China's global go-getters
By Don Lee, Times Staff Writer
March 12, 2007
Erenhot, China — ARMORED dinosaurs once ruled this Gobi Desert area near the Mongolian border. Millions of years later, it became the domain of Genghis Khan and his clan. Now the land belongs to Jin Xiancong and the people from Wenzhou.
Jin ships 10,000 VCRs each month into neighboring Mongolia, runs his own logistics firm and builds office properties. He will soon be mining iron and other minerals in the region, where winter temperatures can drop to 40 degrees below zero. Summers are so hot and dry that people get nosebleeds.
Jin was just 23 when he arrived in 1993 with little more than two large sacks stuffed with hairpins and trinkets to peddle to Chinese, Mongolian and Russian tourists. "My parents told us, 'Go out and explore,' " says the brush-cut Jin, whose four brothers and sisters are scattered in Italy making and selling apparel. "The farther you can reach, the stronger you get."
Like modern-day Marco Polos, the people of Wenzhou are extending the frontiers of China's booming economy. Hundreds of entrepreneurs from the southeastern Chinese city 1,200 miles away have flocked here, opening retail stores and developing hotels and apartments, even a $1-million nightclub featuring topless Mongolian dancers. (The club is named SOS, presumably after the distress signal.)
Undaunted by treacherous terrain, harsh climate and hostile governments, Wenzhou natives are spreading Chinese commerce not only here but across the globe. They are mining molybdenum in North Korea, acquiring cow leather from African tribes, selling shoes in Iraq and exporting Arctic shrimp and turbot from Iceland.
Even after two decades in Reykjavik, Iceland, seafood trader Xiang Youyi, 45, still finds it tough to endure two months of near-total darkness every year. "This place isn't suitable for living," he says, only to add: "I have opportunities here."
Almost 2 million people from Wenzhou, a metropolitan area of 7.5 million about 250 miles south of Shanghai in Zhejiang province, have left their homes over the years in search of riches. The migration goes back at least a century, but accelerated with Communist China's opening up to the West nearly 30 years ago.
"Wherever there is business opportunity, there are Wenzhou people," says Zhong Pengrong, a prominent Chinese economist in Beijing. He calls them a people of "four thousand spirits" — they walk through a thousand rivers and mountains, speak a thousand words to promote their goods, dare to solve problems in a thousand ways and endure a thousand hardships.
"Unlike many other businesspeople in China who became rich overnight," Zhong says, "almost all the Wenzhou people built up their wealth from nothing and amassed their fortune through years of hardship."
NOW, nearly half a million of them are staking their claims in 70 foreign countries, including 100,000 in the United States, mostly New York, where they've opened dozens of supermarkets and dollar stores. They like New York City because they don't need a car to get around, says Lin Ter-Hsien, who started out with a tiny gift shop in Brooklyn, then imported gloves from South Korea and hats from India and now invests in Los Angeles real estate. Lin splits his time between Alhambra, New Jersey and Wenzhou.
In Tanzania, Hu Qiaoming keeps a loaded pistol near his bedside because robbery is rampant. Even with a stable of dogs, an electric fence around his compound and alarms that will bring police within minutes, the 52-year-old entrepreneur doesn't take chances. A couple of years ago, he says, robbers killed two guards protecting the house next door.
Since arriving in the East African nation in 1993, Hu and his wife have opened shoe plants there and in Kenya, Congo, Zambia and Malawi. He keeps shotguns in his factories too, although they can't protect him from the sub-Saharan heat and long rains, political turmoil and disease.
Hu's employees have been ravaged by malaria, and his wife, Xu Shuping, has a four-inch scar running down her left arm, a reminder of the tumble their car took as it was hurtling along rugged roads.
Still, the couple made $3 million in profit last year. They have homes in Dar es Salaam, Tanzania; Wenzhou and Diamond Bar. If he could do it over again, Hu says, he wouldn't change a thing. "Many of the Africans who used to be barefooted are now wearing my shoes," he says, speaking from Wenzhou, where he was visiting for the lunar New Year holiday.
Scholars attribute such entrepreneurial verve to geographic isolation. Wenzhou is hemmed in by jagged mountains on three sides and the East China Sea on the fourth. Lacking arable land, many villagers must travel to prosper.
Wenzhou traders have been at the forefront of Communist China's market-driven economic reforms — launching businesses, raising capital and making investments — but their tradition of private enterprise goes much further back. During the Southern Song Dynasty about 850 years ago, a school of thought known as Yongjia (the old name of Wenzhou) espoused that government should embrace commercial society to develop the nation.
The Yongjia school, led by scholar Ye Shi, was ridiculed by the dominant Confucian philosophers of the day, whose view of social rank had teachers and bureaucrats at the top and the merchant class at the bottom.
More recently, Wenzhou's spirit of capitalism might have been further nurtured by the spread of Christianity in the city in the same way the Protestant work ethic pushed America's economic development. In an officially atheist country, Wenzhou is home to more than 2,000 churches, a legacy of the Nanking Treaty of 1842, which required China to open up nearby Ningbo Port to missionaries.
"Their spirit of putting up with hardship is in harmony with the Protestant spirit," says Xie Jian, executive vice president of Wenzhou University's City College. He says the church's emphasis on mutual trust and aid also may have been a factor in Wenzhou's famed network of private lending.
The city is a hub of informal money channels. Many Wenzhou people bypass state-owned banks, preferring instead to borrow money from relatives, friends and business associates, even though interest rates are much higher.
The loans are typically sealed with handshakes, but Wenzhou people say defaults are very low because borrowers fear ostracism. Such deals have financed tens of thousands of factories in the city and surrounding areas that produce a good chunk of the world's shoes, buttons, eyeglass frames, razors and cigarette lighters.
But these low-value industries aren't enough to sustain several million residents, and many Wenzhou people would rather be their own bosses.
Wenzhou's streets are teeming with new cars, including scores of BMWs and Mercedeses. Rows of fancy villas are being built. But not all the streets are paved with gold. The city mostly looks like other mid-size Chinese cities, with their dusty air, grimy factories and slabs of dreary apartment buildings. Wenzhou's per-capita income of $3,000, about double the nationwide average, would be higher but many neighborhoods are left with mostly old and young people.
Outside their city, many Wenzhou businesspeople help one another. After peddling calendars in New York subway stations, Yu Xilong, 42, raised more than $20,000 by borrowing $500 each from fellow Wenzhou emigrants in town. With that, the middle-school graduate opened a fruit and vegetable stall in a large market on East Broadway.
That was 1993. Today, he owns his own big supermarket on East Broadway, as well as another in Flushing, a section of Queens where he and most Wenzhou natives in New York live.
"I never had to write down a single IOU," Yu says. "We Wenzhou people value credit more than our lives."
ABOUT 100,000 Wenzhou natives now live here in China's Inner Mongolia. Like others from their hometown, they shun politics but have taken pains to dispel the notion that they are carpetbaggers. Some have given up their Wenzhou hukou, or residence cards, and switched to those of their adopted homes.
Erenhot is on China's only railway route to Mongolia, but it wasn't until 1992 that authorities in Beijing allowed the town to operate as an open international hub. Then, only about 8,000 people lived in Erenhot.
The city's population now hovers around 100,000 — with 40,000 migrants coming in to work on construction sites and other jobs, many of them created by Wenzhou merchants.
Ying Hongju, 37, arrived here three years ago, after roaming China's rugged far western Xinjiang region and the northeast.
Ying left his village when he was 15, but all his travels didn't prepare him for Erenhot. In winter, powerful gusts of bai mao feng — literally "white hairy wind" — can blind drivers and knock their cars off roads. On summer evenings, he says, hot air seems to rise up from the ground.
"My lips and nose bled," he says, adding that there's nothing fun to do here. He winces when someone mentions SOS, the name of the Wenzhou bar with the Mongolian dancers. "I don't like it here," Ying says.
But he stays for business. Ying and two partners recently raised $15 million and, in five months, built the International Trade City mall, a block-long, three-story wholesale market that houses 527 tenants who sell silk fabrics, rabbit and fox furs and other commodities. The mall, festooned with red signs in Chinese and Russian, opened last summer and is fully occupied.
"Next year, I'm going to Russia and Mongolia for business," says Ying, whose two children live in Wenzhou with their grandparents while Ying's wife travels between two homes in Inner Mongolia.
For Jin Xiancong, his wife and their two children, Erenhot is home. Not that they've forgotten their first winter, when the couple huddled around a coal-burning stove in a 15-foot room where they lived. That was behind their counter, where they sold hairpins and ribbons for a dime each. Jin remembers his black mustache turning to ice outside, making him look like Santa Claus.
"I would be talking and my eyebrows would freeze," recalls his wife, Xu Xihong. "I just focused on making money."
They made money that winter of 1993. The town was growing and Wenzhou people were repairing shoes and selling watch batteries and items such as buttons, then lacking in this remote outpost.
"My friends said anything that's red and green would sell well," says Jin, sitting in his 40-room Golden Leaf Hotel.
Like most Wenzhou businesspeople, Jin does not want to disclose much about his company's sales and his personal wealth. But he and his wife own four apartments and several shops in Erenhot, and they pull in tens of thousands of dollars more through trading and investments.
On summer weekends, their children go horseback riding nearby in the Mongolian grasslands. Jin and his wife rarely take vacations, although once a year the entire family returns to Wenzhou. Jin couldn't recall exactly when he last saw his four siblings. The oldest left in 1992, paying $15,000 to a so-called snakehead to sneak him into Italy. Jin was the next to leave home. Then the others followed, all to Europe.
Jin says he isn't done roaming the Mongolian region. He wants to find oil and dig up iron ore.
On a recent frigid afternoon, Jin feasted on strips of beef and sheep stomach boiled in soup, then walked along Dinosaur Park, a large field with statues of the sauropods that trampled the area eons ago.
For now, Jin says, he is content to stay in Erenhot. But he sees himself eventually moving back to Wenzhou.
The air outside was below zero. He paused, then recited an old Chinese saying: "A fallen leaf will return to its roots."
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don.lee@latimes.com
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Cao Jun in The Times' Shanghai Bureau contributed to this report.
http://www.latimes.com/business/la-fi-nomads12mar12,1,7296495,full.story
