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Last Updated: Wednesday, 9 March 2005, 00:08 GMT
Wenzhou lights the way for China
By James Whittington
BBC World Service business reporter in Wenzhou, China

The southern Chinese city of Wenzhou is a place renowned for its entrepreneurs.

Wenzhou skyline
Wenzhou's booming economy is driven by the private sector

In many ways it symbolises the rise of China's private sector, in what has traditionally been an economy dominated by government-owned companies.

Wenzhou is the country's biggest manufacturer of small scale goods such as lighters, spectacles and badges, which are then exported around the world.

The factories that produce these items are owned by local private businessmen. In fact, over 95% of the local economy is based in the private sector.

Whereas other booming cities in China have relied on foreign investment or government funding to fuel their economies, Wenzhou has done it on its own.

Major exporter

One of the city's many success stories is the Ri Feng Lighter company, where rows of workers hunch over small desks piecing together lighters of all shapes and sizes.

When the economy in China started to open Wenzhou was already ahead of the game
Huang Fajing, Ri Feng Lighter company

With over 600 employees, Ri Feng produces more than 8 million lighters a year, 90% of which are exported.

The company's main overseas markets are in Europe, America and Japan, and it is currently trialling a lighter for the US lighter company, Zippo.

"Our company puts a great emphasis on quality and a lot of countries are willing to import from my company," says the boss of Ri Feng, Huang Fajing.

"I can say that almost all the major lighter importers buy products from me."

Wenzhou has developed for a number of reasons, says Mr Huang.

"Firstly, the people have had a business sense for a long time. Secondly, they are hard working. Thirdly, Wenzhou has a large population but limited land; the resources are scarce and transportation poor so we had to work harder with what we had.

"So when the economy in China started to open Wenzhou was already ahead of the game," he says.

Business model

However, will Wenzhou's entrepreneurial spirit spread across the rest of the country?

Workers in the Ri Feng lighter factory
Ri Feng's lighters are sold in markets across the world

The city, which is 500km south of Shanghai, is widely viewed as a model for economic development elsewhere.

In the capital, Beijing, delegates are converging this week for the annual meeting of the National Peoples Congress, China's most powerful decision-making body.

One of the areas under discussion is how to encourage small and medium sized private businesses.

The Mayor of Wenzhou is in Beijing attending the event, and delegations from other parts of China seeking his advice are not uncommon.

Expatriate support

Historically, Wenzhou was all but ignored by China's central planners, partly because it was cut off from the rest of the country by mountains on all sides.

So the area was never saddled with big state enterprises which are so difficult and costly to reform.

There is also a big expatriate community of Wenzhounese around the world, not just in places like Hong Kong and Taiwan, but also Italy, France, South Africa and America.

It is these links that may have helped Wenzhou look outwards and become an important part of this workshop of the world.

Wenzhou businessman, Huang Fajing
"We had to work harder with what we had."

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