PIG skins have never been highly prized in Cunhua village, but they may be worth millions of yuan following the opening of a leather-processing plant this summer. Cunhua, 30 kilometres from the centre of Changsha, has a history of existing on rice cultivation and livestock farming. The idea of building a leather factory arose only when the village's party secretary, Huang Jiahui, decided the dumping of pig skins was wasteful. 'In our village alone, we kill an average of 100,000 pigs a year for sale. However, lacking technology, most of the animal skins were either dumped or sold to other people at a very low price in the past. 'Therefore I just wondered if we could have our own processing plant. Once the pig skin is turned into leather, we can sell it at a better price. The additional profits not only raise our living standard, but could also be reinvested in improving farming technologies. 'Of course, it is also a good working opportunity for our farmers outside the sowing and harvest seasons.' The village chief started fund-raising from some relatively richer farmers, who accumulated capital by doing business or working in cities during the beginning of China's economic reforms, and he also sought loans from the Agricultural Bank. In July, the leather plant was opened with an initial investment of five million yuan (about HK$4.5 million). Mr Huang said sales could reap hundreds of thousands of yuan a month when buyers from the north came to source their leather for the winter. The company was also planning to introduce the production of leather fashion, he said. A second factory is already being built to accommodate production lines of leather coats. 'Leather fashion is a value-added item which could achieve a higher profit margin. We expect the turnover of the clothes-manufacturing can notch up one million yuan a month. 'As we still have land and surplus workforce, it makes sense to use our resources.' With the area affected by China's austerity measures, Mr Huang is seeking foreign investors with technology, capital and, most important, a distribution network overseas. Cunhua's experience is mirrored in many farming villages in China, which struggle with relatively low annual incomes. Zuo Shu, vice-chairman of the Working Committee on Township Enterprises in Changsha county said: 'Township enterprises help to maximise the productivity of villages, as well as that of the country. In 1993, gross domestic product for the county reached 5.15 billion yuan, up 2.27 billion yuan from the previous year. Production of township enterprises, which was 2.99 billion yuan for the year, accounted for 58.05 per cent of GDP. The average annual income of Changsha county over the same period was 3,973 yuan per capita. The gain is substantial, compared with the figure of 2,674 yuan a year ago. 'Our injection in township enterprises last year is also the total sum of our investments in 1990, 1991 and 1992 plus an extra 110 million yuan. Demand for our services is on rise,' said Mr Zuo. 'Smaller in scale, township enterprises are more flexible in operation. We can always cater for individual customers whose order may be small in amount and are ignored by large enterprises. 'The production costs are also low as no accommodation or other daily facilities are required.'