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Exporting factories to climb value ladder
Date:2010/11/4      View:951
Branded goods and value-added products are selling better than their cheaper counterparts at the Canton Fair, a strong indication that China's battered exporters have to climb the value ladder to survive.

Liu Jianjun, a Canton Fair spokesman, said enterprises with independent intellectual property rights and their own brands, were better represented this year than in previous years, with their products priced 20-30 percent higher than their traditional rivals.

Liu Wenge, a professor at the Central University of Finance and Economics in Beijing, said China's manufacturers are making the transformation from low-value producers to makers with independent research and development capabilities.

Recent research in Guangdong province in South China, one of the country's manufacturing hubs, showed that upgraded enterprises making their own brands have profit margins 15 percent higher than those that did not.

Zhao Zhongxiu, from the University of International Business and Economics in Beijing, said the structure of China's manufacturing industry is changing, "although it still largely depends on the global market".

"In the past, most of China's small and medium-sized companies did not have capability to invest in research and development," said Zhao, who is head of the university's International Trade and Economics School.

"The thin profit in export industry caused by exchange rate and labor cost will eliminate some speculative companies with no technical value.

"But with the government's help, more and more enterprises are able to start to innovate and design their own brands."

The fair, which opened in Guangzhou in mid-October, is held over three five-day phases, with phase one exhibiting high-tech machinery and products as well as heavy machinery and building materials.

Phase two covers non-durable consumer goods, gifts and home decoration.

Phase three mainly shows off textiles, clothes, baggage, medicine and healthcare products.

The biannual fair, officially called China Import and Export Fair, is a crucial barometer of the foreign trade in China.

Over the past five years, the fair attracted more than 350,000 buyers from around the world a year and before the financial crisis, annual turnover reached $73.8 billion.

Among the companies at this year's fair was Aiminer Leather Products Co, from Southwest China's Sichuan province, which has benefited from carrying out independent design and research.

The company has entered the US and European markets with its own brand and has enjoyed a more than 30 percent increase in exports over the past few years.

Other manufacturers at the fair have also received increases in orders. Dong Cuiqing, trade manager of socks and hosiery makers MengNa, from Zhejiang province, said: "The textile industry business this year has been good, but profit has dropped as the material and labor cost increase, together with an increasing exchange rate."

A report released by the Ministry of Commerce on Monday, said the proportion of China's high-tech and new electromechanical exports has grown, and amount to $348.24 billion and $667.72 billion in first nine months of this year.

In addition, more enterprises are being encouraged to create own design and brands.

Last year, more than 10,000 products received intellectual property rights in Dongguan, in Guangdong province, a 59 percent increase over the previous year.

"Eighty-nine R&D centers with foreign investment were established in the city at the end of 2008, about 10 times of that in 2007," Liu Wenge said.
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