The mill is one of only two remaining in the city where more than 30 thrived just 20 years ago.

This one has only been able to survive the exodus towards cheaper labour over Hong Kong's northern border in China because it is so heavily mechanised.

But mill owner Pat-Nie Woo, the third generation of his family to run the company, now faces another challenge to maintain his competitive edge -- slashing his carbon footprint.

"The companies that are going to make the best of the material resources are going to survive and everyone else is not going to survive. Reducing your impact on the environment is crucial," Woo told AFP.

Woo's company is at the vanguard of a realisation among a currently small number of factory owners in Hong Kong and southern China that greenhouse gas emissions must be dramatically cut to prevent catastrophic global warming.

He has joined with the environmental pressure group WWF to develop a carbon labelling system, which aims to provide a simple measure of how effective factories have been in reducing emissions of carbon dioxide (CO2).

The system will be similar to the labelling system used to measure the efficiency of refrigerators.

China's rampant industrialisation in recent decades has meant it is set to overtake the US as the world's number one source of greenhouse gas emissions, prompting criticism it is not doing enough to halt global warming.

But Woo's move, along with around a dozen fellow factory owners, is not simply an assertion of green credentials -- he is hard-headed enough to recognise the financial advantage of cutting his energy output as costs rise on rocketing oil, gas and coal prices.

"Everyone is facing severe cost pressures. On one side we have the commodities increasing in price, on the other side we have a slowing economy, but buyers are still asking for discounts," Woo said.

Early indications show the scheme could reduce the company's energy bill by between 10 and 20 percent, the equivalent of almost 2,000 homes, said Woo.

"To save 20 percent on your electricity bill and to be able to reduce energy consumption when the whole of China is lacking energy? It is a no brainer."

Liam Salter, head of WWF Hong Kong's climate and energy programme, said the scheme, which he believes is the first of its kind in the world, will allow participants to prove to Western buyers their carbon credentials.

Salter said commitments from US retail giant Wal-Mart and British supermarket Tesco to reduce the carbon footprint of their entire supply chain had created an opportunity for such innovation.

"The nightmare scenario for manufacturers is that buyers come out with five different requirements on carbon, which just pushes up costs. This project gives a chance for manufacturers to differentiate themselves in front of buyers," he said.

Initial signs are positive.

Since Woo's Central Textiles and fellow manufacturers launched the Sustainable Fashion Business Consortium, a group which aims to promote sustainable development in China's clothing industry, earlier this year, they have been contacted by Tesco about their work, he said.

The scheme will assess a factory's systems and technologies and the success it has made in reducing its overall CO2 emissions.

WWF hope to trial the system later this year before encouraging factories across the Pearl River Delta to use it. More than 30 percent of the world's clothes are made in China, mainly in the factory-belt bordering Hong Kong.

Alex Yeung, from the Hong Kong-based Clothing Industry Training Authority, who will train industry workers to use the programme once it has been tested, said the initiative showed that Chinese factories were keen to promote a more positive image, following safety and labour scandals that have dogged them over the past two years.

"We want to show that we can do more than be pushed, that we can be more proactive (in dealing with problems)," he said.

Salter concedes that the programme will initially be small scale, but insists that if a robust, easy-to-use system can be developed, it could have a significant impact, on both manufacturers and buyers.

"This mechanism will help us see how serious the Western companies are. This is not about bullying your factories into becoming low carbon, you are going to have to offer support to factories wanting to improve," he said.

Woo, who also owns a huge spinning and weaving operation in southern China's Guangdong province, played down the need to satisfy Western buyers and insisted the move was not just motivated by the need to survive.

"It is every factory owner's responsibility to be sustainable on an ongoing basis. It has to be sustainable in a business sense, but also in an environmental sense," he said.

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