Gold Brothers, the family firm behind a tourist shop empire on and around Edinburgh's Royal Mile, is to focus more on "Made in Scotland" stock after the resolution of a dispute with a tenant and competitor heralded a symbolic shift for the firm.

Last month, the family bought the Edinburgh Old Town Weaving Co, formerly owned by kiltmaker Geoffrey Nicholsby, a tenant in their landmark Castlehill building. Director Dildar Singh Gold said that fewer goods labelled "Made in China" and more quality "Made in Scotland" stock are now being sold in their stores. Some will be manufactured in the small weaving mill established by Nicholsby, who had 15 years of a 25-year lease to run on the building when the Singh Golds bought it for £6 million in 2007. Last year, the firm also began a £250,000-a-year supply contract with Hawick Knitwear.

"Pretty much we started with 100% not made in Scotland products," Dildar Singh Gold told the Sunday Herald. "These were products bought from cash and carries, very cheap souvenir products like you would pick up in any other country.

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"As we grew, and we've been doing this for quite a bit of time now, we realised that people want 'Made in Scotland'. Our most popular products are tartan scarves."

After the Gold Brothers bought the Castlehill building, at one point the rivalry between the firms led to Nicholsby setting up a turnstile preventing customers moving between his shop space and the Gold Brothers area.

Dildar Singh Gold said. "There was tension right at the start, but recently, over the last few years, I think Geoffrey has been chilling out. I think he realised there's no point spending all his money on court cases all the time."

Nicholsby, who will still trade from his shop further down the Royal Mile, has said he is "looking forward to spending more time on his yacht in the Virgin Islands".

Gold Brothers' strategy is to "enhance the mill with new machinery and more staff so we can produce what we want" to sell in their shops and online.

Dildar Singh Gold added that the focus on Scottish products was price-driven as well as quality-driven. "Across the board prices are going up for products from China. A lot of the people who are spending [in Scotland] now are prosperous Chinese customers … they don't want stuff made back home."

In January 2011, Gold Brothers was fined £4500 for selling Chinese-made cashmere garments claiming to have been made in Scotland, after an investigation by Edinburgh City Council's trading standards department.