our products do not necessarily carry a particular Irish flavour as Prada and Gucci do not carry the Italian flavour. However, we'd like to represent the strong modern and contemporary Irish feeling in design and that is why the collection is designed by an Irish designer who is one of the most respected designers in Europe," says Mr Nishi.

A new collection of TFGT's products for spring/summer 2000, designed by an Irish designer working in Milan, will be launched at the Molesworth Gallery in Dublin on October 19th. Mr Nishi says the company's high-quality products will attract continued custom from the more affluent in Irish society.

"It is difficult to wear wool sweaters after you've bought cashmere. It is the same for leather goods. Once you level up your lifestyle, it is not easy to go down again," says Mr Nishi.