The self-made ride stitches to riches
For the Chinese lunar New Year Lin Jian Ning and wife Ci Yan willfly to palmy Hainan Island, something they've only seen others do on TV. As part owners of a small shoe factory on the Fujian coast, they see the resort holiday as a sign of success amid a rise of new competitors.
The Lins are part of a reemerging class of entrepreneur on China's east coast. They represent a self-made family business, whose small toy, appliance, and garment factories are a driver of China's economic growth - which clicked off an impressive 9.9 percent in the final quarter of last year.
The Lins' business rose swiftly. Two lanky brothers, along with half this neighborhood, got a message in the early 1990s - a green light by leader Deng Xiaoping, who told a nascent mercantile class that "to get rich is good."
The Lin brothers agreed. They used family savings to buy a roomful of sewing machines and learned how to make tennis shoe parts by hand. By the mid-1990s, joined by a third brother, and with little official red tape, they made the leap to a home factory with 100 workers.
Contacts with industry middle-men came along with a global sports shoe boom. A small loan launched them into full-scale production, adding three buildings, 2,000 workers, and advanced machinery. They now make 300,000 shoes per month, with contracts from Puma and others.
"Before the communist revolution, a quarter of [Fujian] cities were business people, and I think you are moving in that direction again," says David Wank, a China specialist at Sophia University in Tokyo. "Everyone there wants to be a small boss, a xiao laoban. Having a small company is a powerful aspiration."
Accordingly, Yang Dai is a place that cheap labor and the tennis shoe transformed. In the 1980s this was a rusting village of 7,000 with no industry, just south of Quanzhou, the ancient Silk Road port where Marco Polo landed. Now, in half a square mile of intensity, for up to 16 hours a day, some 60,000 peasant migrants, move and breath to the pace of the sewing machine, the fabric stamp, and the glue swabber.
Factories range from two rooms in a house, to long corrugated sheds of 3,000 people. Thick fabric rolls are raced down streets on the backs of scooters; bicycles carry discards with punched out foot-shaped holes, or stacks of shoe boxes. Think New York's crowded garment district, circa 1915. As Jin Ning says dryly, "in this neighborhood, everyone is in the shoes business."
Yet this profit paradise has new problems. Competition has gotten rough. Fewer factories are opening, and many are scaling down. Gone are the halcyon mid-90s, when any homeowner could start work in a spare room, when no one could contain the flood of contracts. New South Korean and Japanese money has arrived. But a worrying shake out has begun. New designs arrive so fast that larger firms have started investing in R&D. Suddenly the Lin brothers find that management is important. They worry about competition from Guangdong in the south, where labor is even cheaper - as well as from two streets over. Firms fight bitterly for niche markets and new orders. The pie is not shrinking, but competition is thickening. The neighborhood energy feels like a tennis-shoe shark feed.
Private business also faces corruption, a weak judicial system, ambiguous property rights, and uncertain contract enforcement, to name a few.
"Businesspeople in China, at any level, have to be near geniuses," says an expert in Beijing. "The minute a market opens up, everyone piles in, and the margins shut down. People talk about China's rising economic power. But inside China, the growth is not stable and consistent. You have to be very savvy to survive."
"Look at falling toy prices," says Robin Munro, research director of China Labor Bulletin in Hong Kong. "Factories will cut each other's throats to produce at the lowest price. It is a real race to the bottom."
Still, east coast residents have prospered. According to the Asian Development Bank, 89 percent of foreign investment in China is on the east coast. In Yang Dai, migrant worker dorms with plywood interiors are interspersed among fancy rebuilt homes with Greek statuettes, inlaid tile, and gurgling fountains.
Page: 1 | 2 
