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Textile Cooperation Zones to Be Set up
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The Chinese government will help domestic textile firms establish trade cooperation zones overseas, especially in developing countries, according to China's Minister of Commerce Bo Xilai.

"We expect to strengthen China's economic ties with developing countries," he told the Third Global Textile Economic Forum in Beijing yesterday.

The move will benefit both sides because it will not only help Chinese firms expand their businesses, but will also create jobs in partner countries.

Bo said the government would also help firms establish research and development (R&D), production and sales centers abroad.

The move to establish overseas cooperation zones is a new focus for China's outbound investment, according a source involved with the project.

He said that major investors in these cooperation zones could be enterprises from a specific province or a municipality, adding that China's coastal regions, traditional powerhouses in the textile industry, could provide a first group of investors.

Although some domestic textile firms have already invested abroad, these tend to be large enterprises.

Small and medium-sized enterprises (SMEs) are equally keen on expanding their investments overseas but haven't been able to because of the costs involved.

"This move is a practical way of supporting them," the source said.

A number of developing countries have shown an interest in Chinese investment in the textile sector, which is regarded as one of the most complete and comprehensive industrial sectors in the country.

Le Quoc An, chairman of the Viet Nam National Textile and Apparel Association, was encouraged by the news. He expects his country will benefit from technical and capital assistance from Chinese textile firms.

He said a Chinese business delegation, which included representatives from textile firms, was scheduled to visit Viet Nam next month to explore business opportunities.

Bo added that the Chinese government would strengthen the protection of intellectual property rights (IPR) in the textile industry.

"It (IPR protection) is vital to both foreign and domestic firms," the minister said.

He explained that many Chinese textile companies were in the process of transforming themselves from manufacturers for foreign brands to manufacturers of their own brands.

"We will try to promote technological innovation with IPR protection systems," Bo said.

The central government will also help enterprises develop their own brands through events and trade shows across China.

The minister said investment by domestic textile firms in R&D was low compared with their foreign counterparts.

R&D at major textile companies accounted for only 0.25 percent of total sales in 2004.

This lack of R&D commitment results in their products being less profitable and falling largely into the cheaper end of the market.

The country's textile sector was one of the first industries to open up to international commerce in the initial stages of China's reform process.

So far, the industry has developed into a sector that supports a large number of workers.

According to statistics from the Ministry of Commerce, the textile sector employs over 20 million people, 70 percent of whom come from rural areas.

Over the years, this booming sector has met with its fair share of ups and downs, including trade disputes.

The US and the EU imposed curbs on Chinese textile imports last April, only months after the global abolition of textile quotas.

The crises were only settled with agreements to restrict the volume of Chinese imports.

However, despite such conflicts, the rising prices of raw materials and energy shortages, the industry managed a steady growth in both exports and production last year.

(China Daily March 28, 2006)

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