Zhili has managed to free itself from the clutches of some of the crudest forms of industrialization and return to its ancient roots that lay in weaving, knitting and pastoral settings.
Today, Zhili town is the largest centre in China for making children’s garments. The town and its surroundings exhibit lush greenery, ever-flowing streams and clean roads. But it wasn’t always so.
Located in the hinterland of China's Yangtze river delta economic circle, Zhili town covers an area of 90 square kilometres with a permanent resident population of more than 450,000. It squats in the midst of three waters – the Tau Tang in the South, Taihu lake in the North, and Beihengtang in the middle. True to the adage that water breeds life, the region developed ancient water systems. In 2016, the neighbouring Yigao village was selected as a model irrigation village by the World Heritage Foundation. This village was famous for its weaving, and water transport through the nearby Hujiong harbour gave it access to markets.
But in between the past and the present came short-sighted industrialisation. Three decades ago, the area known as Zhili and the adjoining Yu village in Zhejiang province were hostages to some of the crudest forms of industrialisation. Many still remember that there used to be a 30,000-square-meter quarry in the vicinity. It had abandoned its ancient roots that lay in weaving, knitting and pastoral settings. It used to embrace embroidery, shipbuilding, book printing and book trading industry in older times.
Then the community, with support from the local government, took over through careful planning and social governance. Both decided to go back to the roots. Zhili was known for its flourishing weaving industry in history. Thanks to social governance, government funding, startup schemes with financial incentives and accompanying tax laws, they decided to develop the areas as a Children’s wear centre., Zhili has today emerged as the world’s largest production base for children’s wear.
The neighbourhood changed. Streams were cleaned up and greenery was protected. The quarries and mines went. In came fabrics, weaving, knitting and garments. Over the past 20 years, it has attracted numerous wholesalers from all over the country to make their purchases at the Zhili south gate. In the north cashmere sweaters are popular.
Garment weaving and hi-tech industries nestle together. Electronics, robotics and e-commerce are the new non-polluting industries around today. Some of them have become suppliers to the world’s top 500 companies such as Apple, Belsen, Hitachi, Sumitomo, Foxconn, BlueThink Technology, and Bourne optical.
Hitech has blended into garment making as well. In Zhili you can witness the magic of a child’s dress being readied in just 45 seconds. Intelligent production and logistics further add to the bottom line of this industry. On an average 3,000 children’s clothes are transported out of weaving in out of Zhili every minute. The town is busy -- even at night.
The garment industry is huge. In 2018, according to Xinhua, it produced 1.3 billion pieces/sets of children's clothes produced and sold by over 13,000 companies with annual sales reaching 50 billion yuan (about US$ 7.33 billion). Not all of it gets exported. China has a bustline and attractive domestic market as well.
Zhili alone has around 20,000 are children. In 2018, China alone accounted for 246 million children/ This is expected to reach around 250 million by 2023. The sales volume of China's children's wear market reached 160 billion yuan (US$ 22.75 billion – each yuan is approximately Rs.10). and this is expected to grow to 265.5 billion yuan (US$37.7 bn) in 2020.
That could explain why the biggest children’s garment brand in Zhili – QiruiDeze -- prefers to sell only to the domestic market. But, according to Li Yun Pin, Chairman, and owner of the QiruiDeze brand, he is considering exports – especially to Africa. He is also considering shifting some of his production base to Vietnam or Laos -- not India – to cope with increasing costs of Chinese labour. Studies are underway. Wherever automation reduces costs, it will be adopted. The rest could go overseas. But India is important as a market. That is why he has begun looking for dealerships in this country as well.
He, like many other garment manufacturers, admits that were it not for Zhili, he might not have grown so big and so quickly. He has self-financed this brand and has around 1,600 stores (owned and franchisee) across China – all within 15 years. He employs around 5,000 people, but refuses to discuss investments (“my people are my biggest investment”, he says smilingly). “We will add more stores in years to come, and we will expand overseas as well,” adds Li. He admits that there are bigger players than him in the country, notably Balabala, which grew over four decades outside of Zhili. It has sales of 65 billion yuan ($8.8 bn) compared to his own 5 billion yuan ($711 million). But he is confident of becoming a 100 billion yuan company ($14.2 bn) within the next five years.
With garment sales zooming, the growth of the e-commerce sector was inevitable. Even Li wants to sell through the internet – through stores like Alibaba and Amazon -- by next year. Currently, the number of e-commerce shops has swelled to 10,000.
All this resulted in more jobs – and accommodation/construction -- for workers who came here from other provinces. More than three-fourths of the population comes from other provinces – and are quaintly called immigrants. To ensure that there are no disputes on account of different cultural backgrounds, social governance has played a significant part. The aim is to prevent crime. Penalising culprits is a next step that comes in only when the first has failed.
At the core of all this development is the search for the best talent, because no industry can survive without attracting the best of talent. That is a lesson India needs to learn even as political parties clamour for reserving 80 percent of jobs for locals.
Most people talk of Zhino. She is the fabled daughter of a weaver who fell in love with a cowherd. Their romance was forbidden because both came from different communities. Hence both were banished. Today, there are operas and stories about how the two can be found at either end of a road called the Milky Way.
The romance finds its way into a booming child population in Zhili. And fashion parades in Zhili are also unusual. They have children strutting the stage. That has caused a market for child models to flourish. They can earn as much as $1,500 a day. But China does not want its children without education. Its social governance system steps in when a child misses school. Business must grow. But not at the cost of the future generation.
The author is consulting editor with Moneycontrol.Disclosure: The author was taken to this town by Xinhua and Communications University of China. LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.