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Tales from the Development Frontier
Summary In a tale repeated among light industries throughout coastal China, the toothbrush industrial cluster sprang up spontaneously and flourished after reforms unleashed market forces and the entrepreneurial spirit of private investors. The local government generally gave a free hand to local businesses and encouraged innovation and brand naming among larger companies. As the sector expanded, the government provided an enabling environment for private businesses by improving infrastructure and services. Hangji shows that, by facilitating entrepreneurship and creativity, a city can develop rapidly, even as the wider investment climate remains deficient.
The Metalware Industrial Cluster, Yongkang, Zhejiang Province As China became a global manufacturing powerhouse, the metals industry grew considerably. Already the world’s largest steel producer, with close to 45 percent of world output, China has increased its production capacity in aluminum, iron, copper, and other metals. Demand for metal inputs has been increasing not only from heavy manufacturing industries, such as automobiles and shipbuilding, but also from light industries that produce consumer metalwares, such as tools, locks, hinges, security doors, thermal cups, and cutlery. Several hardware clusters have emerged in the coastal regions. In central Zhejiang Province, Yongkang, which enjoys a prime location and good logistics, has developed thanks to strong entrepreneurship and preferential government policies. Since the onset of reform, Yongkang’s economy has developed rapidly on the strength of the traditional hardware industry and the advantages of a flexible private ownership system. The numbers point to a dynamic and thriving industry. By 2011, Yongkang had nearly 10,000 hardware enterprises, 95 percent of which were SMEs. More than 300,000 people work in the sector.16 The hardware industry has become a force in the local economy, accounting for more than 90 percent of industrial output, 60 percent of GDP, about 80 percent of tax revenues, and close to 50 percent of employment in the city. The sector produces more than 10,000 metal product lines in eight major categories: electric tools, measuring apparatus, nonferrous