Zhongyin Cashmere Company, founded in 1994, is the new owner of Todd & Duncan, which has been spinning yarn in Clackmannan and Kinross since 1859.

The first investment of its kind by China in Scotland was piped in yesterday with a marquee full of red-covered tables and ceremonial speeches “on the banks of Loch Leven”, as Alex Salmond poetically put it.

The £6.1m handover of Scotland’s last spinning mill and a world industry leader was spun by the first minister as the beginning of a brave new partnership of equals with the Chinese.

But the arrival of a coachload of municipal dignitaries and bankers from western China’s cashmere capital of Ningxia, in the car park of a site already mortgaged to a London property company by its cash-strapped Scottish owner Dawson International, illustrated who is now pulling the strings in one of Scotland’s key heritage industries.

Scotland held its own, with a roll-call of councillors and officials. “The Chinese are certainly very happy about the level of commitment, it means a lot to them politically,” their host James McArdle, T & D’s managing director, said afterwards.

The new model approach of this foreign investment is that the Chinese are buying not a mill but a market and a ‘Made in Scotland’ provenance for their own products.

“I am very proud to be here, not because of the equipment I have purchased, but because of the excellent product and the quality produced here in Scotland by a skilled and talented workforce, ” said Mr Ma Shengguo, chairman of Zhonghyin, in a long speech.

The mayor of Lingwu, Mr Li Jianjun, in an even longer speech, noted that Zhongyin was the largest of no less than 30 cashmere businesses in Ningxia, and concluded by inviting us all to visit his 2200-year-old city where, according to an uncertain translator, “there were dinosaurs living before”.

Todd & Duncan is no dinosaur. As Mr Ma put it, “behind all the concerns and rigid numbers, I see a business that makes the finest quality cashmere yarn in the world”. Zhongyin, he said, was “committed to manufacturing cashmere yarn from a Scottish manufacturing base and maintaining a Scottish workforce”.

For Kinross, it means the rescuing of 200 skilled jobs that have been under threat for years, with recent investment and restructuring failing to stem a £500,000 operating loss on a £22m turnover last year. The Chinese insisted on a minimum four-year lease of the mill, and have signalled they will look for an alternative site locally if forced to quit. They have secured an important customer in T & D, which took most of its raw cashmere from Zhongyin, and a continuing agreement to supply Dawson’s cashmere garment businesses. And they have a growing domestic market for what will still be ‘made in Scotland’.

“It is one of the few growing consumer markets in the world,” McArdle commented. “A bad year for them is growing by 8%. China has been growing exponentially, and they are starting to evolve to the next stage of development of the market economy, just like we all did. They realise they need to increase domestic consumer demand, they have a brand, a guaranteed customer, and access to the European and North American market at the luxury end.”

For T & D it means new direct access to the Chinese market, and all-important financial stability. “That reassures our existing customer base, it is what we have lacked over the last couple of years,” McArdle added.

Zhongyin, which became China’s biggest cashmere exporter five years ago, is located in a “cashmere industry park” close to the heartland of the raw material and is vertically integrated -- dehairing, spinning and knitting. It employs almost 2000, made £2.4m profit on a turnover of £69m last year, and is quoted on the Shenzhen stock exchange.

Dawson International itself adopted the ‘goat-to-garment’ model of integration, but began its own shrinkage with the sale of the Joseph Dawson dehairing operation in Yorkshire, and has now lost its core spinning business. Dawson has been battling for survival since a series of botched strategic moves in the 1990s, and in May its latest 29% shareholder Peter Gyllenhammar installed his own chairman and removed the only independent non-executive.

Dawson, which has its headquarters at the mortgaged Lochleven Mills, is now left with couture garment-maker Barrie in the Borders, a US knitwear operation which sources from China, and a bedlinen factory in Manchester.

The Chinese deal will inject welcome funds of £6m, plus £5m of working capital during the year, and Dawson’s chief executive Andy Bartmess and finance director David Cooper were among the happy guests yesterday after seeing a two-year process through a maze of Chinese politics. “This was a big ask for Zhongyin, to buy a cashmere company in the UK,” Cooper said. “No other Chinese company has done it.”

Bartmess noted: “One of the things that took a long time was to get them security of location, as they view the Scottish image and base as being central -- this approach has got a lot of foresight.”