Thursday, December 06, 2007

Play the Game of Life - Ryan Petersen's Blog

Play the Game of Life - Ryan Petersen's Blog: "Even in this country of economic miracles and overnight success stories, the city is an anomaly. What was 20 years ago an isolated farming village encircled at a distance by jagged green mountains, is today a key center for vast global trade networks.

But this city is not Shenzhen, whose proximity to Hong Kong, access to the sea and status as China's first special economic zone make its 'miraculous' growth appear somewhat less divinely influenced.

Nor is it Shanghai or some other coastal metropolis with long-standing ties to the international business community. Rather, we are talking about Yiwu, a small town a few hours from the Pacific coast in East China's Zhejiang province that now boasts the world's largest wholesale markets.

Today this sourcing 'Mecca' attracts thousands of businessmen from all points on the compass, each drawn by the world's lowest prices on generic goods."

My Photo
Name: Ryan Petersen
Location: New York, New York, United States

I'm doing an MBA at Columbia Business School in New York City. Recently the blog has been focused on investing and doing business in Africa.

I started it, however, when I got sick of mass e-mailing friends and family everytime something weird happened during the two years I worked in China.

Check the archives and multimedia galleries (below) to find lots of great stories, pictures, and videos from travels in the U.S., China, Vietnam, Thailand, Japan, Kenya and other parts of the world.

But how and why did the markets develop here? In a period of just two decades, how did this isolated farming town with no port, without a large (by China's standards) or skilled (by any standards) population base, nor access to any noteworthy raw materials, develop into a major player in the global supply chain?

To answer these questions, I spoke with Haresh Ahuja, an Indian sourcing agent, raised in Hong Kong, who has been coming to Yiwu for more than a decade.

At that time, Yiwu didn't have the factories, epic wholesale shopping centers or the accompanying luxury hotels. Yiwu started out as a 'stock market,' he says. If a manufacturer's client rejected items for quality control or some other reason, the stock was shipped here.

Sometimes the goods were completely defective, so they would be sold for well below the cost of production (and often below the cost of raw materials).

A guy from Africa might come and buy 10,000 TV remote controls, none of which actually work, but maybe he knows that he can strip out some of the components and resell them for more than he has to pay here.

Other times there were minor problems that might not affect a less distinguishing customer.

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