Downturn taking spark out of business, says lighter tycoon
Josephine Ma in Wenzhou, Zhejiang 13 November 2008
Sitting in a spacious office about the size of an average Hong Kong flat, Zhou Dahu , the mainland’s most well-known maker of lighters, looked tired and distracted.
The 56-year-old businessman has had a sleepless night. The previous day, an important client from France had visited his factory and asked him to cut his prices in the face of the economic downturn. The request was framed as a matter of survival for both.
Mr. Zhou spent 16 years building the Tiger Lighter empire in Wenzhou, Zhejiang, where more than 80 per cent of the world’s lighters are made. Wenzhou is home to China’s largest pool of private floating capital - 600 billion yuan (HK$680 billion) by some estimates - and it has long been hailed as a symbol of the country’s private economy.
Tiger Lighter Group may not be the largest among the thousands of Zhejiang lighter manufacturers, whose heyday was in the 1990s, but it does make one of the best-known brands, especially after Mr. Zhou and other Wenzhou lighter manufacturers won a European Union anti-dumping lawsuit in 2002.
Mr. Zhou’s success as a private businessman epitomises the growth of the mainland’s economy since the open-door policy took effect 30 years ago. However, that means taking the good with the bad, and the downturn has taken its toll.
Mr. Zhou said his survival strategy would be to squeeze into the top-end market of deluxe lighters, but the pressure was tangible.
“In 2002, there was a lot of pressure, but I did not feel the real threat,” he said. “But this time the real thing has come.”
Mr. Zhou is the son of a revolutionary, his father was one of the Communist Party members who helped found the People’s Republic of China, but he was sent off to Wenzhou after his father was labelled a rightist during the Cultural Revolution.
In 1969 he left to work as a metal worker in Xian. However, private business was illegal at that time, and there was no freedom of mobility or work, so Mr. Zhou was sent back to Wenzhou. After a few years of wandering, he finally settled down with a job in a post office in Wenzhou in 1976.
But the stable life ended when his wife was laid off from a state-owned beverage factory with a one-off compensation of 5,000 yuan in 1991. Mr. Zhou decided to hire a couple of workers to start a sweatshop assembling lighters, an industry that had emerged in Wenzhou a few years before.
Surprised by the potential of the business, he made a bold decision to leave the post office to start a factory of 100 workers in a rundown building in 1992.
“There was pressure whether I should give up my iron rice bowl and whether it was the right path to take,” Mr. Zhou said.
Hong Kong and Taiwanese businessmen had swarmed to Wenzhou to buy lighters for re-export to Japan and western countries. The number of lighter factories and sweatshops soon soared to 3,000, as the cost of making a lighter in Wenzhou fell to one 30th of that in Japan.
The beginning of Tiger Lighters is typical of many Wenzhou factories and also reminiscent of Hong Kong in the 1960s.
Mr. Zhou and his family were among 100 workers who assembled tiny components for lighters in a packed, poorly ventilated and dimly lit building by day, and they slept in a cramped attic in the factory at night.
Slowly Mr. Zhou’s business began to build a reputation and was regularly hailed by the media because of his refusal to produce a substandard lighter, compared with others that flooded the market in the early 1990s.
Mr. Zhou said the ups and downs of his career were a result of the “big environment” - the macroeconomic situations domestically and globally.
Tiger Lighters has benefited from the booming, labour-intensive manufacturing industry in Wenzhou.
When China joined the World Trade Organisation in 2001, the lighter manufacturing industry was among the first to feel the pressure, as the EU filed an anti-dumping lawsuit.
According to People’s Daily, Wenzhou produced 850 million lighters a year at that time, with 500 million exported - 80 per cent of them to Europe.
Mr. Zhou, president of the Wenzhou Smoking Set Association, led the team that defended China in the anti-dumping suit, and eventually won.
But since last year, Mr. Zhou says the “big environment” has produced another threat to his business.
Lighter manufacturing has suffered severely from rising labour costs, soaring metal prices and the appreciation of the yuan over the past two years.
“We have to try to survive and find a way out from the big environment. The manufacturing industry is really tiring,” Mr. Zhou said.
According to Zhou Dewen, president of the Wenzhou Association for the Advancement of SMEs (small and medium-sized enterprises), fewer than 100 out of the 3,000 lighter factories remain because of the soaring costs.
Zhou Dahu said he could feel the chill of the financial crisis emanating from the US and Europe as there were almost no Christmas orders this year.
And the visit from his long-time client from France early this month was a signal that the worst was about to come.
“He said the euro had depreciated by 20 per cent and asked me to help him through the difficulty,” Zhou Dahu said.
“This is the first time something like this has happened. I cannot turn him down flatly, but it is a very difficult choice.
“When I started my business, I was very tired physically. Now, although I am millionaire, it’s my heart that is tired.”
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Downturn taking spark out of business, says lighter tycoon
Josephine Ma in Wenzhou, Zhejiang
13 November 2008
Sitting in a spacious office about the size of an average Hong Kong flat, Zhou Dahu , the mainland’s most well-known maker of lighters, looked tired and distracted.
The 56-year-old businessman has had a sleepless night. The previous day, an important client from France had visited his factory and asked him to cut his prices in the face of the economic downturn. The request was framed as a matter of survival for both.
Mr. Zhou spent 16 years building the Tiger Lighter empire in Wenzhou, Zhejiang, where more than 80 per cent of the world’s lighters are made. Wenzhou is home to China’s largest pool of private floating capital - 600 billion yuan (HK$680 billion) by some estimates - and it has long been hailed as a symbol of the country’s private economy.
Tiger Lighter Group may not be the largest among the thousands of Zhejiang lighter manufacturers, whose heyday was in the 1990s, but it does make one of the best-known brands, especially after Mr. Zhou and other Wenzhou lighter manufacturers won a European Union anti-dumping lawsuit in 2002.
Mr. Zhou’s success as a private businessman epitomises the growth of the mainland’s economy since the open-door policy took effect 30 years ago. However, that means taking the good with the bad, and the downturn has taken its toll.
Mr. Zhou said his survival strategy would be to squeeze into the top-end market of deluxe lighters, but the pressure was tangible.
“In 2002, there was a lot of pressure, but I did not feel the real threat,” he said. “But this time the real thing has come.”
Mr. Zhou is the son of a revolutionary, his father was one of the Communist Party members who helped found the People’s Republic of China, but he was sent off to Wenzhou after his father was labelled a rightist during the Cultural Revolution.
In 1969 he left to work as a metal worker in Xian. However, private business was illegal at that time, and there was no freedom of mobility or work, so Mr. Zhou was sent back to Wenzhou. After a few years of wandering, he finally settled down with a job in a post office in Wenzhou in 1976.
But the stable life ended when his wife was laid off from a state-owned beverage factory with a one-off compensation of 5,000 yuan in 1991. Mr. Zhou decided to hire a couple of workers to start a sweatshop assembling lighters, an industry that had emerged in Wenzhou a few years before.
Surprised by the potential of the business, he made a bold decision to leave the post office to start a factory of 100 workers in a rundown building in 1992.
“There was pressure whether I should give up my iron rice bowl and whether it was the right path to take,” Mr. Zhou said.
Hong Kong and Taiwanese businessmen had swarmed to Wenzhou to buy lighters for re-export to Japan and western countries. The number of lighter factories and sweatshops soon soared to 3,000, as the cost of making a lighter in Wenzhou fell to one 30th of that in Japan.
The beginning of Tiger Lighters is typical of many Wenzhou factories and also reminiscent of Hong Kong in the 1960s.
Mr. Zhou and his family were among 100 workers who assembled tiny components for lighters in a packed, poorly ventilated and dimly lit building by day, and they slept in a cramped attic in the factory at night.
Slowly Mr. Zhou’s business began to build a reputation and was regularly hailed by the media because of his refusal to produce a substandard lighter, compared with others that flooded the market in the early 1990s.
Mr. Zhou said the ups and downs of his career were a result of the “big environment” - the macroeconomic situations domestically and globally.
Tiger Lighters has benefited from the booming, labour-intensive manufacturing industry in Wenzhou.
When China joined the World Trade Organisation in 2001, the lighter manufacturing industry was among the first to feel the pressure, as the EU filed an anti-dumping lawsuit.
According to People’s Daily, Wenzhou produced 850 million lighters a year at that time, with 500 million exported - 80 per cent of them to Europe.
Mr. Zhou, president of the Wenzhou Smoking Set Association, led the team that defended China in the anti-dumping suit, and eventually won.
But since last year, Mr. Zhou says the “big environment” has produced another threat to his business.
Lighter manufacturing has suffered severely from rising labour costs, soaring metal prices and the appreciation of the yuan over the past two years.
“We have to try to survive and find a way out from the big environment. The manufacturing industry is really tiring,” Mr. Zhou said.
According to Zhou Dewen, president of the Wenzhou Association for the Advancement of SMEs (small and medium-sized enterprises), fewer than 100 out of the 3,000 lighter factories remain because of the soaring costs.
Zhou Dahu said he could feel the chill of the financial crisis emanating from the US and Europe as there were almost no Christmas orders this year.
And the visit from his long-time client from France early this month was a signal that the worst was about to come.
“He said the euro had depreciated by 20 per cent and asked me to help him through the difficulty,” Zhou Dahu said.
“This is the first time something like this has happened. I cannot turn him down flatly, but it is a very difficult choice.
“When I started my business, I was very tired physically. Now, although I am millionaire, it’s my heart that is tired.”
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