Yiwu entrepreneur Chen Jianhua adapts to the market of today
Yiwu has long been known for its enterprising spirit, and a maker of decorative doors has followed its progress to today's market
Chen Jianhua, who runs a company making decorative doors, is a native of Yiwu in the eastern province of Zhejiang. The 40-year-old entrepreneur has seen the county's rise from the late 1990s to become an international hub for cheap manufactured goods. While this business model has been challenged by rising costs and changing markets created by the internet, Chen is still optimistic about Yiwu's future, believing in the entrepreneurial spirit of its people.
Are many people in Yiwu like you starting up their own businesses instead of working for others?
Yiwu is a basin surrounded by mountains and has a lack of natural resources. Centuries ago, Yiwu people started to go off to find things to trade. This trading tradition was reflected in the cry of street vendors in my childhood shouting: "Chicken feathers for sweets." We got sweets in exchange for the feathers and they would make feather dusters out of them. Small things can have a big market. Yiwu people devote themselves to making small things such as socks, leggings and hair accessories. Low prices and a wide variety of products attract wholesalers from around the world to buy here. Thrilled by the huge market demand, many young people choose to start their own businesses like me. There are also people who prefer to work for government departments, or be idle all day as they are deterred by the hardships of running a business. [However,] I think the majority are workaholics.
Why do you export your products instead of satisfying domestic demand?
Exports of wooden products are generally welcomed by foreign countries as they usually have strict restrictions on felling trees. Competition in the domestic market is very fierce. Manufacturers have to provide installation and maintenance in China. It's easier for us just to export the doors and let wholesalers take care of the service side overseas. Yiwu people are familiar with dealing with foreign businesspeople, so international trade is not a demanding thing for us.
How was your business affected by the 2008 global financial meltdown?
Yiwu businesses started to shrink from the second half of 2007. In this sense, I think the business climate in Yiwu is a good indicator of the whole economy. My orders from Europe and the United States fell sharply in 2008. Then I made great efforts to explore markets in the Middle East and South America. Since then my business has been in recovery. Out of the crisis, I learned you need greater foresight to survive fluctuations in the global market.
How do you manage foreign-exchange risk?
The yuan has appreciated 35 per cent against the US dollar since 2005 when exchange-rate reform started. Almost every year profits were dented by exchange-rate movements and sometimes the impact was huge. … I'm not a fan of economics, but I read a lot every day to learn what has happened around the world and talk to friends frequently to share their insights into China and world political and economic affairs. Without this learning, I think I would lose my competitiveness quickly.
Yiwu products are known for their cheapness. Do you think a low price will remain a competitive edge for your products?
Yiwu became a household name for cheap goods after the 1997 Asian financial crisis. However, China's labour and land costs have been rising fast in recent years. I think no one can keep prices low forever. Also, we should not focus competitiveness on price. Personally speaking, I would never participate in any price war. It's not only because it cuts profit margins, but also it ultimately hurts consumers' interests, as reduced prices always result in substandard quality or service. Yiwu businesses are transforming to move higher in the supply chain and provide better quality products at reasonable prices.
How do you see e-commerce?
We have a website and we take orders online as well as from buyers on the ground. Technology has been driving the world to evolve at a speed beyond imagination. We have to adapt to that quickly. Anyway, we still meet the majority of our customers in person. They come here to know about our products. They talk to me, so they know what kind of person they are dealing with. I think face-to-face talk will always be important at work and in social life. Once mutual trust is established, we make contact online later. Yiwu is constructing new international trading malls covering a combined area of nearly 180 hectares on top of the existing 137 hectares of malls. This is because the Yiwu government thinks site visits and on-site transactions will continue to be important in the future. E-commerce companies will have booths in the mall.
Yiwu's property prices are very high. Why?
Yiwu's average housing price is about 20,000 yuan [HK$25,000] per square metre, almost as high as first-tier cities. Yiwu's population is over one million, with migrants outnumbering natives. Yiwu natives are rich because of the trade business. People from other areas also set up companies in Yiwu to get close to the market. Traders from around the world come here periodically. Some of these people also become property buyers.
Lots of different kinds of people live in Yiwu and transactions are happening all the time. Is crime a problem on the streets?
Security is very good. One could sleep with the door open, ha ha. The whole county is intensively covered by police surveillance cameras. Once a theft or robbery takes place, police catch the suspect quickly. I remember in one theft years ago, the police caught the suspect when he arrived in Guangzhou after stealing in Yiwu two days before.
What do you do in your leisure time?
I like to stay at home reading books or watching television . Some people in Yiwu, especially those not doing much else, like playing mahjong. Foreign businessmen like having a drink after a day's work … Even in my leisure time, I like to think a lot about my business, like many other Yiwu people. The miracle of Yiwu is based on hard work. I think no matter how the world changes, entrepreneurship will help Yiwu people to survive and win.