While Aokang is assisting Geox with the opening of chain stores in China, the Italian firm is introducing more advanced technologies to its Chinese counterpart.

Xu Yong, a senior official from the China Leather Industry Association, said that it is a normal trend to transfer labour-intensive footwear manufacturing from high to low-cost regions.

"It will move to areas with even lower costs in the future," he said, "and China will have to be prepared for that too."

"China has started to control the total amount of shoe output, while encouraging value-added products and cutting energy consumption," Xu said, referring to measures in the 11th Five-Year Plan (2006-10).

But some industry experts say that the European Union's move may actually benefit Chinese shoe manufacturers in the long term.

"The footwear manufacturing industry in China needs some stimulants in order to achieve healthy development," said Yang Chengjie, president of the China Leather and Footwear Industry Research Institute.

Although the tariff may cause the industry some "short-term pain, this will encourage enterprises to focus on the quality of products rather than simply cutting their price."

Many enterprises have started to adjust their business strategies as a result of the trade dispute.

"The anti-dumping sanctions are both a challenge and opportunity for the footwear manufacturers in China, " said Su Wenbin, the boss of Hengtai Hongwei Shoes Co in East China's Fujian Province. His company has developed its own brand since the beginning of the year, while also starting to sell its products on the domestic market.

Zhu Weiwen, chairman of the Guangzhou Leather and Footwear Industry Chamber said: "China's shoe manufacturers should also develop their own brand while working as original equipment manufacturers."

(China Daily 10/13/2006 page9)

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