China's leather manufacturing sector notched up a solid performance last year, despite being plagued by over-production and trade conflicts, and will maintain rapid growth in the next few years, an industry official said yesterday.

"As a pillar industry of China's light industrial sector, the leather industry maintained a rapid development in 2005," said Niu Jianguo, deputy director of the Bureau of Economic Operations of the National Development and Reform Commission.

According to Niu, major enterprises in the sector, each with an annual sales volume exceeding 5 million yuan (US$671,280), chalked up a total 318.5 billion yuan (US$39.32 billion) worth of industrial output value last year, an increase of 26 per cent compared to the previous year.

Profits for major enterprises jumped 39 per cent to reach 12.6 billion yuan (US$1.55 billion) in 2005.

The industry's exports increased 19.3 per cent to US$32.71 billion last year. Among the total, exports of leather shoes hit US$17.11 billion and exports of leather and fur garments totalled US$1.87 billion, a year-on-year growth of 24 per cent and 40 per cent respectively.

Imports of the sector climbed 7 per cent to US$4.15 billion.

As one of the largest leather producers in the world, China produced 550 million square metres of leather, 2.53 billion pairs of leather shoes, 550 million leather bags and 66.4 million leather garments.

China's livestock breeding industry has supplied abundant raw material to support the leather industry's development, Niu said.

Last year, there were 318 new projects in the sector, with an actual investment of US$18.87 billion yuan (US$2.33 billion).

However, despite of the industry's rapid growth, Niu pointed to some problems which continue to plague the industry's development, such as over-production capacity for some products, low added value, and increasing trade conflicts.

"Chinese companies lack core competitiveness in the world market," said Niu.

Last year, most of exported leather shoes were middle- or low-end products. Though export volume grew rapidly, price per pair had a slight increase and price of some products even dropped.

Some countries and regions have adopted measures to block some Chinese leather products like shoes, balls and suitcases out of their markets.

The European Commission is going to decide whether to impose a provisional tax on imports of Chinese leather shoes this week.

Under such circumstances, the industry will focus on improving product quality, developing high value-added products, learning international trade rules, exploring new overseas markets as well as domestic market, said Zhang Shuhua, vice-president of China Leather Industry Association.

The industry association will also continue to foster brand building in the sector. It aims to build three to five internationally known brands by 2015.

To achieve the goal, the association awarded 70 leading enterprises in the sector yesterday.

(China Daily 03/22/2006 page9)