Yiwu, a city best known as a national and international center of trade in small products, is now becoming a center of the new wave of e-commerce, ranking 1st among county-level cities on Taobao’s 2012 China sales list. Nearly one in ten of the Gold Crowns - the highest rating stores in Taobao with over 500,000 transactions - are based in Yiwu, and the world’s big four express delivery firms – UPS, TNT, FedEx and DHL have all set up businesses there.

At the year-end, Wang Guangming, general manager of the Shanghai based Zto Express in Yiwu, has once again put “look for new warehouses” on his business agenda.

Zto Express in Yiwu now has a warehouse of 6000 square meters . “The warehouse is large enough for this year. But we’ll have to find new space for 2014,” said Wang. “The number of orders we receive has been doubling each year since the company was founded in 2009, and the rate is likely to be maintained in the next 3 to 5 years. This year, we’re expecting an increase of over 110 percent. ”

“Every year we worry about not having enough space to process our orders…” According to Wang, this is a “nice problem” to have, as a result of the booming E-commerce business in Yiwu over the last few years.

From “chicken feathers for sugar” to global E-commerce giant

It is said that Yiwu locals are born traders. As early as the Ming and Qing dynasties, the Yiwu people were trading chicken feathers for sugar. Well-preserved tourist attractions like Fotang Ancient Town (Fo Tang Gu Zhen) and Beilei Ancient Street (Bei Lei Gu Jie) bear witness to Yiwu’s rich cultural heritage as a market place.

Now in the Internet age, the Yiwu people have again become the pioneers of modern business, giving birth to China’s No.1 Taobao Village: Qingyanliu Village.

As of the first half of this year, the total value of E-commerce sales had reached over 39 billion yuan in Yiwu, where 213,700 E-commerce accounts are registered.

Cross-border E-commerce is also burgeoning in the city. Transaction sales achieved by Yiwu-based shops on eBay and AliExpress.com had grown by 300 and 400 percent in 2012 on a year on year basis respectively.

Why Yiwu?

From offline to online, the awe-inspiring E-commerce development inevitably prompts the question: Why Yiwu?

The answer is threefold: resources, policies and skills/talent/people.

According to the Yiwu government E-commerce Office, the city boasts “one third of the nation’s trade in small products”, with over 200,000 consumer goods companies manufacturing more than 1.7 million different products. In consequence, a vast small-product production base has formed in the surrounding area, with Yiwu at its center.

The Yiwu government has also stepped up policies to foster E-commerce development. “The (Yiwu) government has positioned E-commerce as a strategic, leading industry of the city, and a key engine in Yiwu’s market transformation and upgrade, introducing a series of policies to support its development,” an official with the E-commerce office said.

In particular, the government initiated an E-commerce training program for 300,000 people in June, sending out 189 university-student village officials to local enterprises to help workers develop E-commerce skills. Within four months 180,000 people had completed the program, rejoining the workforce better equipped for E-commerce.

As a result, the Lowland Effect is being felt as Yiwu continues to attract business and capital with its exceptional strengths in resources, governmental policies, and talent. “There is an endless flow of people coming to Yiwu to do E-business,” said Chen Jifang, manager of a camping equipment company based in Yiwu.

“Online Silk Road”

On November 26, the Yiwu Global Net Goods Center was launched by the Yiwu government in cooperation with DHgate, a Chinese B2B trading website. The center will serve as an open trade platform, performing the functions of both online and offline warehouses as well as logistics centers, distributing “made-in-China” to the world through the “Online Silk Road”.

“For us, this is more than an opportunity for cooperation (with foreign companies). It helps upgrade our entire business,” said Wang Guangming.

“We are planning to launch cross-border E-business in 2014,” Chen Jifang confirmed, in tones of obvious expectation.