On a recent visit to Athens, I visited all the Greek capital city's chief tourist attractions: the Parthenon on the Acropolis, the Temple of Olympian Zeus, the Ancient Agora and the National Archaeological Museum. I ate feta cheese, souvlaki, and sampled the Greek national liquor, Ouzo. Nevertheless, it was the emerging Chinatown in the Omonia Square neighborhood of Central Athens that most piqued my interest.
The Chinese merchants in Athens are selling the same inexpensive Chinese-made products - handbags, luggage, jewelry, sneakers and women's clothing - found in shops along Manhattan's Canal Street. Entering one of these shops, I approached its owner to learn a bit about his business. He and his wife arrived in Athens last year from Wenzhou, in Zhejiang Province, on China's eastern seaboard south of Shanghai. The city, which had a GDP per capita of $3,390 in 2003, is the leading manufacturer of cigarette lighters worldwide. The $1 lighters that litter your dorm room were made in this mid-sized Chinese coastal city. Wenzhou-based firms manufacture 85 million lighters each year, accounting for roughly 80 percent of global output.
Interestingly, more than 95 percent of Wenzhou's economy is based in the private sector. Beijing never established large-scale state enterprises in Wenzhou due to its relatively isolated geographical location. In the absence of widespread state-sponsored employment, the people of Wenzhou were compelled to use their entrepreneurial spirit.
Although this unique history benefited the city's economic development, China's legacy of state ownership continues to be a stumbling block to healthy economic growth. The government's efforts to reform the unprofitable state sector in recent years are a source of potential social unrest. The millions of Chinese laborers left unemployed by the elimination of failed state-owned enterprises dwarfs the number of American workers whose employment was terminated due to the relocation of manufacturing to the Chinese Mainland.
Although Wenzhou is a rather small Chinese city, with slightly more than one million urban residents and about seven million in the greater Wenzhou municipality, there is a relatively large expatriate community of Wenzhou natives throughout the world. Wenzhounese are the largest expatriate Chinese community in France and they also have significant populations in Hong Kong, Taiwan, Greece, Italy, South Africa and the United States. About 90 percent of the Chinese population in Rome comes from Zhejiang Province, most of them from Wenzhou. Wenzhou's large expatriate community and legacy of private ownership have given rise to Wenzhou's unique entrepreneurial culture, export oriented growth, and success as a global manufacturing center (at least for cigarette lighters).
The success of small Chinese textile importers in Athens can easily be attributed to the low production costs and superb efficiency of Chinese manufacturers, which cannot be matched by their European competitors. Bras sell for two euros and women's jeans for ten euros. And the six-euro blouses are just slightly more than a grande coffee frappuccino at an Athens Starbucks.
Although the European Union reached a tentative agreement with Beijing in the so-called "Bra Wars" to release millions of Chinese textiles tied up in European ports, trade frictions and large trade deficits will undoubtedly loom large in the relationships between a rapidly developing China and mature western economies. This is why textile and clothing manufacturers' associations in both the EU and U.S. have been intensively lobbying their respective governments to re-impose protectionist measures to safeguard their industries from inexpensive Chinese imports, and why the U.S. government has repeatedly demanded for greater revaluation of the Chinese currency, the renminbi (somtimes called the yuan).
What's more, the entrepreneurial culture of little Wenzhou has inspired the ambitions of China's rising business class. Li Shufu, the enthusiastic Chairman of Geely Group, has embarked on a self-described mission to "make cars like people from Wenzhou make lighters." Geely sold only 80,000 vehicles in 2003, but wants to reach sales of one million vehicles annually by the end of the decade. Earlier this month, Geely launched its penetration into the European auto market when it unveiled five models at the Frankfurt auto show. Like other Chinese multinationals, Geely can offer its products at much lower prices than its competitors due to China's questionable intellectual property protection and its low costs of production.
If China's economic development continues on the torrid nine percent annual pace set in motion by Deng Xiaoping's reforms of 1978, increases in trade frictions, competition for natural resources, and continued suspicion of China's military intentions will inevitably loom large on the horizon. The rise of China in the 21st century will transform the balance of political and economic, power both in Asia and throughout the world.
