Some trade enterprises have already begun to develop new products for the domestic market, among which is Longpeng Group in the southeast Fujian Province, which specialized in pottery.

After its sales fell 20 million yuan (about US$3 million) in 2008, the company invested several million yuan to research on art pottery, for which there is a domestic demand. Until now, the new product -- white, glazed, art pottery has won sales of 50,000 yuan (about US$7,300) in the domestic market.

"Although a small amount, this is our first step to win domestically," said Chen.

Picture not entirely rosy

However, the newcomers to the domestic market may also take risks in "following steps". According to Chen, his company lacks the necessary experience in producing and managing for the domestic market.

"Taking stock for example, we used to have 'zero stock' because we produce for orders. But now we must manage our stock according to sales. This is really hard to handle with," Chen said.

Zhao Yanmin also told the reporter that the top priority of his company is to build domestic brand awareness of the products," but this will take us at least five years".

To help Chinese trade enterprises turn to the domestic market more easily, China has issued a series of new policies. Earlier this month the interest on deferred customs duty of bonded processing goods for domestic market was lowered from 5.31 percent to 0.36 percent.

This indicates that, if a trade enterprise's income tax payable is 1 million yuan, and the interest period is one year, its deferred customs duty will come down from about 54,000 yuan to 4,000 yuan (from about US$7,900 to US$586).

"With more capital to operate, trade businesses will be more confident in opening up the domestic market," said Guo Hui.

Export-oriented enterprises may face many difficulties in domestic markets, such as debt-collection, brand-building, and developing new distribution channels, said Mei. "It may be very tough at the beginning, but later on the trade enterprises will find heading for the domestic market is the best way out of the current dead end."

(Xinhua News Agency March 23, 2009)