Asian and African observers of the Yantian miracle
- By Zhou Lin
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Yantian presents a different example of development. [File photo] |
Village of Dongguan City in southern China's Pearl River Delta, which has been transformed from vast paddy fields into a thriving, manufacturing center, is coming into sharp focus as it rides on the wave of China's rise. In 2012, Professor Anthony Saich from Harvard Kennedy School and Professor Hu Biliang, dean of the Emerging Markets Institute of Beijing Normal University (BNU), jointly wrote a book entitled Chinese Village, Global Market: New Collectives and Rural Development, which vividly describes Yantian's transition over the past three decades.
Twenty-eight officials from 14 developing countries studying an IMBA program at BNU's Emerging Markets Institute conducted a field investigation in Yantian Village in June 2015 and shared their observations and discussions on its development. Their informed perspectives give us a clearer picture of the dramatic changes that have taken place in China since the policy of reform and opening-up, and can help forecast the nation's future prospects.
Foreign direct investment from the global market
Yantian Village is located in the southernmost town of Fenggang of Dongguan City in Guangdong Province, with Shenzhen City to its east, south, and west, and covers an area of 24 square kilometers. It is just 30 minutes' drive from Luohu Checkpoint and Shenzhen Bao'an International Airport. The village has administration over nine villager groups and a population of 3,000 registered permanent residents.
After the establishment of Shenzhen Special Economic Zone in 1980, the lives of Yantian villagers totally changed. The advantageous location of the village, adjacent to both Shenzhen and Hong Kong, and its cheap land and workforce made it a preferential district to attract foreign direct investment, especially for manufacturing enterprises in Hong Kong.
In 1980, Lü Zhengfu, a businessman born in Huiyang City of Guangdong Province who later moved to Hong Kong, was considering investing in his hometown. However, he realized that the conditions there were not right; the town was not mature enough for what he had in mind. Then, on his way back to Hong Kong, he happened to discover that Yantian Village had a much more convenient market and incentive policies. He opened Zhengxin Wool Mill in Yantian's 60-meter-long, 10-meter-wide village meeting hall, giving birth to the first Hong Kong-invested "Three-plus-one" trading-mix enterprise, whose major business comes from custom manufacturing with materials, designs or samples supplies, and compensation trade. This business model was created when the Chinese government adopted the policy of reform and opening-up with the intention of attracting foreign investment in various forms. The first year Zhengxin Wool Mill was in operation, it had good economic performance: the village collective gained a net income of RMB 250,000. Later, from 1992 to 1995, Yantian Village built 180 factories and five industrial parks. On its 24 square kilometers of land, enterprises in the fields of electronics, computers, machine-building, clothing, toys, and wristwatches sprang up like mushrooms after rain.
The success of Zhengxin Wool Mill has further inspired Yantian's villagers, who are keen to attract more foreign investment. It has also set a good example for entrepreneurs of the Deng family in Hong Kong, whose forefathers formed the biggest clan of Yantian Village and whose offspring still hold a dominant role in the village today. Traditionally, overseas Chinese eventually return home after retirement to live out their days, seen as a homecoming to their wider families. Therefore, from 1981, Deng clan members who went to Hong Kong to escape the poverty began returning home, bringing their successful businesses with them. By the end of 1985, there were 10 such foreign-funded companies. These entrepreneurs' endeavors paved the way for more investors from Hong Kong, Taiwan, Japan, Germany, and the U.S., and by the end of 1998, the total number of foreign-invested enterprises reached 430. Meanwhile, entrepreneurs from across the country began to invest in Yantian, and the total number of private enterprises reached 700.
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