Iran carpet traders hope quality will trump rivals

By Fredrik Dahl and Zahra Hosseinian

TEHRAN (Reuters) - Standing next to piles of exquisitely hand-woven Persian carpets, Hossein Ghaseminia is confident his rugs, which cost up to $50,000, can see off cheaper Asian rivals and ride out threatened U.S. sanctions.

One of Iran's best-known exports, Persian carpets made from silk, wool and cotton are traditionally by women in villages, who use natural dyes derived from plants to color them in rich hues where red, brown and cream dominate.

"If we produce high-quality carpets people will continue to buy them," said Ghaseminia, who has been more than four decades in the business which is one of Iran's main export earners besides oil.

Selling outside Iran mainly to the United States and Germany, the Persian carpet is also deeply ingrained in the country's national identity. Rugs adorn the floors of most homes and with prices for finer examples reaching many thousands of dollars, they are, for some people, an investment.

But a half-empty hall at the annual Persian Carpet Grand Exhibition last month showed the business facing tough challenges, both at home and abroad.

Drinking tea and talking shop in the midst of thousands of carpets from different parts of Iran, dealers in various types of rugs accused low-cost producers from India, Pakistan and China of copying elaborate Iranian designs.

While Iran remains ahead at the most expensive end of the market, its overall position in the $10 billion global industry -- which also includes machine-made carpets -- has slipped five places to number eight since 2001, with Belgium on top.

Trader Ata Erad said sales were better last year, but insisted there was no crisis.