Of the 415 businesses investigated, the great majority were involved in imports and exports. But in Shenzhen, one-third of the companies were tech companies. One, called Shenzhen City Ludao Technology Limited Co., introduces itself as "a specialist in MP4 production and sales". But these companies simultaneously have quotas on a myriad of products. "We have no idea how companies like this obtained their quota licenses," says one source.

Industry insiders guess that business quotas are linked to the black market. Last September, MOFCOM published "Textile Product Management Methods", which included quota adjustments. According to Wang Qianjin, an analyst for First Textile Network, quota licenses that are in high demand can easily sell for ten times the official price.

"Businesses that don't use up their quotas sell credits to others who are over their own, or to ones who don't have a license to begin with. The government has no clear rules regarding this, which directly allows for the emergence of a black market for quota sharing... Many are just shell companies masquerading as textile businesses, but in reality they are dealers of quota credits."

Export figures are the main deciding factors that go into quota calculations. According to a 2007 second-quarter conference, not a single company didn't use up their 2007 quota for exports to the U.S. and Europe.
Xungang Trade Limited Co. is treating the readjustment of their quota as a normal occurrence. "We've bought quotas before. And we've also sold them," said one spokesman.

Shenzhen Qunkang Industrial Limited Co. is one such company. According to its website, it provides services including "acting as a representative in customs for importers, exporters, and manufacturers. We also provide sourcing licenses and related documents. All export-related procedures are provided by this company, including documentation, inspection, quarantine, customs descriptions, etc." The business even participates in the MOFCOMauction, though it only has rights to seven kinds of quotas. On May 10, one source from the company admitted to the EO, "We've already used them up."

Gao Yong, vice-president of the conference, asks, "If all quota agreements will expire, what's the point of re-selling them?" The Textile Working Conference is currently investigating this issue.

For Gao Yong, recent developments show that the U.S. and Europe won't continue to use the quota regime, but they are even more unlikely to relax controls on their textile imports, and thus will find other policy measures to control Chinese textiles entering their markets. When the quota system is about to expire, businesses won't purely make false claims for the quotas. There are other motives.