GUANGZHOU: Shiling township, a major production and export base of leather products in this southern city, has introduced a series of measures to help local manufacturers with industrial upgrading as overseas demand wanes.

This includes the establishment of a design and development research center for leather products, at an investment of 29 million yuan, the local government said.

It has come to a crucial time for the township - which produces up to 35 percent of the mainland's leather products - to upgrade business amid "domestic and international difficulties", said Quan Taiyuan, Party chief of Shiling Township.

Shiling currently has more than 6,200 enterprises making leather products, with an annual production value of more than 10 billion yuan.

"But most of them, especially the small producers, are feeling the pinch of increased domestic labor and production costs, and the decreased demand in the overseas market," Quan said.

The Party chief was speaking yesterday at a forum for leather industry development, which was held in conjunction with the eighth China (Shiling) Leather Products Fair.

"Local leather producers have also been affected by the global financial crisis. And, so far, their combined sales revenue has been cut by nearly 20 percent," Quan said.

Quan admitted that some small manufacturers had been forced to close due to fewer orders from overseas buyers and difficulties obtaining loans from financial organizations.

"Nearly 70 percent of our products are sold overseas. But this year, orders from overseas buyers have dropped dramatically due to decreased market demand," said a manager of the V-Goal Handbag Co, a leading leather handbag producer based in Shiling.

The manager estimated that this year's annual salesgrowth will shrink below 5 percent, year-on-year.

"Last year, the increase rate was up to 30 percent," he added. "The leather industry here will see a big reshuffle this year. And we are making our utmost efforts to upgrade our business to maintain the market share."

(HK Edition 10/31/2008 page2)