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Wenzhou goes all out to boost exports
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08:09, August 12, 2009

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It was 10:30 p.m., the usual bedtime for many in Wenzhou, a coastal city in East China's Zhejiang Province. For Ye Xiaoqiong, a business manager with an international trade firm, work had just started.

Sitting in the quiet study at her home, she browsed new garment designs prompted out on the screen of the LCD display. Through the software Skype, Ye discussed "face-to-face " with a New York-based importer on design alterations.

Describing her work at a recent interview with Xinhua, Ye said, "Here we have an eight -hour time difference with the United States. I moved the office to my home to engage in zero time-gap working. It makes my work more efficient and helps me to seize business opportunities. "

Caught up in the global downturn, many export-oriented companies in Wenzhou were making similar efforts, with encouraging results. Statistics released by the Wenzhou Administration of Customs show the city shipped out a total of US$ 264 million worth of goods in the Q2 period. It was a drop of 14.67 percent compared with the same period of 2008. But the value marked a climb of 20.87 percent on the Q1 performance.

Corresponding figures for the whole province were a fall of 19.02 percent and a rise of 18.32 percent. China's total exports in the first half year reported a decline of 21.8 percent from the same period of 2008. And exports in June climbed 7.5 percent from that of May.

Wenzhou had been a leading city in China's economic development ever since the beginning of the reform and opening policy more than three decades ago.

Wenzhou's rapidly recovering exports were contributed by six major sectors: garments, spectacles, shoes, machines and electrical goods, low-voltage electrical appliances and leather goods. They accounted for nearly 80 percent of the city's total exports. Year-on-year growth was registered by the first two categories, while products of the other four categories all recorded impressive monthly growth in June. The customs statistics also showed remarkable yearly growths for exports such as motorbike parts, wireless radio and recorders, digital processing equipment, electrical transformers, and electric fans.

The people in Wenzhou were well known for their shrewdness and industrious spirit in business undertakings. Many businesses had reacted to the economic crisis by strengthening R&D work and upgrading technology. Wenzhou Juyi Shoes Co. Ltd. was a good example. Last year the company expanded its R&D staff team from 180 to 280 people. Coordinating the work of designers at home and abroad -- in Spain, the United States, Italy and Germany -- it managed to put out 500 new shoe designs per season, compared with the 300 on average before. Early this year the company installed 16 state-of-the-art production lines with a total investment of 16.5 million yuan.

Juyi recorded a yearly export growth of 82 percent in the first half of this year. Its manufacturing center ran in full capacity and more than a score of containers were shipped out every day. The company had diverted orders that it was unable to deliver to eight outside factories. Board chairman Pan Jianzhong said in July that exports would probably exceed US$ 100 million by the end of the year, representing a 35 percent or higher annual growth.

The harsh conditions had a positive effect on the eyeware sector. The sluggish demand had driven many suppliers of cheap low-quality glasses out of business. The surviving companies were relatively big and strong. They wasted no time to upgrade technology to produce eyeware with greater added-values. In marketing, they focused on brand promotion. The price of a Wenzhou-made pair of glasses rose 20-30 percent on average from that of a year before. But orders for the products had increased and revenues grew accordingly.

"The Chinese spectacles made in Wenzhou were cheap and good in the past. Now they are reasonably priced and excellent, " Ye Zijian, president of Wenzhou Optical Association and board chairman of Wenzhou Yuanyang Glasses Co. Ltd., quoted a foreign customer as saying. "Instead of being spread out for sale at stalls by the side of the road or in small markets, Wenzhou spectacles are now showcased in big overseas shopping centers, catering to middle-class consumers," he said in July.

Official statistics showed there were about 600,000 Wenzhou business people living in more than 100 countries and regions around the world. Wenzhou people had formed a tradition of team-up and mutual help in business operations. The extensive network based on family ties and regional relations was invaluable in passing on information and facilitating contact in business transactions. However, under the pressure of the economic downturn, people at home reckoned they should not rely solely on the overseas Wenzhou network for exports. They resolved to reach foreign clients directly.

The new marketing strategy was supported by the government, which organized the first business delegation to attend the Hong Kong Fashion Week in July 2008. At this largest fashion event in Asia, participating companies reaped a great amount of orders from new customers. Encouraged, Wenzhou Fashion Association (WFA) gathered two similar delegations to international fairs in January and July. The delegations grew bigger in size and returned with increasingly more orders. Compared with the big orders with small profit margins placed by established customers, who were often trading agents, the new orders placed directly by foreign clients were small in amount, but with bigger profit margins and often followed by more orders.

"It's a successful trial. Although the orders were small, they were good ones, placed by high-class clients and bore less risk. It's worth the trouble," WFA president Zheng Chenai said in May.

The government was credited for guiding and helping businesses in manufacturing products and selling them at overseas markets. According to Su Xiangqing, director of Wenzhou Foreign Trade & Economic Cooperation Bureau (WFTECB), the government provided subsidies to companies going to international fairs and expositions. The money was handed out to private firms, as well as state-owned enterprises. It was used to cover expenses on exhibition space and ads. The amount of subsidies appropriated this year was increased to 150 million yuan, from 100 million in 2008.

The government was also active in facilitating contact of companies with banks to help businesses surmount the difficulty of financing. And every month since late last year relevant government departments and institutions such as WFTECB, the customs and taxation administration would send staffers to the city's 200-odd key enterprises that had foreign trade business to listen to corporate complaints and find out their needs.

"The economic crisis has a less impact on exports of life necessities. Consumers abroad need the inexpensive and good quality light industrial products made in Wenzhou. The efforts of Wenzhou businesses in upgrading technology and adjusting product mix have won recognition on the international market, " WFTECB director Su Xiangqing said in a recent interview.


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