TWEEK : The WES Topic of the Week
Buttons, Zippers and Vuvuzelas!
The case of Township Entrepreneurship
Renee Horne- Johannesburg 16 May 2011
What do buttons used on your garments have in common with the South African Vuvuzela used to great effect in the World Cup to reflect the exhilaration of supporters? Both are “Made in China” a label synonymous with merchandise that you see around the world, indeed the “Made in China” brand is one of the most recognizable labels in the world today, due to a rapidly developing and large Chinese manufacturing industry. China is the largest exporter in the world, however, Chinese exports plunged by more than a quarter in February from a year ago as the world's third-largest economy was hit by a drop in demand for its goods.
The pivotal factor is the economic downturn, but still China’s dominance can be seen around the world, especially in Africa. So do they have the secret to successful entrepreneurship that the rest of the world doesn't know about, or is it sheer business acumen? Dr Chunlin Zhang, a Private Sector Development Specialist of the World Bank, states that “entrepreneurship is the key to the Chinese success which is harnessed and nurtured”. Zhang, who worked in the World Bank’s Beijing office and is currently responsible for coordinating the bank’s operations in financial sector operations in Botswana, Lesotho, Namibia, South Africa and Swaziland argues “what is also crucial is finding that market niche, technological skills, having respect for innovation and also allowing those entrepreneurs to grow in the township businesses”. As part of the World Entrepreneur Society (WES) “Africa Business Voice” series, we go beyond the African continent to find out why China has muscled its way into Africa.
Buttoning Success
Wearing those jeans, pencil skirts, or indeed anything with buttons and zippers, the chances are they have been made in a place that is slap-bang in the middle of nowhere; a place is so small that it is not marked on western maps. Indeed, the township of Qiaotou, in the Zhejiang Province of China, is the "button capital of the world" producing 60 percent of the world's supply of clothing buttons and making 80 percent of the world's zippers. Qiaotou manufactures 15 billion buttons and 200 million metres of zippers a year. In just 25 years, this humble community has destroyed most of its international counterparts to become the undisputed global capital of buttons and zippers. It all started with three brothers who had no money and could not obtain finance, but picked up buttons off the township streets. Decades later the three brothers have made a popping button profit, boasting two hundred factories and two thousand workers.
Dr Zhang, said “the success here is that while no bank may loan you money and at the time township enterprise was not a buzzword in the government’s reform strategy; it was the township people that played a role in supporting the three brothers”. Indeed in a world where getting ahead is filled with pitfalls, perhaps you should count on the two F's, friends and family. The Qiaotou Township is a microcosm of the dominant Chinese economy in the world. A success story of how a farming village of families can be transformed into a manufacturing powerhouse. Paddy fields have been cleared for factories, and peasants have become industrialists. But take heed while this may be a success story, the township has faced environmental degradation. The river, which used to be a clean source for irrigation, is now a heavily polluted outlet for brightly colored plastic waste. The positive may be a profit and development for a community but the negative is the cost to the environment.
The Made in China Vuvuzela
So it’s more about starting a family business that could give you a business boost. Indeed, a family in the Chinese town of Ningbo seized the opportunity making more than 90 percent of the Vuvuzelas that could be bought for more than nine times of what it takes to manufacture it. The Chinese may not have made it into the 2010 World Cup but their presence was heard by the Made in China Vuvuzelas which cornered the market on perhaps the most unforgettable off-field aspect of the World Cup. “Why is the Vuvuzela not produced by South Africans but by Chinese rural enterprises? What went wrong? questioned Zhang. He warns that “this is another South African example of the local market not capturing the opportunity that is the market niche”. Zhang argues that in South Africa there needs to be a change of mind set with regard to supporting township enterprise. Thuli Mogotsi an official commissioned to deal with entrepreneurship especially in the townships in the City of Johannesburg argues, “It is not easy if you don't know the niche markets. We need to have a better understanding of what is out there. The state has a role in business suppor; is it not possible for us to have a clear vision of what collectively can be achieved?”
However, Dr Thami Mazwai who heads the Centre for Small Business Development provides a counter argument, “What I am doing at the University of Johannesburg is enterprise development. There are also projects announced by the President, the Jobs Fund so these are the things that the country is doing to stimulate the growth of small businesses and so on”. Mogotsi argues that if enterprise is to succeed in townships, there are some necessities that businesses can’t go without; “implement some basic infrastructure, and identify the townships, hence making the experience of small township business seamless”. This also means creating one stop shops for entrepreneurs where they can be advised, “You need local development hubs, a space where you go as an entrepreneur where you get help. You stand in a queue. There’s somebody behind a desk. One of the challenges of doing business in a township is ‘where do I go?’ We do not need flashy offices but we need to create a space where there is a development agenda, where ideas can germinate”.
So if township entrepreneurship is left to germinate, perhaps this is the same innovation that the villagers of China have used for decades! Indeed, should African entrepreneurs look towards the Chinese case study or the Western model of business to shed some light on a prosperous business future? Do you think that China’s dominance in the world economy and its rising township enterprise is sheer business acumen? Have your say and stayed tuned for the next instalment of the WES “Africa Business Voice”.