Where there is winter, there is woollen knitwear made in Dongguan.

This Pearl River Delta city in south China's Guangdong Province has developed into one of the leading woollen knitwear product suppliers in China and even the world.

Dalang Town, the city's key base for knitwear production, is home of more than 200 million woollen sweaters in many varieties.

Success so far is encouraging, said Leng Xiaoming, vice-mayor of Dongguan, at the recent China (Dalang) International Woollen Knitwear Fair.

"The elimination of quota restrictions on textiles and garments as of next year will mean open competition for knitwear enterprises in the global market,'' Leng said.

"That will mean opportunities for a greater global market share for the city's knitwear industry.''

He said the municipal government would streamline overall planning in industrial development by improving the infrastructure of the knitwear industrial park, attracting more competitive enterprises, research and development facilities and marketing facilities to the city, as well as strengthening the local logistics service.

The city will also encourage related enterprises to invest more in technological renovations and brand name cultivation; and meanwhile hammer out preferential policies to secure trained professionals and set up more training facilities for the industry, said Leng.

The government will also help related enterprises raise funds for business operations, he said.

The city has set up two warranty companies for private enterprises and they have offered warranties for some 50 firms to borrow some 200 million yuan (US$24.10 million).

He said the city would encourage more enterprises to tap the global market and set up outlets abroad.

Some of the city's knitwear products go to overseas markets, raking in profits of over US$300 million a year. Eight enterprises in the city have set up outlets in Europe, benefiting from the overseas market.

Deals worth 2.65 billion yuan (US$319.28 million) were clinched during the fair and more than 30,000 professional buyers from countries like Russia, Italy, the United States, Japan and Hungary sought trade opportunities in the city.

After quota restrictions on textiles and garments are lifted after 2005, experts have warned firms in the industry of new trade barriers and price wars among domestic manufacturers.

Yang Donghui, vice-chairman of China Textile Industry Association, said developed countries like the United States and European Union member states would be likely to resort to new protective trade measures to frustrate textiles including knitwear products from China after quota restrictions are removed in a couple of months' time.

Internal competition in the export business will also possibly lead to undercutting practices among domestic manufacturers.

Leng said manufacturers in Dongguan and across the nation should make timely technological renovations, and improve their design capability and brand reputation to increase the value of their products and upgrade their industrial structure.

Setting up terminal sales channels abroad should also be encouraged, Yang added.

(China Business Weekly November 6, 2004)