For bigger companies, shrinking overseas demand may not be as serious a problem as it is for smaller companies, but the former face great pressure to modernize the production chain.

One such company is Zhejiang Jinchan Curtain Co, whose chairman, Yang Lairong, says its biggest problem is not shrinking external demand. In fact, with a history of more than 20 years and more than 700 workers, Yang's company performed well in the first nine months of this year, when sales revenue rose 20 percent year-on-year.

"We have regular customers with whom contracts have been signed long in advance," he says.

Yang says that what preoccupies him most is how to modernize production in this traditionally labor-intensive manufacturing company.

"To be honest, the nature of the textile industry limits the scope of so-called industrial modernization, because the product itself still requires intensive labor and traditional techniques."

Yang says that although his company invested more than 4 million yuan in upgrading the plant last year, many qualified workers are still essential to the production process.

"The cost of hiring highly proficient workers is growing all the time, and we have to look for cutting-edge equipment to reduce those costs. But so far as I know there is no technology in China that can come up with the equipment needed to do away with the intensive production labor that the textiles industry requires."

He, the Party chief, acknowledges that textile industry modernization is something that cannot be achieved in a day, but rather is a long-term challenge.

"What Shaoxing's textile industry should essentially be heading for is strong innovative design and branding, but those things cannot relieve the industry of the burden of intensive labor, and that may be a hurdle to further modernization."

Another challenge is how to maintain output while at the same time making an effort to protect the environment. For example, Yang says that some of the textile industry's production processes inevitably produce waste water.

The local government has stringent environmental protection rules, but it would be too expensive and complex for his company to shoulder the burden of solving this problem, which exists in just one or two links of the whole chain, he says. "So what we came up with was to outsource our dyeing process, which holds the biggest environmental challenges, to other companies that can handle these problems."

Even as small factories battle to survive faced with shrinking external demand, and the large ones wrestle with the task of modernization, Shao-xing appears confident about the future of its pillar industry.

The autumn edition of the China Ke-qiao International Textile Expo is being held in the city from Oct 26 to Oct 29, and Shou from China Textile City says local companies' interest in the event is unprecedented. "By the end of last month 1,309 stalls had been booked, the first time that the number has exceeded 1,300."

Shou says she feels that in her contact with the companies their eagerness to reach out for customers has been increasingly strong.

"In China Textile City, companies are used to getting orders as they sit and read the paper, but this year they cannot just sit there. They want to do something."

Yu says her company has already booked a 10-square-meter stall for the expo. "Customers from around the world will be there, and it's a great opportunity to show off our wares. We don't necessarily expect to sign big deals; with the failing European market, our priority is to expand our customer base."