Source: GT    Published: 2023-04-05

In the spring of 2023, China's economy came to a critical turning point, where the country decided to shake off coronavirus disruptions that lasted for the past three years and pivoted toward all-around economic rebound. In Wenzhou, a coastal city in East China's Zhejiang Province, one could feel the great changes.

Through decades of development, the city of 9 million has earned itself a lot of names - the birthplace of private enterprises in China; the center of China's private economy; and China's 'capital of capitalism', among others.

Wenzhou merchants are known around the globe for their business acumen, entrepreneurial spirit and teamwork, and there are a lot of studies on the so-called "Wenzhou model," namely, how it grasped the opportunities of China's opening-up to transform itself from a humble mountainous city to a thriving business hub.

When China and the world were grappling with increasing challenges like the coronavirus pandemic and other uncertainties in recent years, Wenzhou wasn't completely immune to them. However, Wenzhou's strong economic performance in 2022 was also a mirror of the strength of China's private sector.

Now, the city is mulling a new start.

On Monday, scholars and merchants arrived in the Wenzhou Business College in a spring drizzle to attend the Wenzhou Entrepreneurs Forum, where they discussed the development of Wenzhou and Chinese economy in the new era. Several Wenzhou business representatives told the Global Times that they are confident about this year's market revival, though they are also taking action to prevent possible risks.

Gearing up for new start

Pan Yuxiang, general manager of Wenzhou Ruixing Shoes Co, was busy lately. He flew to the US to negotiate business deals to seek more orders with the company's largest client, the US shoe company Sketchers in November 2022, and, he is preparing a second visit to the customer in May.

"I might be among the last batch of Chinese people to undergo COVID-19 quarantine," he joked in an interview with the Global Times on Tuesday.

Pan has been working in the shoe industry for more than 10 years and has been in charge of a number of positions ranging from procurement to business development. As the Ruixing business expanded in 2019, he planned for a yearly revenue growth of 25-30 percent, but with outbreak of the pandemic, the plan was disrupted.

Though the pandemic is largely gone, some challenges are still there, especially for the first and second quarter of this year, he said.

"Many overseas clients are still de-stocking and are cautious about placing new orders. Purchasing power is waning in some overseas markets because of high inflation there," he told the Global Times on Sunday, adding that unstable China-US relations are another source of uncertainty for his company.

Coping with challenges

Faced with such a situation, Wenzhou merchants are taking active action to defuse risks. Besides arranging overseas business talks, Pan said that his company is reaching out to more clients instead of overly relying on one single customer.

Experts said that such flexibility shown by local businesspeople is one of many underlying factors that propped up Wenzhou's economy in 2022 despite economic fluctuations in the country. Chen Yingxu, vice mayor of the city, said at a recent forum that there are 700,000 people from Wenzhou all over the world, and 1.75 million people from Wenzhou have started businesses all over China, and the city has established economic and trade ties with more than 130 countries and regions.

By the end of 2022, Wenzhou had 1.3 million registered market entities, including 904,000 individual businesses. The city secured a 22.9 percent growth in exports, according to a report by the chinanews.com.cn. The better-than-expected economic data is a factual refutation to some overseas media outlets' repeated attempts to question or talk down China's private economy.

Wu Aiqi, deputy dean of the Academy of Global Zheshang Entrepreneurship in Zhejiang University, told the Global Times on Monday during the forum that small and medium private Chinese enterprises are sensitive (to business climate changes) and can often make timely adjustment in the face of external headwinds. Based on some of his surveys, he found that a number of Zhejiang enterprises are pivoting to catering to internal markets when global buyers are destocking.

"I think this is an era in which both opportunities and challenges exist in the private economy," said Wang Wen, the executive dean of the Chongyang Institute for Financial Studies, Renmin University, to the Global Times on the sidelines of the aforementioned forum. "To some extent, opportunities are proportional to challenges…It's like saying that risk and profit are proportional as well."

According to Wang, the current risks exist in the context of de-globalization, tense China-US relations, and the constantly emerging geopolitical problems, but he believes that businesspeople who dare to "pull chestnuts out of the fire" are able to get bigger opportunities in the midst of the risks.

Pan said that the three-year coronavirus health crisis is not necessarily a bad thing for the industry, as it helped sift out unhealthy enterprises. "It sifts someone out and lets someone in, which will always happen. I think it will slow down some companies' growth pace, but won't bring about a dangerous backslide in their competence," he said.

Confidence in the future

Notwithstanding the uncertainties and the recent business fluctuations, a lot of business people in Wenzhou expressed firm belief in the business prospects for the whole year, as they believed that market orders would come back after a temporary slowdown.

Pan is anticipating a pick-up in demands starting from the third quarter after some necessary business adjustment in the April-June period.

"I believe that the post-coronavirus period ought to be better than the past three years," he said. "We also found that overseas clients are making growing investments in brand promotion and advertising, which shows that they are confident about the market's growth in the future."

Zhang Pengfei, chairman of Wenzhou-based manufacturing and engineering company Taichang Group, expressed similar optimism about this year's market potential during the Wenzhou Entrepreneurs Forum.

"Private entrepreneurs are confident of recovering after bottoming out. Business pressure is still relatively large in the first quarter, but the industry is hopeful about a rebound," he said.

One thing that most entrepreneurs cited when explaining their confidence about this year's market prospects, is the supportive government policies. As Zhang pointed out, the fact that the government has launched so many favorable policies itself reflects the government's firm support for the private sector growth.

"I think the government will roll out more pro-growth investments, or plans to boost home consumption, and a new spring will arrive for the private economy," he said. Zhang's business is related to electric power, a sector where the government is ramping up investment, so the company has witnessed fairly rapid development in the last few years.

Wang Yiming, former deputy head of the Development Research Center at the State Council, said at the forum that China is now in a phase of "great change not seen in a century". The nation is expected to promote modernization through high-quality development, which puts forward new requirements for Wenzhou businessmen and the evolution of the "Wenzhou model".

According to him, Wenzhou merchants are bound to create new achievements in improving the quality of economic development. To achieve this, they should further consider how to use capital advantages to promote technological content and quality improvement of their products, and at the same time shore up industrial value chains, and enhancing labor productivity.