UMW Regional GeogBlog

Foshan City, Guangdong Province.

During my visits to China, what has struck me most is the scale of the place.  It’s big, its population is vast, and its economy is immense and growing fast.

At 9.6 million square kilometers in area, China is significantly larger than the 48 contiguous states of the U.S.  Flying non-stop from east to west takes five hours, going by train takes three days. The country’s population is huge: at 1.3 billion, it is four times the population of the United States, and constitutes one fifth of the world’s population.  600 million people, less than half of the country’s population, live in cities, but by some estimates China’s urban population will rise to a billion people by 2025.  Already, China has some of the world’s largest cities: Shanghai, Beijing, and Tianjin each have over ten million inhabitants. Perhaps 100 cities have a million or more inhabitants.  “One of the amazing things about traveling in China is that you suddenly come across a city you have never even heard of before with a population of more than four million people – that’s twice he size of Dallas,” notes NPR correspondent Rob Gifford.

China’s economy is vast, and growing fast.  Figures released in January 2009 revealed that the country has now overtaken Germany as the world’s third largest economy, after the United States and Japan.

Much of China’s economic growth is a result of the country’s manufacturing sector, which has expanded in leaps and bounds over the past two decades.  Economic reforms have encouraged the growth of a thriving private sector, anathema in the China of Mao Zedong.  The creation of Special Economic Zones (SEZs) along the country’s east coast have encouraged foreign investment and the growth of manufacturing industries. And relaxation of strict controls on movement of people has allowed tens of millions of poor rural dwellers to come to the cities as migrant workers to work in the new factories.

It is not just government policies, though, that have allowed China’s industrial sector to grow so fast. It’s also wages that are very low in comparison with the country’s main competitors. A 2004 report notes that at that time companies spent about 92 cents an hour for each worker in China, versus $1.20 in Thailand, $1.70 in Mexico and about $21.80 in the United States. Even though wages in China have risen since that time, the country remains a formidable competitor for established manufacturers worldwide.

It took me a flight across China to comprehend the country’s physical size, and visits to some of its teeming megacities to appreciate the enormity of the country’s population.  I didn’t really start to comprehend the scale of China’s economy, though, until I visited a wholesale market, a factory, and a trade show.

Negotiating the price of glass beads at the clothing accessories market.

The clothing accessories wholesale market in Guangzhou is an amazing place. I was here in October 2008 with James, a Chinese friend who works as a buyers’ agent for foreign companies. On this visit he was looking for small glass beads for a manufacturer of African beadwork. As he negotiated the price of beads, I wandered around exploring the market.

From the outside, the eight-storey building is nothing spectacular. The inside, though, is remarkable. Every floor is a warren of small stores, each a showroom for a wholesaler of some kind of clothing accessory. I gave up trying to count the stores, but I guessed that there were probably at least 800 wholesalers doing business here. There were purveyors of buttons, zippers, beads, fasteners, sequins — even two stores dedicated to the sale of feather boas.  The first floor of the market was devoted largely to buttons: probably a hundred wholesalers, each taking orders for buttons. They seemed to sell every kind of button imaginable buttons, large buttons, brass buttons, and glass buttons, all of them made in China and for sale here in wholesale quantities to buyers from around the globe.  It seemed to me, as I marveled at the site of all of these buttons, that this place should surely be able to supply all of the button needs of the galaxy.

I wasn’t far wrong, as I discovered when I did some further research on the geography of the world’s button manufacturing industry. In 2004, sixty percent of the world’s buttons were being made in 200 factories the Chinese town of Qiaotou in Zhejiang province.  China seems also to have cornered the world zipper market: the trade site alibaba.com lists 4 951 Chinese manufacturers of zippers. And this was just the clothing accessories market.

In another part of Guangzhou are the sock wholesalers, where buyers from Buenos Aires to Brisbane come to view merchandise and place orders.  Most socks are made in the coastal city of Datang (aka Socks City) which produces nine billion pairs of socks a year (that’s about one and a half socks annually for every foot on the planet.)

And then there is Underwear City, part of the city of Foshan, not far from Guangzhou, where some 300 underwear manufacturers are located, churning out a sizeable share of the world’s undergarments.

China's Pearl River Delta region (This map is from The Economist, June 28, 2007)

The bigger picture is even more astounding: If the Pearl River Delta – which includes the cities of Guanzhou,  Hong Kong, and Macao – was a separate country, it would have the world’s 18th largest economy and be its 11th largest exporter, ahead of India and South Korea. In 2007, the region produced two thirds of the world’s toys, 45 percent of its wristwatches, and one third of its consumer electronics, garments, and footwear. And for the past quarter century, it has had an average annual economic growth rate of 17 percent.

Making sofas, Foshan City, Guangdong Province.

My factory visit took place in January 2009, when I paid a visit to Foshan City as a guest of a friend who goes by the English name of Sarah. Her family owns a factory in the Shunde district of the city.  They don’t make intimate apparel, though; this is Furtinure City, and Sarah’s family is in the sofas and recliner business. On this visit I met Sarah at the factory’s showroom, or, more correctly, their part of a vast complex of showrooms where local manufacturers compete to earn the custom of buyers from around the world.  When I arrived at the showroom, Sarah was engaged in animated negotiations with two buyers from Azerbaijan, who end up signing an order for leather-covered recliners.

Later, Sarah drove me to the factory itself, located in a part of the city that only a few years ago used to be area dominated by the large ponds of fish farms.  The factory is indistinguishable from the hundreds of others around: a mid-sized low-rise building, with a nondescript exterior. Inside, young men assemble the wooden frames of sofas, attach padding, and staple leather and vinyl covering. In another building, young women sew seating covers. Sarah tells me that most of the workers are migrants from rural areas.  Most live in dormitory-style accommodation near the factory, and a handful stay in rooms in the factory building itself. Many come from the same region, since word of mouth is the factory’s main means of recruitment.

Workers in Sarah's family's sofa and recliner factory in Foshan City, Guangdong Province.

Sarah’s family’s factory is part of the reason that China’s furniture exports grew from $3.5 billion in 1999 to $16.6 billion only six years later.  It’s also part of the reason that employment in the furniture manufacturing industry in North Carolina and Virginia plummeted by more than 25 percent during the same period.

The wholesale fashion accessories market and the furniture factory gave me an idea of the size of two pieces of China’s manufacturing economy. To comprehend the big picture, I had to go to the China Import and Export Fair, better known as the Canton Fair (Guangzhou was previously known as Canton.)

The Canton Fair takes place twice a year at a vast new exhibition center in Guangzhou. My friend James, the buyer’s agent, was scouting out electrically powered scooters for a potential customer from Arizona at the 104th Fair, in Fall 2008, and I tagged along.

Inspecting the merchandise, Canton Fair,

Our welcome to the Fair took the form of dozens of young Chinese translators, lined up along the approach to the exhibition’s registration center, waving signs and loudly announcing their services to foreign visitors. Registration was a quick and efficient process, and within a few minutes we were inside the first cavernous hall and on our way to the exhibits of the manufacturers of electric scooters. We must have visited the exhibits of a dozen companies, each showing its line of rechargeable electric bikes and scooters. And this was just a small part of the Motorcycle section of the Fair, which was part of the Vehicles and Spare Parts exhibit, which occupied part of one of the pavilions during Week One of the three week Fall Fair.  All in all, there were over ten thousand exhibitors at the 104th Import and Export Fair, showing everything from motorcycles to kitchenware, dolls, and purses. Also in attendance were shipping agents that could arrange to transport goods to Iran and Ghana, translators to facilitate communication between Mandarin-speaking manufacturers and Spanish speaking buyers, renters of mobile phones, and even an office to deal with trade disputes (identified on the Fair’s slick website by a smiley face logo.)

Despite its evident economic prowess, however, China still faces significant problems. Its economy, though still growing fast by world standards, has been hit hard by the global recession. Sarah’s family’s factory employed a hundred workers in mid 2008, by the start of 2009 its workforce was down to sixty. Those forty laid off workers are among the millions now returning to their rural homes, where prospects of employment are dim.  This prospect raises a red flag (of the wrong kind) for Chinese leaders.  For the past few decades, the government has been able to use the country’s economic growth and increasing living standards to fend off demands for political change.  But unless the rest of the world recovers its appetite buttons, socks, and sofas, China will surely face some serious challenges at home.

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Update, March 15, 2010.  Despite the worldwide recession, China’s economy grew by 8.7 percent in 2009, and a recent poll of economists predicted a growth rate of 9.5 percent in 2010. It looks as though those migrant workers who went back to rural areas in 2008 are coming back to the cities.