Yiwu, China’s wholesale capital, switches its economic growth engine from manufacturing to design

By Sun Shuangjie Source:Global Times Published: 2016-5-4 18:08:01

Shanghai-based fashion designer Ling Yali still remembers her first visit to Yiwu of Zhejiang Province in 2005. She was persuaded by a business partner in Zhejiang that she "must see" this small city, known as China's wholesale capital for its comprehensive manufacturing and marketing capacity in almost every form of commodities.

China Academy of Art showcases an exhibit at the 11th China Yiwu Cultural Products Trade Fair. Photo: Sun Shuangjie/GT

"I spent two days at Yiwu International Trade City (YITC), and it turned out that I only walked along two floors of one district in the city." Ling recalled. YITC has in total five districts, each with four floors of stores featuring a variety of categories, from jewels to toys, electronics to watches, cosmetics to stationary, hats to bedding, to name just a few. A local official once estimated that if a person spends eight hours per day browsing at each YITC store for just three minutes, he/she would still need one and a half years to see all of YITC.

Since 2005 Ling has been a frequent visitor of Yiwu to search for materials for her costume and accessory design business. But it wasn't until just recently that she held her first catwalk show in Yiwu. Her namesake brand was featured during the second edition of VDS Fashion Month, a biannual fashion communication project initiated by Milan Sino-European Innovation Center and Sino-EU Designers Association. Organized by VDS Showroom (Via Della Seta which means the silk road), the event promotes fashion and design trade between China and Europe.

From April 26 to 27, 12 brands, nine of which are from China and four from Yiwu, were featured at catwalks during VDS Fashion Month, a roadshow that will also stop in Hangzhou, Shanghai, Hong Kong, Dunhuang and Milan from March to May.

Runaway runway

For the event, hundreds of people, mostly entrepreneurs and fashion industry insiders, got together at the newly renovated 1970 Culture and Innovation Park, which was built upon former factory workshops and storehouses.

A model walks the runway at Yiwu during the VDS Fashion Month. Photo: Sun Shuangjie/GT

 Yiwu people were obviously not as familiar with runway shows as metropolitan dwellers in Beijing or Shanghai, as during the event there were people constantly moving about, with some even walking directly onto the runway and in front of models. Despite that, Ling Yali and He Jiani, two designers featured as VDS Showroom's cooperative brands, still spoke highly of the event.

"I think it can make Yiwu people closer to fashion and change their views toward the fashion industry," Ling told the Global Times.

That was in fact the original intention of the Yiwu government when it signed a cooperation contract with VDS Showroom last October to include Yiwu as a stop during VDS Fashion Month. It will also be holding regular Spring/Summer and Autumn/Winter fashion releases at Chinese and European cities similar to much more established International fashion weeks.

"Yiwu is actually famous in China's international community, even though it's not a very big city like Beijing, Shanghai or Guangzhou, because people here are familiar with its wholesale commodities. Many foreign businessmen come here to trade," Chen Kaidi, brands' center manager at VDS Showroom, told Global Times.

"But now the city is also faced with challenging problems because its own design force is too weak to support its economy or develop efficiently and sustainably. I think that by cooperating with us, Yiwu's government wants to show off mature designs and fashion brands to local brands and manufactures, and so that they can learn to update its economic growth model from manufacture-driven to design-driven."

Critical moment

The aftermath of the 2008 financial crisis combined with the recent boom of online e-retailers has posed severe challenges to the development of Yiwu's economy. Among Yiwu people, it's well known that right now they are witnessing a critical juncture in its economic transformation.

According to The Economic Observer, many migrants who once worked at Yiwu returned to their home town due to declining business. Migrant workers at Yiwu far outnumber the natives and constitute a very significant role in the city's economy. By 2015, the migrant population in Yiwu was 1.25 million while locals were only 730,000. The migrant population in Yiwu reached its historical peak in 2011 at 1.51 million, but since 2012 its migrant population has been decreasing.

One vendor at Yiwu's downtown Binwang Night Market told the Global Times that customers have also dropped off heavily in recent years due to the decrease of migrants. On major streets of Yiwu, entire buildings once used as high-end shopping centers now stand vacant. A taxi driver told Global Times that there are a number of unfinished residential compounds around the city being deserted by their developers as well.

Entrepreneurs and designers attend a show during the VDS Fashion Month. Photo: Sun Shuangjie/GT

Following Jack Ma Yun's high-profile "single's day" shopping festival in 2011, which netted 91.2 billion yuan in online retail sales, chinanews.com reported that YITC was "a bit lonely" that day as "most store owners were resting or playing on their phones" due to the sheer lack of foot traffic.

In order to counter the growing competition from Taobao and other online vendors, Yiwu finally launched its own online trade platform, yiwugou.com, which sold 4 billion yuan worth of commodities in 2015. Yiwu has started accelerating the promotion of its own original designs through a variety of platforms and methods, including building innovation parks and offering subsidies to enterprises.

Cheaper no longer better

Boby DIY Fabric Craft Company is one of a small number of Yiwu-based enterprises attending the 11th China Yiwu Cultural Products Trade Fair from April 27 to 30. The fair attracted 1,300 exhibitors from 15 countries and 19 Chinese provinces. Most of the attending companies are from outside Yiwu.

Boby DIY deals in fabric-based 'Do It Yourself" doll kits that customers can make themselves by following the enclosed instructions. The toys are designed by its five-person team. Meanwhile, the company also makes toys in accordance to their client's orders.

Each year Yiwu's government allocates an "incentive budget" to encourage original designs from its enterprises. Boby DIY was once awarded with 150,000 yuan. However, a Boby DIY rep surnamed Zheng told the Global Times that their business is struggling to compete in China's fierce marketplace.

"It's inevitable that other people start copying our designs and selling them at lower prices. Most customers prefer the cheaper alternative," Zheng complained, explaining that in spite of the copycats they have never filed a lawsuit against anyone.

Boby DIY is not the only Yiwu enterprise who feels reluctant to fight back piracy, but most Yiwu designers choose to ignore intellectual property offenders as the time it takes to deal with it in court, compounded by low compensation, are simply not worth their trouble.

The legal situation is, however, changing as Yiwu authorities recently established their own unique form of justice: a new intermediary system that hears cases before reaching court. By February of this year, the new system already heard 462 cases and successfully solved 194 of them.

Design minds

Meanwhile, Yiwu is hoping to lure fresh design talents to the city. Last year KIDP (Korean Institute of Design Promotion) China built a new office in Yiwu, offering designers from 38 South Korean firms to cooperate with Yiwu enterprises.

Lee Sang Kyu, an officer at KIDP China, told the Global Times that they have collaborated with local companies on graphic and industrial designs and would also like to conduct design training courses for local people.

VDS Fashion Month is also expanding its activities in order to reach more Yiwu entrepreneurs and designers. It curated a project called VDS Academy which offers design education to young people in Yiwu. Sudents from China Academy of Art and Zhejiang University of Science and Technology are also showcasing their designs at Yiwu. Moreover, it will be organizing a trip to Italy for a group of Yiwu entrepreneurs and designers.

"I think the core method to transform Yiwu's economy from manufacture-driven to design-driven is to change people's minds and attitudes, let them see how the industrial upgradation can benefit their business in the long term," Chen Kaidi told the Global Times.

"But it's also very difficult, because many local businessmen here are accustomed to just focus on making fast money, and some designers don't care much about the market, they just want to express their own ideas. It's quite hard to combine the two together, " Chen added.

Newspaper headline: Design hub

Posted in: City Panorama

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