Pearl River Delta export powerhouse Dongguan has earmarked 500 million yuan to raise the quality of its garment sector as it comes under growing pressure from trade disputes and anti-dumping duties. The investment - part of a wider 2.5 billion yuan, five-year plan to raise the quality of goods across all industries - would help the region avoid anti-dumping duties since the goods would not be competing merely on the basis of price. 'Dongguan wants to shift from being a big manufacturing city to a strong manufacturing city, strong in research and development and design,' said a Dongguan government official. Dongguan was China's fourth largest exporting city in 2004, when exports of its products increased by 26.1 per cent to reach US$35.19 billion. 'If Dongguan's garment exports grow, Hong Kong will benefit. Many Dongguan garment factories are Hong Kong-invested, and some of [their] exports will pass through Hong Kong,' the official said. He estimated that about 1,000 of Dongguan's 6,000 garment factories were Hong Kong-invested. Dongguan has 10,000 textile and garment factories that export US$3 billion worth of textiles and garments annually, according to the Dongguan Clothing Network. The local government's plans to set up research and development, design and quality-control centres in Dongguan fits in with national plans by China's Ministry of Commerce to set up 'export products technical service centres' in various industries, including agriculture and garments. 'If our products are too cheap, we will be accused of dumping,' the official said. 'We fear that after the American and European quotas on Chinese textiles expire, the United States, Europe and other countries might impose anti-dumping duties on Chinese garments, or use non-tariff barriers such as environmental standards.' According to Liang Haiqian, vice-secretary of the Dalang Chamber of Commerce, the Dongguan government has made the establishment of quality centres a priority since late last year. 'If our products remain low-end, our competitiveness will never be strong. If we compete only on cost, how can our workers earn decent wages? We won't be able to raise our standard of living,' said Mr Liang. Japan, South Korea and Taiwan had adopted similar strategies to beat anti-dumping laws, said Edmund Sim, a partner at US law firm White & Case. He said Taiwanese bicycles, for example, were subject to European Union anti-dumping duties in the 1980s, but by the 1990s the industry was producing more sophisticated carbon fibre frames which did not attract anti-dumping duties. The US and EU signed textile deals with China last year, imposing quotas on certain Chinese textile items that will expire by the end of 2008. Last year, China was subject to 51 anti-dumping cases involving US$1.79 billion, according to the Ministry of Commerce.