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Market force

Market force

Write: Veena [2011-05-20]

Business is naturally at the top of the agenda for most entrepreneurs - it is, after all, their passion and profession.

But not always.

He Haimei, president and founder of Hanmei Garment Co Ltd, is one of the exceptions.

The 55-year-old businesswoman is rarely seen at her office, factory, or shops. She spends most of her time at local government meetings or walking around the market helping other shop owners solve business disputes and calling for honest trade.

She has the credentials to do so. He was there as Yiwu grew from a small town in East China's Zhejiang Province into the busiest commodity-trading center for small goods in the country. International purchasing giants like Carrefour, the United Nations and the Chinese Ministry of Foreign Affairs all have procurement centers in the town.

There are tens of thousand of shops and several hundred thousand buyers in the market every day, so it is inevitable that conflicts arise. The limited number of commercial and administrative officials on-site has led He and other well-established shop owners to volunteer to help resolve problems.

"We are veterans here, and venders here trust us and accept our coordination," she says.

Her firm Hanmei Garment is a leading scarf maker in Yiwu. Ninety percent of its production is exported to more than 30 nations in Europe, the Middle East and Southeast Asia, including Muslim countries like Malaysia where demand for women's scarves is robust and the Hanmei brand is widely known.

He's business concentrates on cutting fabric, packaging and trading, leaving the printing and dyeing work to three other local operations. Hanmei has 100 workers in its factory and a sales staff of 14.

"I don't like the battle line to be too long. I would prefer to be more focused on innovation in new patterns and designs, and have quick reaction to market demands," she says.

Like most Yiwu entrepreneurs He is reluctant to reveal the size of her business.

Carrying Gucci's latest designer handbag, driving a BMW sedan and living in a large house in a quiet suburb of Yiwu, He has obviously done well, but she clearly recalls the struggle to survive three decades ago.

Countryside beginnings

He Haimei

In 1976, the then 24-year-old country girl married a salesman in a Yiwu food factory. Only a middle-school graduate, she found it hard to get a job, so the family's only income was her husband's salary of 33 yuan a month.

When their son was born, life became even harder. They spent 5 fen - one-20th of a yuan - for each meal of vegetables at the local cafeteria, then added copious soybean sauce to give the rice more taste.

She still remembers the feeling of seeing her son staring at other children eating candy.

"I felt very guilty that I could not give him even a simple candy. I told myself no matter how hard it is, I would give my son a quality life some day," she says.

Watching his mother work hard every day, the boy matured quickly, rising very early in the morning to share the burden and prepare breakfast for the family before going to school.

He started her first business selling pictures from a movie based on the Chinese classic novel Dream of Red Mansion popular throughout the country at the time. When her older brother, a soldier, came to visit her from Hangzhou, capital of Zhejiang Province, he brought three pictures from the movie, telling her that they were very popular in the cities.

Sensing there might be an opportunity, He bought a compact camera, went to a local movie theater, took 30 pictures of the movie and had them developed them at a photo studio.

She persuaded a bicycle keeper outside the theater to help sell the pictures.

"Let's sell them for 1 yuan each and split the income - if they don't sell, give them back to me" was her sales pitch.

After a long, persuasive talk, the bike guard agreed to give it a try. He easily sold out all 30 pictures the first night.

To save cost, He then decided to develop the black-and-white pictures herself and her 20-sq-m home became her studio. Every night, she tucked her son in to bed then started developing pictures in the dark, keeping at it until 3 am. At five in the morning, she went out to sell her work.

She later expanded the business to Niansanli, an outdoor market 10 km away from downtown Yiwu. The town had a fair three times a month, mainly selling small daily necessities. She and her husband walked several hours to the market, put a self-made poster on the wall, and shouted for business. She wholesaled her pictures at only 2 jiao - one-fifth of a yuan - that buyers later sold at five times the price in cities like Nanchang and Hefei.

He's photos became among the best-selling products at the market.

By 1981, she had managed to save 50,000 yuan and bought her son a tricycle for 36 yuan - more than the family's previous monthly income.

But the money did not help to improve her social status, since sellers, especially market venders, were seen as low class or even illegal during the planned economy still in place in the early 1980s. When she saw former classmates or friends on the street, she tried her best to avoid them.

Selling small commodities on the street was at that time subject to government crackdowns, but He believed there was nothing wrong with the free trade. One day in 1982, she and some vender friends saw that Yiwu Communist Party Secretary Xie Gaohua was inspecting the city. Without hesitation, He went up to Xie and challenged him.

"Why can't we sell things in Yiwu?" she asked. "Shanghai already has a legal market for such business. Why can't we have it?"

The city's top official did not give a reply at the scene, but held a meeting a month later, which resulted in the first changes in decades for Yiwu. More than 200 venders attended the meeting that ended with a decision for an official open market. The government committed support for infrastructure and regulations.

"I burst into tears I knew I had found a correct route," He recalls.

Wider play for a sharp mind

Now able to give wider play to her sharp business mind, He bought garments ranging from children's clothes to caps in Shanghai and sold them in Yiwu.

Finding it more profitable to include processing, He made her largest investment in 1984 - spending 180,000 yuan on a pleating machine.

"A friend of mine sent me a pleated skirt. When I wore it, everybody thought it was pretty. Most people would just feel happy about the compliment, but for me it meant another business opportunity," she says.

After selling 200 pleated skirts in a day, He decided to buy skirts and pleat them herself. "I could earn 2 to 3 yuan for each skirt, compared to only 1 yuan profit for just selling them."

In a year, she broke even.

He started the scarf business 1987, beginning with the domestic market and many years later expanding to overseas sales. A couple of years ago, her exports to Europe started through a Wenzhou family who had lived in Rome for many years.

Through the partner, the Hanmei brand now extends to mainstream European markets. "Products with a wholesale price of around 10 yuan each from China have the largest sales volume in Europe, where they are then sold for at least double the price," she says.

Also through the partner, He's now-grownup son found a bride last year. "The family only has one daughter. So with (the marriage), the two firms' businesses connect more closely," He says with a smile.

For his part, He's son started helping with the business immediately after graduation from Zhejiang University of Technology.

"I gave my son two choices - pursue further studies in the United States or help with my business. Without hesitation, he chose to stay."

One morning, He told her son at breakfast: "I will lend you 2 million yuan, and give the best part of my business - the best-selling large-sized scarf - to manage. Show me what you can do with it."

Now with a degree in international trade, He's son uses modern and professional management approaches that He believes are much more advanced than her own. "My son always has very clear figures on cash flow and stock, while I was never clear about them. And he pays special attention staying abreast of the latest trends."

He says she now devotes more time to improvement of local trading facilities than on her own business. One of the first entrepreneurs to call for the establishment of the market, He's ambition is to keep it growing and prosperous.

"Being honest is the key. If one shop ruins the reputation, the whole market will go nowhere," she tells other shop owners.