Innovation, key for "Made in China" to out of crisis

China's foreign trade and export enterprises have encountered unprecedented pressure during the global financial crisis -- but analysts say they believe innovation is the way out for the "Made in China" brand.

The Quanzhou Baofeng Shoes Company, one of China's leading producer of slippers, is precisely the type of exporter that should be on its knees. Headquartered in Quanzhou, a coastal city in southeastern Fujian Province, Baofeng used to export 90 percent of its annual output to the United States.

The company's exports fell about 20 percent from a year earlier in 2008 but the situation improved after the company put efforts into developing its domestic market, moving up the value chain and building its own brand, the company's general manager, Zheng Guozhang, said.

"Innovation is the key to a company's success," Zheng said. In this company of 1,000 employees, more than 100 are working on research and development.

Zheng expects exports to start picking up no later than the second half of 2010.

It is a similar story in southern Guangdong Province, the world's largest base of toy production and exports. Customs figures show products of self-owned, independent brands have achieved better and faster growth than those without independent brands.

Guangdong's toy exports from self-owned brands expanded from January's 48 million U.S. dollars to 100 million U.S. dollars in July, up 41.4 percent compared with June.

While Baofeng might be surviving rather than thriving, its performance is encouraging, considering wider pain across China's export sector.

Exports, one of the three engines that have fueled China's fast growth in recent times, fell 22.2 percent year on year in the first eight months this year. The other two engines are investment and consumption.