"Those who have cheaper products than ours do not have a comparable productive capacity, while those with a greater technological capacity are unable to cut their production costs. This situation will not change," Han told China Daily.

Yijia has registered capital valued at 268 million yuan (33.5 million U.S. dollars). Its major products are Muslim commodities, such as hats, scarves, Arabian-style embroidery, prayer mats and bed linen, he said.

Located in Xunhua Salar Autonomous County, which is overwhelmingly populated by Muslims, Yijia enjoys a monopoly of China's Muslim commodity market and exports its products to major Muslim countries, such as Saudi Arabia, Pakistan, Malaysia, the United Arab Emirates and Nigeria.

"We have a 20 percent market share in Saudi Arabia, and around 30 percent in Malaysia and the United Arab Emirates," said Han, who confidently predicted that his firm will have a 15 percent share of the global market for Muslim commodities and clothing within two or three years.

Yijia currently produces 100 million Muslim caps annually and its total annual output is worth 300 million yuan (37.5 million dollars).

"We have made a plan to further increase our production, with our annual output reaching 347.6 million caps within five years," he said.

Han, 37, was a poor farmer before going to study in Pakistan in 1995, where he set up his own small workshop with 280,000 yuan (35,000 dollars) in 1998.

"I got the money by exporting Chinese silk to Pakistan from my home town and importing Muslim commodities from Pakistan.

"I found out that China did not have a single factory making Muslim commodities, especially caps for the nation's more than 20 million Muslims. I thought it was a good chance for me," Han said.

The caps worn by Muslim men during religious worship and at weddings and funerals were generally made at home by China's Muslims before the establishment of Han's company.

There are more than 1 billion Muslims around the world, of whom some 30 percent are men wearing caps and 40 percent are women wearing scarves, noted Han, pointing to the massive global opportunities his firm has.

"As a Muslim religious product, other non-Muslim Chinese companies had no idea about such small products, and in other countries, though there are many manufacturers of Muslim commodities, they are all family workshops with a limited production capacity and high costs," said Bian Senling, a Muslim expert with Qinghai Ethnic Cultural Research Centre.

Yijia is successful because it has made full use of China's low labour costs and cheaper raw materials, and it has worked hard to upgrade its technological capacity, Bian said.

In 2001, Yijia, in co-operation with a research institute based in Wuhan, the capital of Central China's Hubei Province, designed and made computer-controlled embroidery machines. Specially designed to produce Muslim caps, these are the world's most efficient machines of their kind.

"There are embroidery machines made in Japan, but these are not designed especially for Muslim caps. In addition, they are expensive, which increases production costs," Han said.

The firm's efforts have been backed by the Qinghai provincial government, which has provided it with loans totalling 115 million yuan (14.4 million dollars) since 2004.

"My firm got a 20 million yuan (2.5 million dollars) discounted loan from the local government this year, which will be a great help in terms of our future development," Han said.

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