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Editorial Content
Promotion of a Province: Prosperity and Beauty in Zhejiang
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Writer’s Thoughts—
On the twisting-turning and
perpetual path to the greater good, the leaders of government and
industry to whom the history books will be most kind hold true to a
societal course that advances their nation in a moral, ethical and
sustainable manner. The broad concept of sustainable development
might be fundamentally defined in three parts:
- Advance industry; but do so
with care, control and foresight.
- Advance culture; but
cherish, respect, and learn from the past.
- Advance society; but know
that our society is not the exclusive domain of the powerful
inhabiting the capitals of commerce. Our society is of all the
land, and held within are all her people.
Today this still developing
nation of China struggles to equitably accommodate 1.3 billion
citizens while advancing industry and protecting the land. Those
citizens are diverse and not equal in education and ability;
industry is accelerating at a rapid and problematic pace; the land
is vast and its resources are at risk. And ahead are known, unknown
and formidable obstacles still to be navigated.
Yet across the nation, within
its remarkable and vibrant cities, upon its extraordinary rural
landscapes, and among its resourceful and good-hearted people,
signposts of collective progress are everywhere.
Those undertaking the honorable
quest for progressive and sustainable development are being
rewarded—
And Zhejiang thrives.
The Powerhouse Province
— Zhejiang Soaring
At the close of 2005, the
level of international import/export trade volume in and out
of China’s southeastern coastal province of Zhejiang topped
$107 billion, one of only four provinces to hit this mark.
By all accounts this benchmark was achieved through
progressive policies that have realized a lucrative level of
regional prosperity, ongoing openness to foreign enterprise,
greater gains for a better educated citizenry, and more
cautious care for the environment.
Spanning a land mass of
101,800 square kilometers, with 49 million residents derived
from 50 ethnic groups, the province of Zhejiang in 2005
imported materials, machinery and goods valued at $30.6
billion; and exports went out at $76.8 billion.
Perspective: In the US,
total 2005 exports for the State of New York were valued at
$50.4 billion, and Microsoft’s home state of Washington
logged $37.9 billion. Zhejiang’s export numbers did fall
short of California’s, at about 65.7 percent of the most
populous state’s $116.8 billion – but if California were a
nation, it would represent the world’s seventh or ninth
largest economy – depending on whether one consults the
California Department of Finance, or the CIA.
A notable portion of
Zhejiang’s growth is attributed to a market that is
extraordinarily receptive to foreign-based firms. Today
more than 2,200 foreign enterprises operate within
Zhejiang’s borders. That’s more foreign-owned enterprises
than any other province in China. The province maintains
economic and trade ties with more than 220 nations and
regions, and 76 of the world’s top 500 companies have
established more than 190 enterprises in Zhejiang.
In 2005, more than 71
percent of Zhejiang’s total GDP was generated by private
business, with the province able to boast 188 enterprises
among the list of Top 500 Enterprises in China, as
determined by the Chinese Federation of Enterprises (CFE).
For eight years Zhejiang has led the nation in total
production value, total sales volume, retail sales of
consumer goods, and volume of foreign exchange.
Explaining Zhejiang’s
success in general terms, while extending a philosophical
application, Xia Baolong, Deputy Secretary of the Zhejiang
Provincial Committee of the CPC, says, “Zhejiang people have
combined Confucius thought with doing business to form a
unique system of values prioritizing business and education
at the same time … giving prominence to ethics and culture
on the one hand, and entrepreneurship and creativity on the
other.”
Competitive
Credentials
The homegrown entrepreneurs
have proven to be the primary drivers in both global
cooperation and domestic revenues. Today more than one
million so-called “Zhejiang Businessmen” actively do
business in nearly every nation on Earth, according to the
provincial government. And according to the Global
Competitiveness Report 2005, compiled by IMD International
Business School of Lausanne, Zhejiang ranked 20th among the
60 nations and regions evaluated. Of the 50 Best
Competitive Brands in China, as designated by the China
Academy of Social Science, Zhejiang firms hold 23 positions.
Stanley Crossick, governing
board member and founding chairman of the influential
Brussels-based think tank, The European Policy Centre (EPC),
offers his view on the rise of the Zhejiang Businessmen.
“The historic entrepreneurial tradition within the region
enabled Zhejiang to get a running start when reforms began.
Several of the more resourceful individuals became natural
leaders in the push for future business development. This
is exemplified by the remarkable gains of their most
successful and self-made businessmen, a few of whom actually
began their careers as shoemakers. In a single generation,
they progressed from being small entrepreneurs to become the
leaders of enormous international business concerns.”
A business savvy provincial
government helped, according to Mr. Crossick. “The large,
modern factories could not have been put to their best use
without an efficient infrastructure, and private sector
development has been strongly supported by provincial and
municipal governments.”
Corporate
Cooperation
Representative of
Zhejiang’s inclination to Sino-foreign cooperation is
Rousselot (Wenzhou) Gelatin Co., Ltd., a JV established by
and between Rousselot SAS France, and the Zhejiang Sanfan
Gelatin Factory, the two corporate partners holding 70 and
30 percent, respectively. The venture generated sales of
130 million yuan ($16.2m) in 2005, and 8.7 million ($1.08m)
of that went to the local government in the form of tax
revenue. Sales in 2006 are projected at 200 million yuan
($25m). Management says they are on track to hit 600
million yuan ($75m) in 2008, thus becoming the largest
producer of gelatin in Asia.
Utilizing not only imported
materials and machinery, but also heavyweight foreign
management talent, is the Sharmoon EZ Co., Ltd., a maker of
better quality men’s suits. Formed in 2003 as a 50/50 joint
venture by and between Italy’s Zegna Group and China
Sharmoon Garment Co., Ltd, the firm employs 3,000 people and
annually turns out 300,000 suits. The chief designers are
Leo Rogna, formerly of Zegna, and Christophe Fortis,
formerly with Versace. Chen Xiaoxiang, the JV’s president,
successfully recruited Zegna’s then global vice president,
Silvio Galimberti, to serve as the Sharmon EZ’s CEO.
Producing a fundamental
commodity for which Zhejiang has become famous, the Kangnai
Group Co, Ltd., annually turns out more than 8 million pairs
of shoes. The company employs more than 4,000 workers,
designers and managers, with output realized within a
manufacturing facility spanning 1,280,000 square meters.
Far from the bargain basement brand, Kangnai shoes are mid
to high-level in quality, with the average retail price at
foreign outlets running about $60 per pair.
Domestically, the company
operates 2,500 retail outlets supported by 45 marketing
headquarters. Internationally, besides thousands of foreign
client retailers, there are more than 100 Kangnai shops in
10 nations, including the US, France, and Italy. That’s
just for starters, according to Kangnai’s president, Zheng
Xiukang. “In the next five years, Kangnai will open at
least another 1,000 Kangnai shops within the key districts
of the world’s major cities,” he said.
Elevating
Environment
In contrast to an otherwise
decidedly pro-business disposition, in recent years
Zhejiang’s regulators have shut down or suspended the
operation of more than 6,000 enterprises – polluting
enterprises.
Zhejiang is at the
forefront of China’s drive to limit pollution and clean up
the air and water. In the past five years, according to the
provincial government, more than 330 eco-friendly proposals
and resolutions have been processed. Anti-pollution
measures backed by an investment of 10 billion yuan ($1.25b)
are now in play to protect eight river systems and 11
designated environmental zones. Some 35 centralized
wastewater treatment plants and 36 trash treatment plants
are now in operation. The result has been a general
stabilization of conditions in the province and a marked
improvement of urban environments.
In the past five years
regulators say water quality in about 65 percent of the
province’s water systems have improved by better than 10
percent. And conservation has resulted in sustained forest
coverage of more than 60 percent.
By 2010, the provincial
government says more aggressive goals will be met. These
include: reducing sulfur dioxide emissions by 15 percent;
bringing 85 percent of water supplies to a drinkable
standard; and the treating and safe disposal of all
hazardous industrial waste. The air quality goal is to meet
the national Grade 2 standard of safety for 292 days out of
the year.
And according to Governor
Lu Zushan, Zhejiang is determined to boost energy efficiency
across the board. "[Zhejiang] has set a goal which requires
the energy consumption per unit of GDP in 2010 to decline by
15% from 2005." About 60 county-level officials and 11
mayors have been tasked with heading up programs to boost
energy savings within their respective jurisdictions.
Signpost Stats
Zhejiang was the first
Chinese province to introduce a program of compulsory
15-year education, from preschool to senior high, and
illiteracy has essentially been eradicated. There are now
more than 70 institutions of higher learning educating about
500,000 students, and approximately 70 percent of high
school graduates go on to university.
Since the reforms and
opening up commenced in the late 1970s, a province once poor
in economic infrastructure, Zhejiang has realized impressive
fiscal gains to take its place as the province ranking
fourth in terms of GDP. In 1978, then rated 12th among the
provinces, GDP stood at 12.4 billion yuan ($1.55b). GDP has
since expanded at an annual average of about 13 percent, and
in 2005, volume hit more than 133 billion yuan ($16.6b). In
China the province is now ranked fourth in terms of overall
economic productivity.
Today, provincial stats
indicate that total annual fiscal revenue stands at more
than 211 billion yuan ($26.3b), per capita GDP tops 28,000
yuan ($3,500), and overall economic expansion is now running
about 14 percent annually. Per capita disposable income is
among the highest in China, 16,294 and 6,660 yuan, in urban
and rural areas, respectively. In the rural areas, in 2005
per capita income had increased by 42.7 percent over the
year 2000. And in all areas, annual increases in individual
disposable incomes are averaging about 7.5 percent.
Academic
Advisory
Lynn White, author on the
subject of China and a professor of politics and
international affairs at the Woodrow Wilson School at
Princeton University, believes the successful dynamism of
Zhejiang could, to some extent, serve as a model for China’s
future. “The best of China's recent leaders have been
experimentalists; ‘crossing the river while feeling the
stones,’ as they say. Not just the nation's top leaders,
but also leaders at many intermediate and low levels of
collectivity – even families – will surely notice the
prosperity of Zhejiang. They will naturally want to learn
from the province’s methods and accomplishments.” But
Professor White offers some qualification. “While other
provinces have already seen the success of that model, which
may well become contagious, it will face resistance in
relatively conservative parts of the country … most of the
North and Northeast, Hubei, and some other areas.”
In part echoing White’s
analyses, Stanley Crossick answers the question: Can the
Zhejiang model be applied to all the provinces? “Over the
short-term, no. China’s regions differ vastly and no 'one
size fits all' policy is possible. The model can, at best,
be extended gradually northwards and westwards.” And he
offers a bit of cautionary criticism for Zhejiang and all of
China’s government and business leaders. “Government and
industry need to better recognize that they must keep
western markets open for their goods and play their part in
encouraging reciprocity in the Chinese market.” Mr.
Crossick advises, “Among other measures that should be
implemented: it is in the region's best interest that there
be a clampdown on counterfeiting; and as they
[entrepreneurs] innovate more, they need stronger
intellectual property protection.
Yongnian Zheng, a native of
Zhejiang, now a professor and Head of Research for the China
Policy Institute at the University of Nottingham in the UK,
explicates on what he sees as the four primary drivers in
the Zhejiang rise. “First, there is sustainability;
compared to other provinces, Zhejiang's development has
gained a stronger momentum due to its focus on indigenous
development. Second, societal harmony; indigenous
development tends to create a sense of local community
between employers and employees. Third, technological
innovation; without strong financial support from the state,
the private sector must rely on technological innovation for
competitiveness and further development. And fourth,
governmental innovation; in Zhejiang, governments at all
levels are under a process of innovation."
Professor Yongnian
concludes, "The government has to reform itself, not only to
accommodate a growing non-state sector, but also to continue
to lead that development. With rapid economic development,
various forms of social progress are taking place in
Zhejiang, such as local democratic elections, and
improvement in welfare systems.”
●●●
Concluding Commentary—
And yet, for all its
economic power and social vitality, Zhejiang represents only
one small corner of this nation; just a notation on the
global map.
It would seem to be enough;
contending with industry, politics, the environment and
social welfare within China’s vast borders. Yet beyond
Zhejiang, beyond all 34 provinces, autonomous regions and
municipalities, now the nation’s leaders of government and
business must assume even greater responsibility.
Despite the remarkable
progress already achieved, despite the formidable challenges
now faced, despite contending with the nearly inconceivable
task of fulfilling a social pact owed to 1.3 billion
citizens, in rapidly rising to play a greater leading role
on an even greater stage, China now faces greater
challenges. Now the nation must navigate a path to
advancing the greater good of a global society.
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Open PDF of Final Product as Published, or Right Click 'Save As'
Ed Note: PDF photos as credited (not
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