Italy produced 476.2 million pairs of shoes last year worth about US$10 billion. This represented a one per cent growth rate since 1994 and, while it may not sound impressive, Italy was the only European Union producer to show an increase. Spain fell 1.8 per cent to 187 million pairs, France was down 1.3 per cent at 153 million pairs and Britain was down 2.37 per cent with 103.1 million pairs. Rising costs have begun to impact on Italian shoe manufacturers but they remain confident in the future of their high-end markets. The Italian industry has been overhauled and its streamlined production is now able to compete with emerging shoe-makers from all over the world. A major reason for Italian confidence is the order and profit margin for high-priced footwear is steadier than the lower-priced market. Consumers of high-end shoes are more able to absorb price increases in a recession and competition is not as fierce as in the low-priced market. The majority of last year's Italian production was exported, mostly to European countries. Exports to Asia have been buoyant, although they still account for just a few per cent of the Italian total. Japan is the main destination for Asia exports, followed by Hong Kong, Taiwan and South Korea. The biggest growth rate in the area last year was seen in Indonesia and China. Total exports of all goods from Italy to Hong Kong increased by 21 per cent in 1995 to more than US$3.5 billion, despite a slowdown in the retail business. Hong Kong imported almost $164 million worth of Italian footwear, an increase of nine per cent over the previous year, making Italy its second-largest supplier after China. In the first half of this year, Hong Kong imported $80.7 million worth of Italian shoes, a six per cent increase over the same period last year. Italian shoes account for 2.3 per cent of the Hong Kong market. China, the world's biggest shoe producer, is seen by Italy more as a market than a competitive manufacturer. As Chinese living standards rise, people have become more fashion conscious. Last year, China imported more than a million pairs of Italian shoes, excluding indirect imports via Hong Kong. As a technology leader, Italy is also actively supporting China's manufacturing industry through about 40 official joint ventures and many unofficial exchanges of design and technical knowhow. A key factor in Italy's success in the shoe industry is the close relationship between designers and manufacturers.