The fate of Zhongda market is one example of China’s rapid urbanisation, and particularly the upgrading of the country’s top-tier cities, with wholesale markets increasingly viewed as a liability and an eyesore instead of an asset for municipal authorities. In Beijing, for example, the local government has shut down many wholesale markets, including the iconic Beijing Zoo clothes market, to reduce traffic congestion and to phase out low-end businesses.
While places like Zhongda market offer jobs to up to 100,000 people and are essential for many small factories, municipal officials see better uses of the land – an increasingly expensive resource in Chinese cities – for office towers, shopping malls, residential buildings, or hi-tech parks.
The process of transformation could speed up with the adoption of the new “Greater Bay Area” plan, which would turn Guangzhou and eight other cities in Guangdong province, plus Hong Kong and Macau, into a huge metropolitan area focused on hi-tech development in industry and finance.The evolution of Zhongda market
From the late 1980s, when manufacturing started to boom in the Pearl River Delta, fuelled by investment from Hong Kong, Macau and Taiwan, a group of merchants moved into a deserted area in Guangzhou’s Haizhu district and started to sell fabrics – technically illegally – from small stalls. Today, Zhongda market is the biggest of its kind in China, supporting more than 30,000 small and medium-sized garment factories across Guangdong and even other neighbouring provinces.
Zhonda market is actually a cluster of 50 small and large markets that extends over an area of more than five square kilometres, one and a half-times the size of New York’s Central Park, with more than 20,000 merchants and 100,000 employees trading 100,000 different kinds of fabrics, textiles and garments. The footprint of the market, though, is much larger as it extends deep into the surrounding area with various workshops, warehouses and logistic operations.
Strolling through the tangled and smudged streets, “handshake buildings” – packed so closely together that residents can stick an arm out of their window and shake the hand of a neighbour in the opposite building – are mixed in with thousands of small garment factories, workshops and service establishments.
One dominant sight in Zhongda market is the mixture of colour and patterns from the thousands of fabric samples hanging in storefronts waiting to be picked up by Chinese or foreign customers. The seemingly infinite number of decorative textiles and accessories covered with colourful, shiny beads and sequins creates a spectacular display.
The handcrafters either work together in cramped factories at small workbenches or at homes spread all over Guangdong and some neighbouring provinces. The handcrafted product assignments are distributed to workers, like Li, who work at home by “village group leaders”, who are responsible for delivering the product to the buyer on time.
The area is vibrant both day and night, with a constant flow of vehicles delivering bundles of packed goods. The sound of heavy traffic fills the air as porters waiting for jobs rest by the pavement on their parked vehicles.
“The market is the pearl and core of Guangdong’s garment industry supply chain, linking almost all garment factories in Guangdong and inland provinces nearby,” said He Runzu, a Guangzhou-based merchant, who has been in the clothing business for more than three decades. “All kinds of fabrics, textiles and apparel accessories are distributed in Zhongda, and the latest materials, styles and information on the entire industrial chain are gathered here.
“Outsiders can’t image how fast the market operates. If a new model from a famous brand is seen by a veteran trader in a stall, he could have the approximate details of the style in his mind with just a few glances. With some subtle details changed a little bit, he can take a turn through the market and find similar fabrics, accessories, and similar [fabric] patterns. Then the printing factory nearby can begin printing immediately. In the evening, the fabric can be transported from Zhongda to garment factories throughout the Pearl River Delta in Foshan, Dongguan, Zhongshan and Zhaoqing, more than 30,000 in total. [The new clothing] will be produced overnight.
“Early the next morning, the copycats will appear at various large and small professional wholesale markets in the city, ready to sell and deliver across the country and the world, much faster than the scheduled debut.”
What next for Zhongda market?
However, the prosperity of the Zhongda market ecosystem, representing traditional low-tech trading and manufacturing, seems unable to win the hearts of local authorities in the new era, with Beijing ordering Guangdong to give priority to developing the Greater Bay Area.
And in late February, the municipal government of Guangzhou announced its decision to relocate Zhongda market, step by step, in the coming year, to Qingyuan, an economically backward city about 100km away – or an hour and a half drive from the current market. Qingyuan is not part of the region covered by the Greater Bay Area plan and so will not enjoy the same level of support from the government.
The current market space will be used to build a modern international innovation centre to rival America’s Silicon Valley or Beijing’s Zhongguan village hi-tech centre in the capital’s university district, the government said on its official microblog.
“Everyone says something different. There are people who say it’s just about to happen, and those who say it’ll be three, four, five years from now. Even the landlords don’t know, so how could we know?” worker Li said.
Although there is still no detailed timeline for the move, it is already causing strains among the many small businesses who call the market home.
“If the market really moves to Qingyuan, it will have a great impact on the procurement process for garment companies and factories in Guangdong. Procurement time will increase by at least two or three times compared to now, which will directly affect delivery times for products,” said Wang Xingang, who pays 300,000 yuan per month (US$44,500) to rent his shop at Zhongda market and also has a factory in Foshan city.
“We all heard about the announcement. But so far no one from an official department has come to tell us when the relocation will start and how we will be compensated. We would face huge losses if the government just forces us to move.”
As a result, the market and even Guangdong’s entire garment industry could fade away, Wang warned.
“In the past couple years, a large number of garment factories in Guangzhou, Foshan and Dongguan have already shut down and moved to Southeast Asian countries because of the combination of soaring costs, shrinking orders and lack of budgets to make the investment to meet stricter environmental regulations,” he said.
“Moving the Zhongda market out of its current location will definitely result in further closures of up to thousands of small and medium-sized companies in the industry.”
But some entrepreneurs see the turmoil surrounding the Zhongda market move as a business opportunity.
Liu Yi, founder of Ebudaowei.cn, which matches demand for fabrics with suppliers, is trying to organise a fabric market in Bangladesh to rival Zhongda market.
“We can see the consumption power of the domestic market will decline in the next few years, causing the entire garment industrial chain here to shrink,” Liu said. “For example, many down jacket producers saw the sales rate of down jackets at less than 50 per cent last year, which means that most down brands produced 100 down jackets but only sold 30, 40 of them. The same happened in car sales, showing that the consumption power of [Chinese] residents has dropped sharply.” Liu said.
“Meanwhile, we see that there is a huge and emerging demand for fabrics in Bangladesh, as a growing number of Chinese textile and garment suppliers have set up factories there because overseas customers are increasingly only giving orders to factories in Southeast Asian countries, instead of China.
“The Guangzhou government’s push to move Zhongda market could be a good opportunity for us. We are going to open a fabric market in [Bangladesh’s capital city] Dhaka this year. It would attract more of Guangdong’s garment and fabric factories to invest in production line and sales operations in Dhaka, where there’s emerging demand.”
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