The Chinese Government will help domestic textile firms establish trade co-operation 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, but will also create jobs in target countries. Bo said the government would also help firms establish research and development (R&D), production and sales centres abroad.
The move to establish overseas co-operation zones is a new focus for China's outbound investment, according a source involved in the project.
He said that major investors in these co-operation zones could be enterprises from a specific province or a municipality, adding that China's costal regions, with a strong textile industry, could provide the first group of investors.
Although some domestic textile firms have already invested abroad, most investors are large enterprises.
Small and medium-sized enterprises (SMEs), even if interested in manufacturing abroad, are not able to afford the costs of setting themselves up.
"This move is a practical way in which we can support 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 help from Chinese textile firms.
He said a Chinese business delegation, including textile firms, was scheduled to visit Viet Nam next month to explore business opportunities.
Bo said 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 developing their own brands.
"We will try to promote technological innovation with IPR protection systems," said the minister.
The central government will also help enterprises develop their own brand names through events and trade shows across China.
The minister said investment by domestic textile firms into R&D was low compared with their foreign counterparts.
R&D at major textile companies accounted for only 0.25 per cent of total sales in 2004.
Therefore, their products are less profitable and largely concentrate on the cheaper end of the market.
The country's textile sector was one of the first industries to open up in the early stage 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 per cent of whom come from rural areas.
China's textile sector suffered from disputes with major trading partners last year.
The United States and the European Union imposed curbs on imports of Chinese textile and garment products last April, only months after the global removal of textile quotas.
The crisis was finally settled with agreements to restrict Chinese exports.
Despite such conflicts, and price rises of raw materials and energy shortages, the industry achieved steady growth in both exports and production last year.