2002 was the middle year of the project and so involved building upon what had been achieved during the first year. Fieldwork was conducted in Xinjiang, Shandong, Jiangsu, Gansu and Beijing for a period of around 9 weeks. Raw field work reports are attached. (These raw reports are records of interviews and are intended for research purposes of the Project Team only as they contain unedited sensitive information and also requires significant cross referencing to other reports and checking before they can be used in research analysis. Because of their commercially sensitive nature, field reports of mills visited are not included). Progress was made in all four sub-project areas as outlined below.

Sub-project 1, which involves the development of a mill model and the use of that model to analyse various mill decisions, is at the core of the project. It is also the most difficult of all the sub-project areas as it involves the collection and use of highly sensitive mill information. In 2001, mill visits were used to understand mill systems and to identify how the model could be designed to be of maximum use to mill managers. Two major issues were identified and then confirmed over visits to 13 mills in 2002 fieldwork. First, information, accounting and management systems of the vast majority of mills visited are very rudimentary. Therefore, the mill model can make a very large contribution if it can help mills manage information and make decisions in systematic way (in areas such as pricing, input purchases, inventories, cost controls etc.). Second, with only one exception, mills have no experience or skills in analyzing their own information to derive vital management indicators (and especially cost and yield co-efficients).

In 2002, progress was made in developing the mill model in way that will be user-friendly and useful to mill managers. The aim of analysing mill data first involved gathering highly sensitive data, only possible by building up trust between all parties (mills and researchers) on the basis that the research would be of great use for the mills and that the data would be used only for the purposes intended. Ultimately a relatively large number of mills were interested in participating. However, it was decided to focus on a few select mills that keep detailed and disaggregated information. After developing a solid modeling framework with these mills, it could then be extended to the large number of other interested mills or tailored to suit the needs of specific mills at a later stage in the Project. The focus on a few select mills was also necessary because the disaggregated data often required considerable and time-consuming re-organisation to be in a form suitable for analysis. Data analysis was conducted in the second half of 2002 and is still in progress.

Collection of the data and detailed discussions with mill managers also allowed for the rigorous development of the model in a way that would be most suitable for mills and aligned with existing information systems at the mills. Development of a detailed core model occurred between August and November on return from the fieldwork. The model was developed as a visual basic model embedded in an Excel spreadsheet. The model will undergo much further development as well as validation back at the case study mills in 2003, but is at a stage where it can run basic mill scenarios.

Progress was also made in sub-project 2, especially in relation to understanding domestic wool textile marketing channels and their user preferences. This included visits and analysis of fabric wholesalers and fabric markets. Information on customer types, product attributes and prices was also gathered from mills. Although the research team have a good understanding about the marketing channels and preferences, this sub-project is still in progress.

Of all the sub-projects, most progress to date has been achieved on sub-project 3. From the fieldwork in Xinjiang, the research team gathered complete and detailed information on domestic wool marketing and supply chains. They were also able to conduct a comparative analysis based on fieldwork they conducted on wool marketing in Xinjiang ten years previously. The fieldwork debunked some popular myths that were appearing in the Australian press at the time of the fieldwork (including China's capacity to expand high-quality fine wool production). A very important side benefit of the fieldwork in Xinjiang was that it was able to bridge the information gap between mill buyers and wool producers in some tangible ways. Although much has been achieved on sub-project 3, it is still intended to conduct fieldwork in Inner Mongolia to compare and contrast developments there with other pastoral regions.

Considerable time and resources in 2002 were also devoted to sub-project 4, namely an analysis of the imported wool supply chain. Interviews with a wide variety of participants including wool traders, wool buyers, inspection agencies, port and customs authorities and other agencies was carried out. Although many of the problems and issues have been identified, this sub-project is still in progress.

In summary, progress has been made in all sub-projects but especially in the all-important sub-project 1. It is hoped that this progress will allow for detailed specific analysis in the final year of the project in 2003.

2002 was the middle year of the project and so involved building upon what had been achieved during the first year. Fieldwork was conducted in Xinjiang, Shandong, Jiangsu, Gansu and Beijing for a period of around 9 weeks. Raw field work reports are attached. (These raw reports are records of interviews and are intended for research purposes of the Project Team only as they contain unedited sensitive information and also requires significant cross referencing to other reports and checking before they can be used in research analysis. Because of their commercially sensitive nature, field reports of mills visited are not included). Progress was made in all four sub-project areas as outlined below.

Sub-project 1, which involves the development of a mill model and the use of that model to analyse various mill decisions, is at the core of the project. It is also the most difficult of all the sub-project areas as it involves the collection and use of highly sensitive mill information. In 2001, mill visits were used to understand mill systems and to identify how the model could be designed to be of maximum use to mill managers. Two major issues were identified and then confirmed over visits to 13 mills in 2002 fieldwork. First, information, accounting and management systems of the vast majority of mills visited are very rudimentary. Therefore, the mill model can make a very large contribution if it can help mills manage information and make decisions in systematic way (in areas such as pricing, input purchases, inventories, cost controls etc.). Second, with only one exception, mills have no experience or skills in analyzing their own information to derive vital management indicators (and especially cost and yield co-efficients).

In 2002, progress was made in developing the mill model in way that will be user-friendly and useful to mill managers. The aim of analysing mill data first involved gathering highly sensitive data, only possible by building up trust between all parties (mills and researchers) on the basis that the research would be of great use for the mills and that the data would be used only for the purposes intended. Ultimately a relatively large number of mills were interested in participating. However, it was decided to focus on a few select mills that keep detailed and disaggregated information. After developing a solid modeling framework with these mills, it could then be extended to the large number of other interested mills or tailored to suit the needs of specific mills at a later stage in the Project. The focus on a few select mills was also necessary because the disaggregated data often required considerable and time-consuming re-organisation to be in a form suitable for analysis. Data analysis was conducted in the second half of 2002 and is still in progress.

Collection of the data and detailed discussions with mill managers also allowed for the rigorous development of the model in a way that would be most suitable for mills and aligned with existing information systems at the mills. Development of a detailed core model occurred between August and November on return from the fieldwork. The model was developed as a visual basic model embedded in an Excel spreadsheet. The model will undergo much further development as well as validation back at the case study mills in 2003, but is at a stage where it can run basic mill scenarios.

Progress was also made in sub-project 2, especially in relation to understanding domestic wool textile marketing channels and their user preferences. This included visits and analysis of fabric wholesalers and fabric markets. Information on customer types, product attributes and prices was also gathered from mills. Although the research team have a good understanding about the marketing channels and preferences, this sub-project is still in progress.

Of all the sub-projects, most progress to date has been achieved on sub-project 3. From the fieldwork in Xinjiang, the research team gathered complete and detailed information on domestic wool marketing and supply chains. They were also able to conduct a comparative analysis based on fieldwork they conducted on wool marketing in Xinjiang ten years previously. The fieldwork debunked some popular myths that were appearing in the Australian press at the time of the fieldwork (including China's capacity to expand high-quality fine wool production). A very important side benefit of the fieldwork in Xinjiang was that it was able to bridge the information gap between mill buyers and wool producers in some tangible ways. Although much has been achieved on sub-project 3, it is still intended to conduct fieldwork in Inner Mongolia to compare and contrast developments there with other pastoral regions.

Considerable time and resources in 2002 were also devoted to sub-project 4, namely an analysis of the imported wool supply chain. Interviews with a wide variety of participants including wool traders, wool buyers, inspection agencies, port and customs authorities and other agencies was carried out. Although many of the problems and issues have been identified, this sub-project is still in progress.

In summary, progress has been made in all sub-projects but especially in the all-important sub-project 1. It is hoped that this progress will allow for detailed specific analysis in the final year of the project in 2003.

Year 3 (01/01/2003-31/12/2003)
Fieldwork was conducted in Inner Mongolia, Zhejiang, Jiangsu, Shandong and Beijing for a period of around 7 weeks. Raw field work including records of interviews requires cross referencing to other reports and checking before they can be used in research analysis. Because of their commercially sensitive nature, field reports of mills visited are not included.
The development of a mill model and the use of that model to analyse various mill decisions, is at the core of the project. A full pilot version of the model was developed during 2003 and it was intended to trial the model on various mills in China in the middle of the year. The outbreak of SARS delayed that testing, however the model was well received by the trial mills and various refinements were suggested. The pilot version of the model was also fully translated into Chinese and tested on the Chinese version of Excel and Visual Basic.
Detailed plans were also made for the project workshop, planned for Wuxi in mid-2004, that will explain the model and associated analysis to a large number of mill managers.
One of the major objectives of the fieldwork in November was to fill gaps in the domestic marketing of wool textiles. Intensive fieldwork in Zhejiang (Wenzhou and Jiaxiang) added much to the understanding of China's garment making and fabric trading sectors.
Further fieldwork on the domestic wool supply chain was conducted in Inner Mongolia and Shandong to compare with the developments observed in Gansu and Xinjiang in the previous years fieldwork. This has provided comprehensive and detailed information on domestic wool marketing and supply chains, allowing the project team to interact with local officials on ways to improve these domestic supply channels.
Various interviews were also conducted in relation to the imported wool supply chain. The scope of this sub-project has been extended through the close involvement of a PhD student, in the project examining in-depth the impediments to smooth Sino-Australian wool trade and ways that the trade may be facilitated.