ECN 310 Essay Four China’s Rural Industrialization

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China’s Rural Industrialization
Introduction
Since 1978, China has been revolutionizing every aspect of the technological and institutional foundations of her economy. However, for the economic growth of any country to be a success and to also occur uniformly, there is the need for industrialization right from the rural areas. The rural areas form what can be interpreted to be the foundational cornerstones for every economy. Spanning over a period of around 40 years, China’s rural industrialization has been an effort that was tried, failed, then tried again and worked. It resulted in the development of township and village enterprises (TVEs). The impact of these enterprises has been open for all to see, as it set the country on its path to what it is now, and what it continues to be.
As a result, in 2016, the industrial output was about 50 times more than the output in 1978. During this period, TVEs played a starring role in changing the economy from a command economy to a market economy. However, TVEs were carried out depending on various rural development models; The Wenzhou Model, The Southern Jiangsu (Sunan) Model, and The Pearl River Delta (PRD) Model. Despite the common development agenda of both models, each model has unique features while TVEs ability to adapt to economic changes has enabled them surpass State Owned Enterprises (SOSs). While it has contributed minimally, at least the TVEs have helped in the creation of a significant amount of jobs.
The Wenzhou Model
Just as the name suggests. the Wenzhou model originated from the town of Wenzhou, which is 300 kilometers south of southern Jiangsu. Initially, Wenzhou town was highly populated; therefore, the model was developed to use the available cheap labor to manufacture small parts. As a result, an initial key characteristic of the model was that factories were tiny and owned by family members. Even to a greater extent, these factories were basically family businesses, with other people only getting hired on rather temporary basis, especially when there was too much workload to handle. The factories mainly produced ordinary items such as ribbons, plastic ID-card holders, and buttons. Wenzhou traders sold their products throughout China and in the international market. However, the model has undergone changes and large companies that rely on market forces to coordinate factors of production have emerged. This can be due to the fact that smaller firms had a lot to do in order to be visible in the international stage, compared to larger, more organized and more united ones.
Initially, the model did not develop first because of its coastal region that is far from Shanghai. This implies that it was very difficult to be influenced by Shanghai business practices. Therefore, as much as it was bordering the coast and hence ease of transportation of goods, there was still much to be done. The Wenzhou model works well when factory owners squeeze profit margins and the global economy is performing well. However, its reliance on cheap export products and the subsequent small revenues has proven to be unsustainable in a competitive business environment. As a result, the future of the Wenzhou model is bleak becau...