Small business owners in east China's Zhejiang Province are being frustrated by foreign buyers failing to settle their debts before packing up for Christmas.

In Yiwu, the world's largest production base and wholesaler for small commodities such as toys, socks, ties and leather products, police have told businesses to reclaim all their receivables before Christmas and take their debtors to court if necessary.

Yiwu is home to more than 900 foreign-invested trading companies and at least 10,000 international merchants are doing business in the city. As payments are always made in arrears, some buyers disappear without paying the local suppliers.

Earlier this year, 141 suppliers in Yiwu lost 27 million yuan (3.38 million U.S. dollars) worth of commodities in the city's largest ever fraud by a foreign-invested firm, according to China News Service.

Foreign companies were also mainly to blame for 100 million yuan (12.5 million U.S. dollars) loss reported by local suppliers in 2004, China News Service said.

Last month, an Egyptian merchant closed his trading firm in Yiwu and fled China with at least 1 million yuan (125,000 U.S. dollars) worth of commodities. The supplier, a native from northwest China's Shaanxi Province, chased him all the way to Guangzhou in the south, but failed to stop him from boarding the flight home.

Police in Yiwu have advised local businesses to collect payments upon delivery or demand guarantees. Those who fail to reclaim their money are being encouraged to take legal action against their debtors to keep them in China until all the debts are repaid.

Yiwu has more than 1,400 manufacturing firms employing nearly 90,000 people.

The city's output of accessories makes up 80 percent of the country's market share with an annual sales value of 9 billion yuan (1.13 billion U.S. dollars).

It has trade exchanges with 200 countries and regions and receives about 30 billion U.S. dollars worth of orders each year.

The city has been designated China's first national-level shopping tourist destination by the National Tourism Administration.

China's first small commodities index is named after Yiwu.

Editor: Donald