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Wenzhou's shoe, clothing firms start to step out

Updated: 2012-09-04 09:22
By Gao Changxin and Yu Ran (China Daily)
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Entrepreneurs in the private business hub are leading a push into overseas markets, Gao Changxin and Yu Ran report from Wenzhou, Zhejiang

As China's large State-owned enterprises pour money into overseas expansion and acquisitions, the country's private businesses have also started setting their sight on the international market.

And entrepreneurs in Wenzhou, a city with a tradition of entrepreneurship, are among the leaders in the international expansion of the country's private sector.

Wenzhou's shoe, clothing firms start to step out

Wang Weihong, owner of footwear company, works in his factory in Wenzhou, Zhejiang province, Sept 13, 2012. [Photo/Xinhua]

One example is Wenzhou Kangnai Group Co Ltd, one of the leaders in Wenzhou's pillar footwear industry. The company spent 20 years transforming itself from a household workshop into a modern manufacturer that employs more than 5,000 workers. And now it's quickening its pace to expand overseas, vowing to open 1,000 stores abroad over the next five years. Its first overseas store opened in 2006 in Paris.

Kangnai's overseas expansion is not just a case of following others' lead, deputy general manager Zhou Jinmiao said. Going into retail helps achieve higher margins. Previously, Kangnai's overseas sales were mainly wholesale, and the company did not have its own brand.

Wenzhou's shoe, clothing firms start to step out

Zhou said setting up stores overseas helps Kangnai build its own brand and learn market dynamics directly. And the move is a "must" for Kangnai to become an international brand, he said.

Kangnai has entered into a partnership with UK-based SATRA Technology Center, which provides the footwear industry with services in technical knowledge, research and testing.

The move has already had some effect. The average export price of Kangnai shoes now stands at $25 a pair, more than double the industry average in China.

Wenzhou boasts up to 140,000 private companies, accounting for 95 percent of its exports and 94.4 percent of its employment, according to local government data.

The amount of circulating private funds is expected to reach 800 billion yuan ($126 billion) and is growing at an annual average rate of 14 percent.

The number of Zhejiang's overseas firms topped all provinces, municipalities and autonomous regions on the mainland in 2011, accounting for 17.8 percent of the total, according to the Statistical Bulletin of China's Outward Foreign Direct Investment compiled by the Ministry of Commerce.

In fact, the central government is actively encouraging Wenzhou's private sector to invest overseas. The State Council has said it will study allowing residents in Wenzhou to make direct investments overseas as part of a financial reform program.

Chinese mainland residents currently cannot make direct overseas investments. But they can give their money to fund managers, who in turn can invest overseas through the qualified domestic institutional investor arrangement within set limits.

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