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|24-03-2013, 10:41 AM||#1 (permalink)|
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Last Online: Today 12:48 AM
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Location: The land of silk and money.
Yiwu, the 'magical' Chinese city supplying Poundland with cheap goods for Britain
Poundland has become one of the most common sights on Britain's high streets, with 430 branches around the country. Few, though, know how they manage it. The answer, reports Tom Phillips, lies in the Chinese city of Yiwu.
Workers package bandages at the Zhejiang Hongyu Medical Commodity Co. Ltd factory on the outskirts of Yiwu, Zhejiang Province. Photo: Qilai Shen
By Tom Phillips, Yiwu
11:42AM GMT 23 Mar 2013
Down a dirt track on the outskirts of this sprawling trading hub with a population of two million, four towering buildings have sprouted from the brown earth.
Outside, construction workers and earth-diggers put the final touches to the brand-new headquarters of local manufacturer, Zhejiang Hongyu Medical Commodity Co. Ltd.
A view of the just completed Zhejiang Hongyu Medical Commodity Co. Ltd manufacturing complex
Inside, dozens of women sit on a production line, feverishly cramming tiny packets of plasters into yellow and blue cartons. Once full, the cartons are placed inside cardboard boxes marked "Made in China by people who care".
"We have no idea where these products will go," said one factory worker, 52-year-old Shen Youfeng. "There are no Chinese characters on the packets just some foreign language." But the answer is Poundland, and discount stores like it across the globe, where shelves droop under the weight of products made by Chinese workers in factories in the trading boomtown of Yiwu.
Zhejiang Hongyu Medical Commodity is one of thousands of firms in Yiwu churning out vast quantities of staggeringly cheap goods that can be bought from Los Angeles to Liverpool, often for £1 or less.
"We have many customers in the UK," boasted Gong Chunjuan, the company's foreign exports manager. "Poundland, Poundworld, 151 and other companies also." Within months, the plasters and first aid kits being produced here will be shipped to pound and dollar stores around the world, including Britain.
Discount stores have proliferated on British high streets, as the recession drives a demand for rock-bottom prices. While major high-street names have gone bust, the profits of budget retail outlets like Poundland have soared.
Shen Youfeng packages bandages at the Zhejiang Hongyu Medical Commodity Co. Ltd factory
But without places such as Yiwu - a landlocked trade hub in China's eastern Zhejiang province - such success would be impossible.
Until just a few decades ago, Yiwu was an unremarkable rural town, unknown even to most Chinese. Now, it is an essential destination for foreign businesspeople who make make regular bargain-seeking pilgrimages to the city's International Trade Market.
Reputedly the largest and cheapest wholesale market on earth, Yiwu's 4-million-square-metre bazaar consists of some 62,000 outlets that sell an estimated 1.7 million different products, largely produced in factories across south and southeast China, including Yiwu itself.
Hotel rooms come equipped with a "Shopping and Tourism Map" promoting the city as "an ocean of commodities a paradise for shopping". The market did £4.9 billion worth of business in 2010, according to local officials.
"It is like a magnet attracting business around the world," proclaims the promotional pamphlet of one export logistics firm that helps foreign customers ship containers loaded with cheap produce to their markets. "If one spends three minutes in each booth and walks eight hours a day it will take a whole year to walk through the market."
There is little that cannot be found at Yiwu's smoky, four-storey trade market building.
A view of a shop front displaying stuffed toys at the China Commodity City in Yiwu, Zhejiang Province
There are key rings featuring images of the Virgin Mary and Manchester United midfielder Paul Scholes, and there are six-foot-long cuddly sharks.
For 10 yuan - just over £1 - there are Russian and Spanish editions of Monopoly, as well as sex toys and fluorescent bath mats. Boxing gloves in the national colours of Ethiopia, Azerbaijan and even the tiny African archipelago of Cape Verde can be purchased, in lots of 1,200, for around 17p. Union Jack furry dice go for the equivalent of 14p.
In another corner - past tiny stalls hawking "Powder Cockroach killing bait" and "Mouse and Rat Glue" - shoppers can purchase three-dimensional puzzles of global landmarks such Big Ben and "Tower Brideg" [sic]. Prices range from 20p to 95p.
"Not much is known about the earliest London Bridge although it's [sic] location is thought to be near the presesnt [sic] one," reads a description on one puzzle's box.
"Most of our clients are from the Middle East," the apologetic shop-owner said of the spelling mistakes.
Yiwu is also responsible for dressing football fans from Rio de Janeiro to Riyadh. The windows of Wells Knitting a Yiwu scarf outlet - are filled with 32p woolly hats and 80p football scarfs for teams large and small: Manchester United, Arsenal and Chelsea, as well as Preston North End and Exeter City FC.
"We have supplied nearly everyone," said its owner, Wu Pengxu, 29, who claimed to have produced 4,000 different types of scarf since founding the company in 2007 with capital of around £20,000.
Wu Pengxu, owner of the Yiwu Wells Knitting Products Co., Ltd factory
Yiwu's rise has not just transformed the international retail market. It has also radically changed the lives of many locals, turning once-poor farmers into well-paid executives and millionaire factory-owners.
Born to a family of subsistence farmers, Gong Chunjuan or "Carole" as overseas customers call her has risen to become the foreign export manager for Yiwu's Zhejiang Hongyu Medical Commodity Co. Ltd.
"When we were small we just stayed in the village, we knew nothing about the outside world," said the English-speaking Ms Gong, who studied law at a Shanghai university before returning home to Yiwu. Last year, she made her first trip to the UK, which accounts for around 30 per cent of the company's sales and where she is hoping to secure a contract with Boots.
"There have been big changes," she said, sitting in her office on an industrial estate 20 miles from the city's market. "Yiwu is changing every year - new buildings, new markets, new products and also many new customers." Yu Hexi, 52, the manager of Yiwu Beautiful Life Flower Co. Ltd a local firm that makes the imitation flowers that adorn the heads of women across Europe has fared even better.
"I never imagined, or even dared to imagine, that I would enjoy such a good life now," he said. His parents were once part of a rural Communist production team. Now, he runs a company with an annual turnover of more than half a million pounds.
"When I was little, we were really, really poor. My parents were peasants.
We didn't have enough food. Now our family has three cars. We built the best house in our village."
Around 10 per cent of his company's 2 million floral brooches and hair clips goes to the UK each year. The flowers he makes start at around 2.2 yuan - 23p - each and are sold by the thousand.
Yu Hexi, owner of the Yiwu Beautiful Flower Co. Ltd
Not all of Yiwu's residents have achieved such startling success, with hoards of impoverished migrant workers packing into cramped dormitories around the city.
At the recently built head office of Zhejiang Hongyu Medical Commodity Co.Ltd - the medical supplies firm which also sells to the UK's 99p Stores and Castleford-based firm OTL - factory workers said they put in 10-hour days, with two days off each month. For that, they are paid around £320.
Still, they say, the work is good. "I'm quite content with my job otherwise I wouldn't have stayed here for so long," said Wang Jinfang, a 42-year-old who has worked at the factory for 10 years.
"There have been big changes in recent decades," she added, without pausing from her packing duties on the production line. "The city is getting better year after year. The most important change for me is that more factories are bringing more job opportunities." Shen Youfeng, 52, who works in the factory alongside her 18-year-old daughter, Feng Xueqing, agreed. "It is not really hard work for me. I couldn't stand working in a supermarket at my age," she said.
Once a rural backwater, Yiwu now claims a population of close to 2 million.
Its chaotic, dusty streets are lined with hotels emblazoned with names such as "Beverley Business Apartments", the "Green and Ecological hotle" [sic], the "Fortune Hotel", the "Milan Holiday Hotel" and even the "Feilin Hot Hotel".
One of Yiwu's main thoroughfares is home to a restaurant called Kabul Darbar Afghan Halal Cuisine, a mosque and a theme park called "The Rubik's Cube Music Plaza". Nearby an adult entertainment venue bears the name: "Professional Gathering Agency".
Businesspeople from across the globe pour through Yiwu's modern airport, and hotel lobbies hum with the chatter of Arabic, Brazilian Portuguese, Spanish, French, Turkish - and the Queen's English.
"The reason we are here is that the price is phenomenal," said 47-year-old Leeds businessman Mark Cohen, who was on his eighth trip to Yiwu to buy jewellery and fashion accessories for the Sheffield-based company Mac Imports.
"The quality used to be no good and the prices would be very cheap. Now the quality is acceptable and the price is still very cheap," added Mr Cohen, who said he generally spent around £200,000 per trip. "Customers in the UK want it cheap. Everybody wants the retail stuff under £5."
Ian Hunt, 62, a Liverpool-based merchant on his first trip to Yiwu, said the main challenge was simply finding the right product in such a huge space. "It is like finding a needle in a haystack."
But the party may not last for ever. Local factory owners said overheads were rising and complained that it was increasingly hard to find staff. Mr Cohen said he had also heard talk of jewellery manufacturing being moved to Vietnam because wages and other costs there were cheaper.
Mr Wu, the owner of the scarf manufacturer Wells Knitting, admitted he was also feeling the strain of rising production costs and planned to retreat to his home province, Henan, in five years time to open a business there.
Until then, however, it was full-steam ahead. At his three-storey factory on Yiwu's Niansanli industrial estate, he enthused about plans to open a new plant this year to handle a recent order for three million Brazil 2014 World Cup scarfs, which he said would eventually be sold by Carrefour, the French-owned supermarket chain.
Around him workers were churning out the company's latest creation: Harry Potter-themed scarfs emblazoned with the words "Gryffindor" and "Slytherin".
Beside heaps of those scarves, being prepared for a US client, lay the remnants of another recent order: 5,000 green Hamas scarves, commissioned by a businessman from Dubai.
"Yiwu," Mr Wu said, puffing on an expensive Chinese cigarette, "is a magical place."
Yiwu, the 'magical' Chinese city supplying Poundland with cheap goods for Britain - Telegraph
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