HANGZHOU, Nov. 23 (Xinhua) -- As the world's largest sock manufacturing base, Datang in the city of Zhuji, east China's Zhejiang Province, produces about 70 percent of China's socks and 30 percent worldwide.
Challenged by rising labor and raw material costs, and shrinking foreign orders in recent years, the town has been forced to explore a new development model.
Over the past three years, the town closed over 3,000 small companies and invested more than 5 billion yuan (758 million U.S. dollars) in creating an industrial park for innovation.
Chen Renyong, once involved in OEM business like many local people, was among the first businessmen to move to the industrial park to set up new companies.
"Socks produced in Datang were called 'garbage socks' by some foreign clients for their cheap prices in the past," he said, "Despite laser thin profit margins, local companies did not have any pricing or bargaining power."
Chen, a basketball fan, decided to establish his own brand of professional sports socks. Since its founding in October 2015, the company developed over 200 kinds of sports socks, winning 24 patents.
"A pair of basketball socks can be sold at over 100 yuan, about 500 times the price of a pair of OEM socks we produced before," he said. "The company has sold hundreds of thousand of sports socks to foreign clients from countries like the United States and Canada."
According to Chen, his company made less than 1 yuan from a pair of OEM socks, while the profit rate for sports socks is between 20 to 40 percent.
The output of Datang socks saw a year-on-year drop of 5.7 percent and 3.9 percent in 2015 and 2016 respectively, while local GDP rose 3.8 percent and 6.9 percent.
Chen said the company's design capacity had been acknowledged by more foreigners. The company can help change designs or even offer a whole set of designing plans for foreign clients, which was unimaginable in the past.
Last year a sock designing competition was held in the town, attracting the participants from 62 colleges around the country. A total of 139 designers signed contracts for cooperation with 55 local companies.
Datang manufacturers are also exploring advanced manufacturing technologies.
Jiang Leizhong, chief engineer of Huashixiu company of Datang, said the company had successfully developed a sock machine able to produce high quality seamless embroidered socks.
"Some foreign brands came to us for cooperation, and the foreign engineers even asked to have a look at our machines," he said. "But we only agreed to show them our products instead of our equipment."
A pair of socks produced by the company can be priced as high as 500 yuan.
Currently, the town has bid farewell to its reliance on imported machinery, as many local companies are now able to produce hi-tech sock machines.
The town estimates that it could sell about 8,000 sets of hi-tech machines in 2017, for a total of up to 1 billion yuan.
Yang Jichao, head of the China knitting industrial association, said the transformation of Datang was a great example of supply-side reform.
Aiming to see the sock industry's output value exceed 100 billion yuan in 2020, Zhuji will focus more attention on developing high-end raw materials and socks, as well as advanced sock machines in the years to come.