Skip navigation

Wenzhou: capitalism unbound

Continued from Page 1

Japanese-made robots pouring molten plastic around the clock attest to the modernity of Chint's main factory in Wenzhou; one floor above, the rows upon rows of uniformed workers painstakingly assembling switches out of dozens of tiny pieces affirm its Chinese identity. The factory produces 300,000 units of the one hand-assembled product every day, with each worker responsible for 400 over the course of an eight-hour shift. Almost all of them are migrants who have travelled from central China for the chance of earning $240 a month at Chint -- a premium wage in the brutal labour market that makes the Chinese miracle possible.

As it makes plans to go public, becoming the first of Wenzhou's manufacturers to gain a listing on any stock exchange in China or elsewhere in Asia, Chint's biggest immediate problem is excess growth. The company has been growing 50 per cent a year for the past five years, according to spokesman Liao Yi, and is attempting to slow down in order to consolidate its gains.

Thirty-nine-year-old Wang Zhentao, the brush-cut, jeans-clad shoe king of Wenzhou, China's leading centre of shoe production, tells the same story. Sales at his Aokang Group have increased by two-thirds every year for the past decade, he said in the brand-new corporate headquarters, incongruously styled as a Renaissance palace, that dominates his native village. "If we continue at that rate, we'll be bigger than General Motors in 15 years," he joked. "Obviously, that's impossible."

But Mr. Wang has clearly thought through the numbers, and his own career suggests that nothing in Wenzhou is impossible. Over 16 years, the former carpenter built Aokang from a back-alley startup into one of the country's top 10 shoe companies, employing more than 10,000 workers and producing 10 million pairs of shoes a year for the Chinese market. Now, he's beginning to think big.

"We used to be a Wenzhou company serving the domestic Chinese market, now we are a Chinese company serving the global market," he said. "That's a big market."

In addition to establishing sales agencies on three continents and partnering with an established European brand, Aokang is spearheading construction of a brand-new shoemaking "kingdom," designed to employ 50,000 people, in low-cost Sichuan Province. The company has diversified into commercial real estate and pharmaceuticals and this year it helped to found a nine-member consortium of local industrial companies, Sinorich Holdings, that is launching the country's first privately owned bank.

But true to their pioneering ways, the Wenzhounese are already China's savviest bankers, having operated a large and illegal curb market for decades under the noses of dis-approving authorities. It is the source of most of the capital fuelling the growth of the region's emerging corporate giants, according to Huang Fajing, owner of Wenzhou's Rifeng Lighter Co.

"In China, it's very difficult for private companies to borrow money from the banks," he explained. "It's a fact that state-owned companies get special treatment. So for us, it's better to go the informal route -- not to borrow from banks, but from friends and among folk circles."

Mr. Huang estimated that handshake deals in the local curb market have put as much as $24-billion to work in local industries. Others guess that the amount is even higher. And for its part, the central government recently decided not only to tolerate the market but to publicize its prevailing interest rates.

The level of trust that makes such mutual aid possible is a point of pride among Wenzhou entrepreneurs. Every industry concentrates dozens of large and small suppliers in dense networks of competition and co-operation that the Wenzhounese call the "little-dog economy." Each pack of little dogs is highly specialized: One cluster will produce leather shoes, another synthetic; high-voltage electrical equipment comes from Yueqing, while Liushi specializes in low- and medium-voltage equipment.

Strollers are rare on most commercial streets of Wenzhou, where soaring towers and vast new public buildings butt against a buzzing hive of industrial activity. Portable generators -- necessary to keep the little dogs fed in an era of frequent power shortages -- are the most popular consumer item here. Pumps, valves, compressors, drill presses and other machine tools crowd the three-metre storefronts lining suburban roads. Red banners denote side streets devoted to trade in different types of industrial components while billboards tout best buys in bulk polyurethane.

Metal shavings and water run into the gutter along one typical row of vest-pocket machine shops. A young worker in one shop machines the metal dies that will be used to make plastic shoe soles, while his colleague piles the finished products onto the footrests of a scooter for delivery to a nearby factory.

Recommend this article? 47 votes

Back to top