Wealth of difference
Updated: 2011-06-10 10:26
By Yu Ran and Shi Jing (China Daily European Weekly)
The private economy takes up about 60 percent of the GDP of Nantong, in East China's Jiangsu province. Xu Ruiping / for China Daily
Traffic in Nantong, a city in East China's Jiangsu province, is quiet and orderly. But the scene belies the city's industrial might as a textile manufacturing hub in the prosperous province. In contrast to nearby boom towns like Wenzhou and Yiwu in the equally prosperous Zhejiang province, Nantong is a study in conservatism and restraint.
Nantong is all about its people, the entrepreneurs who have turned the rural backwaters into hotbeds of economic growth.
In the two coastal provinces, manufacturers of a wide range of consumer goods have known for sometime that the days of low labor and land cost are numbered.
In the past several years, labor costs in Zhejiang have risen by about 30 percent, industry figures show. The rate of increase in Jiangsu during the same period was 20 percent. Manufacturing profit margin was further squeezed by the rapid increase in material costs, fueled in turn by the rise in oil prices as well as other unexpected factors. The price of PVC, the basic material for the plastic industry, has alone grown by about 2 percent since the March 11 earthquake in Japan, a major supplier, producers say.
The profit margins have been further trimmed by the rise in the value of the yuan against other major currencies. The yuan has appreciated a combined 1.9 percent against the US dollar in the past five months. Because of stiff competition, especially from other emerging markets, many Chinese exporters have absorbed the foreign exchange losses for fear of losing business.
Unwilling to accept the thinning profit margins, many Wenzhou entrepreneurs have taken drastic measures to wind down their manufacturing operations by shifting their investments to property, stocks and coal mines. Flush with spare cash, some of them have speculated in collectibles, including antiques, paintings and other little-known artifacts like yellow stones and clay teapots.
But in Nantong, textile tycoons have taken a much more low-key approach in diversifying their wealth.
Visitors to the low-key city will discover that it does not flaunt its wealth with a jungle of tall buildings, intertwined by a labyrinth of flyovers.
Zhu Xiaohui came from Shanghai to Nantong about five years ago. Thanks to the Sutong Bridge opening in 2008, she is now able to drive home every week within one hour.
Setting up her own home textile design studio in late 2007, Zhu says she does not have much time wandering around the city. But she is already schooled in the street smarts of Nantong's business world.
"Contrary to my previous expectations, businessmen in Nantong are quite shrewd. It was quite difficult for me to work with them at first," Zhu says.
Xue Fei, the 40-year-old owner of a family-run textile domestic supplier in Nantong, reaps in about 500,000 yuan (53,000 euros) annually from up to three stores in the city.
"I've never made any extra investment but I've expanded the number of my stores within the last decade, as I don't want to take any risks with my money," Xue says.
Similarly, Shi Weidong, a maker of wire rope, which is another well-known industry in Nantong, rarely directs his profits into investments as he feels more comfortable and safe by leaving them in the bank.
"I just spent 500,000 yuan on the equity market buying steel-related products, which I deal with everyday," the 43-year-old says.
"I don't want to put my hard-earned money into any risky investment," says Shi, whose factory receives orders from domestic and international market that are valued at up to 10 million yuan annually. Profits can be up to 4 million yuan, he says.
Born and brought up in Nantong, Sun Muyang works for the Nantong government. People in Yiwu and Wenzhou seem more concerned about their businesses and work much harder, while the people of her city prefer "leading their lives leisurely", she says.
But people like Sun might be a little too modest about their city's enterprises.
Nantong Mayor Ding Dawei says the number of private companies registered in the city in 2010 ranked second in Jiangsu. A total of 24 private companies have made it to the "Top 500 Chinese Private Companies List".
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