Knitting new profits

Larger knitting firms in China have seen a double-digit increase in orders, even as smaller firms are suffering in the economic downturn, according to industry insiders from Dalang, China's leading wool-producing town.

Firms doing well said that national policies and efforts by the Dalang government have helped improve business prospects.

Dalang, a town of 300,000 residents in Dongguan, a city of Guangdong province, produces one in every six pieces of knitwear sold around the world.

"Some small workshops collapsed during the economic turmoil, and the orders that would have gone to them have come to big firms like ours instead," said Ma Huicheng, a department manager at Xingye Knitting.

Dalang is home to more than 3,000 knitting firms, of which 100 are considered large - those with annual revenues of at least 5 million yuan.

While 20 percent of the smaller firms have thrown in the towel because of the global economic slowdown, large firms have collectively seen revenues grow by 11.6 percent to 1.56 billion yuan in the first five months of this year, according to government estimates.

One of the bigger firms that has benefited from the situation is the Hong Kong-based Mau Wing Group.

Sales grew 15 percent in the first five months of the year, Mau Wing Group CEO Zeng Tianren said.

With more orders coming in, the firm recently recruited 1,000 new workers and planned to invest 250 million yuan to double the number of its digital knitting machines.

"The impact of the global financial tsunami on our business is almost negligible. In fact, we have to work overtime to finish all the orders," said Zeng, who added that his firm has seen no layoffs or salary cuts.

Xingye Knitting, another of the sizeable enterprises, reported that year-on-year, its orders grew 8 percent for the first four months of the year and 12 percent for May and June.

The large firms reported that efforts by national and local governments have been key in helping the knitwear industry survive.

In June, China increased export tax rebates for knitwear products to 16 percent. That came after six hikes in rebates last year.

The Dalang township government has spared no efforts in aiding businesses. The government already has in place platforms to coordinate exhibition, logistics and financing services for the industry.

This year, the government also financed the establishment of a new research and development center to support local knitting firms. The center helps firms create new designs and train designers.

"The knitting industry is a pillar industry of Dalang, so we are doing our utmost to make the sector stronger," said Xie Jinbo, head of the Dalang township government.

Xie said the government wants to build up Dalang's long-term reputation as the leading knitwear base in China.

It will try to expand the annual woolen knitwear fair in November by increasing the fair's advertising budget in target markets at home and abroad. It also hopes to persuade more global brands to set up shop in the town.

CBW news

(China Daily 08/17/2009 page10)