Where Santa stocks up on stockings

With 62,000 stalls, the Yiwu market is the wholesale face of China's massive factories, selling everything under the sun to the West, Muslim immigrants – and Santa Claus, writes CLIFFORD COONANin Yiwu, Zhejiang Province, China

TO YOUR left, esteemed customers – artificial flowers, cuddly toys, fashion jewellery, hair accessories, jewellery fittings, and arts and crafts items. To your right, moving down this endless row of stalls: photograph frames, crystal, and buckets and spades in lurid reds and yellows.

Go up a floor and you’ve got bags, wallets, hardware, kitchenware, bikes, watches clocks, locks, scooters and home appliances. Not far from here you can see the factories where large percentages of the world’s zips, buttons, packaging materials and accessories are made.

Here in Yiwu, the world’s biggest wholesale market, crazy-eyed leprechauns, Tom and Jerry, the Pink Panther and Yosemite Sam beam out from one of 62,000 stalls. This busy city in eastern China is the factory outlet for the planet’s manufacturing epicentre.

This where Santa Claus comes to shop, particularly in a recession when money is tight and the generous old gent has to tighten that already straining belt across his red-clad girth.

“You need to come up with different products, to make sure they are popular in all kinds of difficult markets,” says stallholder Jin Fang, cheerfully embracing a huge World Cup teddy bear.

The Yiwu wholesale market is the public face of the greatest experiment in mass production ever seen, selling the produce from the world’s five biggest sock manufacturers and the largest zip factory. This market has, quite literally, everything. It is the kind of place that makes you fear for the world’s dwindling resources because so much iron ore, copper and plastic seem to have ended up here, transformed into knick-knacks.

Standing guard at one stall is an enormous World Cup South Africa 2010 mascot. It’s not just Santa Claus who shops here – you can bet that the marketing gurus who trail in his wake will be sourcing green-jerseyed mascots here to beat the band if Ireland ever qualify for South Africa. They also make the funny big hands here. And the comical Viking hats. And whistles. Rattles. Giant bananas. Sometimes it feels like everything is made in Yiwu. Maybe Robbie Keane was made here.

There are 320,000 different commodities on sale, in more than 1,500 categories, within 34 industries. These are spread throughout the city, but are concentrated in four vast wholesale markets, with four million-plus square metres of selling space, shipping to more than 200 countries. City mayor Li Xuhang has pointed out that if you gave each supplier three minutes during an average eight hours of doing business, you would need more than a year to get around the market.

THE GLOBAL DOWNTURN initially hit producers here hard. At the city’s annual fair in October last year, orders dropped 3.2 per cent, instead of swelling by the staggering rates of between 10 and 15 per cent that the city’s business community had become used to. But an ebullient Ms Jin, surrounded by stuffed animals, is confident that business is returning.

On a balmy autumn day, in the Yiwu international trade market, business is brisk. The wholesale market is like a trade fair that runs the whole time. The €2 shops (formerly pound shops) that tend to thrive during recessions are all stocked with goods from Yiwu, so to a certain extent the factories are proofed against the downturn.

The Pink Panther always sells well in Japan, even in a downturn; so do Super Mario and things such as cartoon photograph holders, said Ms Jin. She gives the World Cup mascot a squeeze. “You’ve got to keep an eye on the future.”

Yan Yang is busily arranging the studs on a glistening display of glossy black metal piercing ornaments, aligned to catch the eye of the overseas customer. “Business is good, better than last year,” she says, as she rewraps some fearsome-looking body ornaments. The company does all kinds of studs, chains and rings, but they could be selling anything.

Like plastic fruit, says a woman who gives her surname as Chen. She is lit up from behind by a display of the ripest fruit you have ever seen, until you realise everything is plastic. Farther in, the same fruit is miniaturised and turned into keyrings or other decorations. It looks good enough to eat.

“Quite a few people have been asking how we made these, but they are all our own designs. We have many, many different designs, she says, pointing out some apples, of every conceivable variety, from Granny Smiths to French Golden Delicious. “All made at our factory in Yiwu.”

Above the entrance hangs a Credit Booth sign which does not mean that the stall accepts credit, but rather that the stall has received the seal of approval from the local government. The owners prefer cash, as the crisis has seen an increase in the numbers of people defaulting on loans, and no one wants to chase bad money across the world.

In the hair ornaments section, things are busy. Li Jundao of the Jundao Ornaments Company is seeing signs that things are getting better. More hairbands than you ever thought existed.

“The first six months of last year were bad, but it’s now getting better,” he says as he rummages among the array of hairbands in the shop. “These are all made in our factory near Yiwu, which employs around 100 people.

“We do several million of these a year. One pack costs four mao [or feathers, around four cent], and we do many millions a year, depending on how the orders are going. Our customers are in China, but also the Middle East, Europe and Africa. It’s much better than in the first half,” he says, getting the other family members working the stall, and the employees, to make sure they put things away properly. Dealing with hundreds of thousands of hairclips can be a real headache.

DEMAND FROM ABROAD has been replaced with domestic demand, or at least that’s the theory, with the four-trillion yuan (€400 billion) stimulus plan driving the growth. The main drivers are infrastructure investment, very strong auto sales, and a rebound in housing sales and construction. But consumer demand is still weak.

It’s hard to know what is driving the current strength in the market at Yiwu. The sale of goods abroad has been weak for some time – exports in August fell 23.4 per cent from a year earlier, a sharper drop than expected faster than July’s 23 per cent fall, as global demand remained weak.

Yiwu shares certain characteristics with Shenzhen: everyone is an immigrant, and the local language is mostly Mandarin, rather than the Zhejiang dialect. And there are remarkably few old people around: the streets are filled with young people who have come to Yiwu to be part of the great hustle that is the city’s founding principle.

Zhejiang province, where Yiwu is located, is China’s richest, and both its rural and urban residents have the highest per capita income of any province in China.

Anyone who doubts that China has embraced capitalism need only visit Yiwu’s freewheeling markets. However, it is capitalism with Chinese characteristics, and you do detect the hand of the state in the way the market is monitored.

It’s not just the wholesale markets. Yiwu City has just under two million residents, but around one million of these form a floating population of traders and business people. While the city is 2,200 years old, it has really become a name to conjure with in the years since it started focusing on wholesale markets, some 20 years ago. The whole city is a wholesale market, with open-fronted shops selling everything you care to think of.

This is like early capitalism, competition as the economist Adam Smith might have seen it: a street full of shops selling scarves and shawls is called Scarf Street; for belts try Belt Street; or for photograph frames, try Photograph Frames Street.

Traders come from everywhere to live in Yiwu. More than 20,000 Muslim immigrants have settled in the area over the past five years, from Syria, Iran, Yemen, Egypt and Libya, including about 1,000 from Iraq.

Jamal Flaieh, from Jordan, exports Chinese products all over the world. “I was the first Arabic company to set up here 10 years ago, back when this place Yiwu was just a small town,” he says, fingering his BMW keyring and giving me the card for his Red Sea International Trading Co business.

“I’ve seen so many changes taking place in front of my eyes. There are people from every country in the world in this town, and they export to everywhere. Everything you see here was built in the last five years,” he says. He is pessimistic, reckoning that rising labour costs have hit the competitiveness of local companies, and is looking at production in other markets such as Vietnam, but still finds Yiwu difficult to ignore.

In a sign of how aggressively the local authorities are in combating the downturn, they are planning an extension to the market, with the aim of reaching five million sq m in 2010.

And in case anyone is looking to Yiwu for clues about what’s in Santa’s sack this year, the shops have already shipped for Christmas to the big markets of Europe and the US. Even Santa Claus has to outsource some production these days.

Yiwu: Numbers

• 62,000 stalls
• 320,000 commodities on sale
• 34 industries
• 4 million sq m of selling space
• 200 countries can be shipped to
• 20,000 Muslim immigrants