YIWU IN 40 YEARS

By Zhang Lulu

Thanks to China’s reform and opening-up policies,Yiwu has emerged as an international trading hub

W hen local authorities seized Feng Aiqian’s basket of shoelaces and buttons for the umpteenth time in 1982,she finally decided to confront the Party chief of Yiwu County,Zhejiang Province.

“I just want to sell things,”she pleaded to Xie Gaohua, who had recently taken up the post.Moved by Feng’s situation of feeding four young children and an elderly mother, Xie granted her permission to continue her small commodities business.

A sales associate displays a metal dragon at the China Yiwu Small Commodities Manufacturing and Processing Machinery Equipment Exhibition on April 1, 2018.

This meeting between Feng and Xie has been etched into the county’s lore as the inception of the now-famous Yiwu small commodities market,which officially opened four months later. From a handful of makeshift sheds, the market grew to extend all the way to the site where Party Chief Xie approved its formation.

Xie’s decision was bold at the time. China had announced its reform and opening up four years earlier, but few dared to openly endorse free market practices previously prosecuted as “capitalistic activities.”

However, Xie’s support for Feng and the new marketplace proved game-changing: After several rounds of expansion across almost four decades, the Yiwu small goods market houses more than 380,000 registered businesses. Today, Yiwu annually exports more than 200 billion yuan (US$31 billion) worth of goods to countries around the world. The tiny town tucked in the hills in eastern China earned the title of “the world’s largest small commodities market” and became a flag-bearer for “Made in China.”

From Mom-and-Pop Stores to Global Brands

Wang Minfeng sells hardware from the eighth floor of District Four building in the sprawling market complex called Yiwu International Trade City.Compared to the surrounding stores peddling colorful gift packets, umbrellas, and clocks shaped like Disney characters,Wang’s tools come off modest and subdued. Yet the unifying black and orange theme and stylish logo create a solid brand image which makes the wares attractive. Like his store, Wang appears humble. He tends to avoid eye contact and speaks tersely—until conversation turns to his goods, at which point he becomes as deft a salesman as any.

The Yiwu small goods market houses more than 380,000 registered businesses.

Today, Yiwu annually exports more than 200 billion yuan(US$31 billion)worth of goods to countries around the world.

In 2017, Yiwu reported e-commerce trade volume of 222 billion yuan($34.9 billion),25 percent more than 2016.

He tours visitors through myriad products displayed on the walls, and if none of them are what you are looking for, he pulls out his smartphone to display pictures of tools in the works,like a proud father showing offphotos of his kids.

Like many small business owners in Yiwu, Wang built his store from the ground up. He first launched his business in 1998 and became a major distributor for a famous screwdriver manufacturer two years later.

Not satis fied with growth prospects, he and wife Chen Yanzhen took out a high-interest loan of 200,000 yuan in 2004 to move the store from a rented makeshift booth to the newlybuilt market and register their own brand. Chen recalls years of trials and tribulations before the couple found firm footing.“In the past, it was all about hard work, but now it’s about finding new things and acting quickly.”

When the SARS epidemic hit China in 2003, Yiwu’s trading hub faced a particularly acute threat because it received potential carriers travelling from all over the country. The jam-packed marketplace compounded the risk, with cement booths measuring only one or two square meters squeezed next to each other.

“We couldn’t afford to take a single day off and went to the market every day,” Chen says. “When customers from Guangdong [where the epidemic originated] arrived, my husband gulped down garlic and preventive medicines before meeting them at their hotels.”

The hard work and risktaking—both physically and financially—would eventually bear fruit, and the company gradually took off. According to Wang, his annual sales now have reached 60 million yuan ($9.4 million), and his tools are sold in over 100 countries.

What’s next for Wang? The seemingly reserved entrepreneur is not shy about his ambitions—his goals are inscribed right on the shopfront window:Build an e-commerce team and secure at least 50 international distributors; rev up R&D and enter the second phase of brandbuilding; prepare to introduce stock options.

Through these new tools and platforms, Wang hopes to build a globally recognized brand.

A New Generation of Yiwu Traders

Unlike the previous generation Yiwu traders who began in makeshift booths, Ye Peng launched his store in the online marketplace.

Ye is a Yiwu native, whose parents sold shoes. After attending college in nearby Hangzhou and a brief stint at a state-owned company, Ye returned to his hometown and took up the family trade.

His inspiration for the move was a 2012 drive by the city to boost e-commerce, which was followed by tremendous growth.Just last year, the city reported e-commerce trade volume of 222 billion yuan ($34.9 billion), 25 percent more than 2016.

Ye operates a storefront in Yiwu International Trade City,which at a lavish 425 square meters is eight times the size of his first booth. His annual sales made similar leaps, from 2 million yuan in 2012 to 14 million yuan today. He says 80 to 90 percent of his sales are conducted online.

His experience in e-commerce can be traced all the way to his college days. When he first started his business in Yiwu,his shoes were sold on Taobao,the giant online marketplace under Alibaba. He has since shifted focus to larger volumes,supplying retailers instead of selling directly to end consumers.

2. Yiwu International Trade City includes a service area where businesspeople can conduct crossborder e-commerce transactions.

3.A businesswoman selects snow globes at Yiwu International Trade City.

Ye explains that this helped him improve his product quality and at the same time price his handmade shoes twice as much as his peers while remaining competitive.

“Since I opened my first brickand-mortar store back in 2015,I have remained determined to treat the shoes like my offspring and carefully raise them for 20 or 30 years until they are widely recognized,” he says. “I can make cheap but flimsy shoes that sell a lot, but that’s not what I want to do.”

His sentiments mirror the development of his hometown over the years. “Yiwu used to be a little unknown town surrounded by hills on all sides,” Ye beams.“Nobody could have expected it to achieve what it has today.I think that achievement was fueled by the aspirational spirit in our genes.”

International Trading Hub

As one of the world’s biggest trading hubs, Yiwu is home to not only tens of thousands of Chinese traders, but also 13,000-plus resident foreign traders, not to mention the facilities to accommodate more than 500,000 foreign business travelers per year.

One resident is Aileen Lim,a Malaysian of Chinese descent who imports teapots. “I chose to focus on tea due to my Chinese friends,” she says in fluent Chinese with a southern accent.

When Lim first arrived in Yiwu in 2004, she was shocked by the dirt roads right outside the airport. “My hometown of Penang, Malaysia was already fairly prosperous at that time, but Yiwu was a whole other world!”

But rather than discouraged,she was inspired by the city’s spirit. “People in Yiwu were very hardworking,” she recalls.“And though small, the city was bustling and lively.”

4.On September 9, 2017, the first Yiwu-Prague China Railway Express cargo train, loaded with 88 containers of cloth, clothing,shoes, hats and Christmas items worth US$3.35 million, departs from Yiwu for the capital of the Czech Republic.

Yiwu built a venue for foreign expats in 2008 as part of the city’s drive to foster imports and thereby mitigate risk from a shrinking export-led economy.Lim was an ideal recruit because she was already a seasoned importer at the time. She took the offer in 2011 and has since embraced Yiwu as her second hometown.

“One of the best things about Yiwu is its inclusivity—it embraces strangers and makes us feel right at home,” she says.“Yiwu is the precise embodiment of opening up. Interacting with traders from 200 different countries makes it feel like a small United Nations without the politics.”

That is not to say she is uninterested in major global developments. She has monitored China’s ongoing Belt and Road Initiative, which has brought more and more traders to Yiwu from Africa and ASEAN countries along the routes. “We’re not just trading goods, but also exchanging ideas and cultures,”she says, gesturing towards the flags of various countries dotting the aisles outside her shop.

A City of Reform

Few in Yiwu know more about the Belt and Road Initiative—and the opportunities it creates—than Bei Xudong, who oversees operation of the intercontinental“Yixin’ou” railway that connects the city to several European countries.

Rather than concentrating on the benefits, however, Bei focuses on potential obstacles and plans to maintain Yiwu’s growth momentum.

The Yixin’ou Railway has been hailed as a model project of the massive Belt and Road Initiative.

According to Bei, one potential pitfall is increasingly breakneck competition with European countries. Therefore, Yiwu is considering building alternative rails this year to connect to Western Asia, the Caspian region and Southeastern Asia.

Like the visionary Party secretary credited with launching commodities trading, Bei hopes the market will take the lead in guiding such expansions. Yiwu has not subsidized the railway,and managers have entrusted railway operation to a private company.

Bei also reveals that Yiwu is mulling construction of a “Belt and Road Czech Station” in the Czech Republic, which would integrate the Yiwu-Czech railway,trade, logistics, warehousing,freight stations and other functions.

“We aim to make Yixin’ou a key logistics channel, but also a channel for Yiwu to deepen trade and cooperation with the countries along the railway,” Bei added.

Echoing Bei’s ambitions for the city is Bao Shumin, head of the Yiwu Institute for Reform and Development.

She recalls nearly four decades of Yiwu’s reform beginning in the early 1980s with the establishment of the small commodities market that focused on domestic trade, the transition to exports alongside China’s entry into the WTO in 2001 and its emergence as the “world capital of small commodities.”

“Yiwu has always been a pioneer for county-level reform across China,” Bao declares with pride.

According to Bao, the drive to reform has been fueled by collective self-awareness. Seeing themselves as underdogs, people from Yiwu have worked harder and taken more risks to overcome geographical disadvantages and a lack of natural resources.

“We want to always stay ahead of the times,” Bao says.

As one of the world’s biggest trading hubs,Yiwu is home to not only tens of thousands of Chinese traders, but also 13,000-plus resident foreign traders, not to mention the facilities to accommodate more than 500,000 foreign business travelers per year.