The streets in Israel were filled with jubilant citizens yesterday celebrating the country's 60th Independence Day and waving national flags - made in China.

The city's budget-conscious authorities and regional councils imported 95 percent of their blue-and-white Star of David flags from Chinese suppliers, according to the Israeli Manufacturers Association.

Only 5 percent of the flags were made by local manufacturers, an Israeli newspaper reported recently.

The imported flags reportedly cost about $870,000.

The move is said to have frustrated Israeli flag makers, who have long expected to make a profit on Independence Day, when Israelis follow the custom of hanging national flags from their houses, public buildings and cars.

Flag manufacturers in Asia, on the other hand, have been kept busy with the orders.

Zhang Jun, an operation manager of the Beijng-based Haocai Flag Company, told China Daily his company received orders for Israeli flags worth more than 100,000 yuan ($14,300) this year.

"Israel is a large customer of our business," Zhang said, adding that other large orders usually come from the United States and Britain.

Zhang said his company earns only 2 yuan (29 cents) on each 1.92 m by 2.88 m flag by selling them to Israeli wholesalers.

"The low cost, low profits and good quality are key factors for us in winning the Israeli market. The wholesale price we provide is much lower than the market price in Israel, but our goods are just as fabulous as theirs," Zhang said, without revealing the exact figures.

His factory produces flags valued at more than 1 million yuan ($143,000) every year, with 30 percent going abroad.

According to Zhang, the retail price for a 1.92 m by 2.88 m flag in Beijing is about 150 yuan ($21), while a 64 cm by 96 cm flag is priced at about 70 yuan ($10).

However, for the more than 20 sellers of Israeli national flags on Taobao.com, the largest consumer-to-consumer shopping website in China, such a high retail price is said to frighten off potential customers.

Online shop "monarch banner" offers almost all kinds of national flags, with a 64 cm by 96 cm Israeli flag sold at 38 yuan ($5.4).

"As an online shop, we don't need to afford the rent and other costs, so the price is much lower," said the online shop's owner, Lu Jianbo, who is also the boss of a flag factory based in Jinhua, Zhejiang province.

"My online customers are mainly Chinese companies which have contracts with foreign partners," Lu said.

"Compared to deals between my factory and foreign wholesalers, it only yields a tiny part of my revenue, but I'm still trying to provide the best service."

Lu said his factory received orders for 100,000 Israeli flags last year, which is "not a big figure" for his company.

No figures are available on the total number of flags China exported last year. However, more than 10 villages are making foreign national flags in Jinhua alone, local media said.

(China Daily 05/09/2008 page12)