First registered entrepreneur faced mountain of taxes and fees
Stephen Chen 4 December 2008
Zhang Huamei of Zhejiang province knows about buttons. Describe a fastening to the Wenzhou businesswoman and she can find it for you. Whether it’s metal, “nano-tech” clamp buttons for designer jeans or traditional mandarin-style drawstrings, they are all just a phone call away.
But that is not what she is most famous for.
In 2004, a group of officials showed up at her company. “Fee collectors,” she thought, judging by the smiles on their faces. But then one of the men congratulated her and announced: “You were the first getihu [small business owner].”
Ms. Zhang thought she was looking at a gang of swindlers and would have called a security guard if there was one. But the man took out a copy of an old, handwritten business licence with a black-and-white mugshot, and she recognised the face and outdated hairstyle as her own. The men were government propaganda officials documenting the historical record of the opening and reform policy.
“I just couldn’t believe it,” Ms. Zhang said. “I thought I couldn’t possibly be the first getihu in China. It was less likely than winning the lottery.”
She had ample reason to react incredulously. In the late 1970s small businesses were emerging all over the mainland, but nowhere thrived more than in Guangdong, with its proximity to Hong Kong and overseas connections.
Wenzhou, on the other hand, was nowhere. A coastal city with a long history of business and trade, it had suffered three decades of class struggle and been reduced to one of the poorest cities in Zhejiang province. Even here she was an unlikely candidate to start up a small business.
“In 1979, I put a bench by my doorstep and started selling buttons,” Ms. Zhang recounted. “Many of my neighbours had already turned their street-facing houses into kiosks. I was only 19 years old and knew nothing about business.
“In middle school, the teachers told us that running a small business was a crime. I put chairman Mao Zedong’s icons side by side with the buttons to make myself feel more comfortable, but I still felt guilty. My former classmates treated me like a criminal. They pretended they didn’t know me when they passed by.
“But I had to do it because my family was poor. I couldn’t find a job in a state-owned factory like my classmates, who had influential parents or connections. So I followed some more clever, more experienced neighbours to learn business.”
As to why she was the first officially registered small-business owner, Ms. Zhang said it was probably because she had not been smart.
An unlicensed small-business owner was subject to extortion by bribe-seeking government officials, she said, but a licence only led to a greater burden - a mountain of taxes and fees. The more experienced entrepreneurs avoided getting a licence as long as they could.
“Plus, few could know with certainty at that time whether capitalism would be banned again.”
The 1980s were a golden age for small businesses on the mainland. The market was so big that a keen entrepreneur could make money in virtually any trade. Ms. Zhang’s button business surged as young men and women began to wear jeans, Hawaiian shirts and miniskirts.
As disco music and Taiwanese singer Teresa Teng’s pop songs hit the streets in the late 1980s, Ms. Zhang opened a proper shop and made her first pot of gold - more than 10,000 yuan - from selling buttons.
But the easy days ended in the late 1990s. Lured by the more profitable footwear business, Ms. Zhang abandoned buttons for shoes and quickly lost all her savings.
When she returned to the button business, she found that making a living as a getihu was harder than before. Now there was stiff competition.
Not only had the number of small businesses increased significantly, economy-of-scale operations such as department stores and supermarkets were also expanding.
Almost overnight, the long queues in front of every shop disappeared and retailers needed to compete ferociously to sell an item to increasingly picky customers.
As a result, government taxes and fees became an unbearable burden. From 1999 to last year, more than 8 million small businesses shut down. To avoid that fate, Ms. Zhang changed her getihu into a limited company, to avoid having to pay various taxes and fees.
About the same time, she went back into the button business.
“Business today is totally different from the past, and only the most professional can survive,” she said.
Her button business is thriving today despite the rapid appreciation of the yuan. She said she secured some big domestic customers.
In recent years, the most fashionable buttons on the mainland were decorated with laser beams and made of ivory, horn or seashell, she said. But her favourite is made of cheese - and it’s edible.
“They smell good and feel comfortable. I highly recommend them to gentlemen who wear a suit to work every day,” she said.
The entrepreneurial spirit is being reborn in young people, who have opened hundreds of thousands of online shops without applying for a business licence or paying government fees and taxes, Ms. Zhang said. She admires and supports them.
“They will start another business revolution,” she said.
1 comment:
Small-business pioneer started with buttons
First registered entrepreneur faced mountain of taxes and fees
Stephen Chen
4 December 2008
Zhang Huamei of Zhejiang province knows about buttons. Describe a fastening to the Wenzhou businesswoman and she can find it for you. Whether it’s metal, “nano-tech” clamp buttons for designer jeans or traditional mandarin-style drawstrings, they are all just a phone call away.
But that is not what she is most famous for.
In 2004, a group of officials showed up at her company. “Fee collectors,” she thought, judging by the smiles on their faces. But then one of the men congratulated her and announced: “You were the first getihu [small business owner].”
Ms. Zhang thought she was looking at a gang of swindlers and would have called a security guard if there was one. But the man took out a copy of an old, handwritten business licence with a black-and-white mugshot, and she recognised the face and outdated hairstyle as her own. The men were government propaganda officials documenting the historical record of the opening and reform policy.
“I just couldn’t believe it,” Ms. Zhang said. “I thought I couldn’t possibly be the first getihu in China. It was less likely than winning the lottery.”
She had ample reason to react incredulously. In the late 1970s small businesses were emerging all over the mainland, but nowhere thrived more than in Guangdong, with its proximity to Hong Kong and overseas connections.
Wenzhou, on the other hand, was nowhere. A coastal city with a long history of business and trade, it had suffered three decades of class struggle and been reduced to one of the poorest cities in Zhejiang province. Even here she was an unlikely candidate to start up a small business.
“In 1979, I put a bench by my doorstep and started selling buttons,” Ms. Zhang recounted. “Many of my neighbours had already turned their street-facing houses into kiosks. I was only 19 years old and knew nothing about business.
“In middle school, the teachers told us that running a small business was a crime. I put chairman Mao Zedong’s icons side by side with the buttons to make myself feel more comfortable, but I still felt guilty. My former classmates treated me like a criminal. They pretended they didn’t know me when they passed by.
“But I had to do it because my family was poor. I couldn’t find a job in a state-owned factory like my classmates, who had influential parents or connections. So I followed some more clever, more experienced neighbours to learn business.”
As to why she was the first officially registered small-business owner, Ms. Zhang said it was probably because she had not been smart.
An unlicensed small-business owner was subject to extortion by bribe-seeking government officials, she said, but a licence only led to a greater burden - a mountain of taxes and fees. The more experienced entrepreneurs avoided getting a licence as long as they could.
“Plus, few could know with certainty at that time whether capitalism would be banned again.”
The 1980s were a golden age for small businesses on the mainland. The market was so big that a keen entrepreneur could make money in virtually any trade. Ms. Zhang’s button business surged as young men and women began to wear jeans, Hawaiian shirts and miniskirts.
As disco music and Taiwanese singer Teresa Teng’s pop songs hit the streets in the late 1980s, Ms. Zhang opened a proper shop and made her first pot of gold - more than 10,000 yuan - from selling buttons.
But the easy days ended in the late 1990s. Lured by the more profitable footwear business, Ms. Zhang abandoned buttons for shoes and quickly lost all her savings.
When she returned to the button business, she found that making a living as a getihu was harder than before. Now there was stiff competition.
Not only had the number of small businesses increased significantly, economy-of-scale operations such as department stores and supermarkets were also expanding.
Almost overnight, the long queues in front of every shop disappeared and retailers needed to compete ferociously to sell an item to increasingly picky customers.
As a result, government taxes and fees became an unbearable burden. From 1999 to last year, more than 8 million small businesses shut down. To avoid that fate, Ms. Zhang changed her getihu into a limited company, to avoid having to pay various taxes and fees.
About the same time, she went back into the button business.
“Business today is totally different from the past, and only the most professional can survive,” she said.
Her button business is thriving today despite the rapid appreciation of the yuan. She said she secured some big domestic customers.
In recent years, the most fashionable buttons on the mainland were decorated with laser beams and made of ivory, horn or seashell, she said. But her favourite is made of cheese - and it’s edible.
“They smell good and feel comfortable. I highly recommend them to gentlemen who wear a suit to work every day,” she said.
The entrepreneurial spirit is being reborn in young people, who have opened hundreds of thousands of online shops without applying for a business licence or paying government fees and taxes, Ms. Zhang said. She admires and supports them.
“They will start another business revolution,” she said.
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