Yiwu, the Building of a Global Market

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4In newspapers from around the world and on many official Chinese websites, praises about the miracle of Yiwu abound. Yet behind this meteoric success, the town was the birthplace of a marketplace ex nihilo. Based on the Wenzhou model marking the transition from socialism to global capitalism, which became the official economic paradigm for China during the 1990s (Hulme 2015, Li et al. 2016), this city has been shaped by a series of judicious choices made by local public and private actors in context of strong competition both nationally and internationally.

5Yiwu has a registered population of less than 800,000 and a registered migrant population of 1,331,700 in 2013 (Li et al. 2016) from all parts of China. Since decollectivization was imposed in the late 1970s, this town, two hours by train south of Shanghai in the coastal province of Zhejiang, has made the most of favorable conditions for the growth of its markets thanks to constant support from local authorities. The creation of a wholesale market in Yiwu in 1982 occurred in the wake of economic openness promoted by Deng Xiaoping in 1979. Starting in 1984, the policy of development through trade enabled manufacturers to make local industrial production more visible to wholesalers, initially those from the Zhejiang Province and then later those from all over China (Ding 2006). In 1986, the central government ordered the reorganization of the distribution market by allowing producers of manufactured goods to deal directly with wholesalers. After 1989 and during the 1990s, Chinese President Jiang Zemin set out a path for major economic reforms, particularly by reorganizing the distribution of goods and services. This was followed by a progressive decentralization that granted regional and local governments increased autonomy to intervene in the development and organization of markets. The reforms of China’s distribution system sought to facilitate the transition from a planned economy to a market economy, giving manufacturers access to new customers and allowing wholesalers to benefit from prices that were 30% below those working outside of the program (Sun and Perry 2008), and as a result, Yiwu became one of the new commercial cities. The success of these market-towns, which are wholesale markets whose business drives urban growth, is such that in Zhejiang Province alone there are now 68 such towns, including seven with at least 5,000 shops (Ding 2007).

6Starting in 1991, Yiwu thus became the largest wholesale market in the People’s Republic of China (PRC) in small commodities. The success of this market proves that the local administration managing industry and commerce made the right choice in 1982, when it created the Zhejiang China Small Commodities City Group (CSCG) to set up a wholesale market in Yiwu (Chow 2003). This private group, very closely associated with town council members, plays a key role in three areas.

7First, it has had a significant impact on the restructuring of Zhejiang’s industrial landscape, which is mainly comprised of SMEs, by attracting manufacturers scattered across the province to the town of Yiwu in a context of increased growth and competition. This was a break with the dominant model of single commodity industrial districts inherited from the collectivist period, based on the doctrine of “one village, one product.” In these districts, market towns such as Yiwu today drive modernization by facilitating the flow of goods (Sun and Perry 2008). Yiwu broke with the old pattern by showcasing a growing number of products (1.7 million in 2008), and manufacturers in 22 of the 36 single-specialty industrial districts in Zhejiang now use Yiwu to access domestic and international markets (Ding 2007). Among the most notable districts are office supplies (Wuyi), crystal (Pujiang), hardware store items (Yongkang), textiles and clothing (Dongyang), glasses (Wenzhou) and rain gear.

8Second, Yiwu’s success has led to an expansion and diversification of markets specialized in the wholesale of small commodities, namely household appliances, stationery, toys, clothing and religious objects. In these markets, sellers want to offer wholesalers the widest possible choice and to make sure buyers can find what they are looking for more easily by classifying the products by type and location (Ding 2007). The exhibition business has also flourished here as in other parts of China (Mu 2010). The number of stalls in the city’s markets has grown impressively: there were 705 in 1982, 16,000 ten years later, 42,000 in 2004, 62,000 in 2008 and 65,000 in 2014 (Chen 2015). The International Trade City (ITC), also called the Futian Market (Figure 1 and 2), with its 50,000 stalls often less than 10 m² provides a showcase for products manufactured in the industrial districts in the surrounding Zhejiang region. The ITC was created only one year after China’s entry into the World Trade Organization (WTO) in 2001 in the non-market economy category. At least three-quarters of the commercial transactions done in the city are concentrated in the ITC and in a few other places in Yiwu. In 2011, the six largest markets in Yiwu (Table 1) constituted one of the most important sources of goods supplying the commercial networks of grassroots globalization, to which must be added tens of streets in the city specialized in a particular niche product (170,000 booths).

Table 1: Main Importers of Products from Yiwu (2002-2011)

Rank

2002

2006

2009

2011

1

United Arab Emirates

USA

USA

EU

2

Russia

United Arab Emirates

United Arab Emirates

Association of Southeast Asian Nations

3

USA

Russia

Germany

Iran

4

South Korea

Ukraine

Spain

India

5

Ukraine

South Korea

Russia

Egypt

6

Japan

Germany

UK

United Arab Emirates

7

Saudi Arabia

Spain

Italia

Saudi Arabia

8

Britain

Brazil

Brazil

9

Panama

Iran

Iraq

10

Brazil

India

Algeria

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