As the calendar turns into January, Yuyao also goes into its traditionally coldest season. Yet for Zhejiang Sacon Group, the Spring is already very much in the air. At the manufacturer’s workshops, production lines are geared to their full capacity, churning out water-heaters, cooker hoods and other kitchen appliances. In and around the company, a gushing vitality is fueled by burning enthusiasm for innovation and perfection. Zou Guoying, the Group’s CEO was obviously in a cheerful mood. According to Zou, Sacon gradually pulled out of difficult situation in 2009 and achieved a steady and relatively fast growth. Entering the new year, the company is experiencing a pleasant busy time with its production thanks to a improving export situation and an increase in foreign orders, which has already been scheduled until this June.
Sacon, however, is just one of many examples that the city’s enterprises buck the trend and soured against a headwind.
From 2008 to 2009, Yuyao’s industrial economy went through a V-shape course, reaching its high in the first half of 2008, before sliding into the bottom at the end of the year, followed by a gradual stabilizing and rebounding starting the second quarter 2009. It is estimated that the total GDP for 2009 grew by 9% from the previous year. The accumulative growth for the city’s industrial output went into positive territory at the end of last year. The estimated output for over-scale industries reaches RMB 81.9 billion for the whole year, maintaining the same level as 2008, and the profits totals RMB 3.5 billion, a jump of 6% year-on-year. For the whole year, the city’s three industries, namely primary, secondary and tertiary industry recorded an output worth RMB 18.7 billion, up by 14%, responsible for 5% of the total GDP growth and breaking 50% mark in its share of economic growth.
Yuyao’s economic rebound was way faster than expected in 2009.
Confidence and Moral amid Crises
Looking back, there was indeed a period in 2009, when the word “decline” dogging Yuyao’s industrial economy like an unshakable shadow during one of the toughest year for the city’s economic development since the reform and opening up. From mounting crises to a gradual turnaround before turning red into black ink, several key words can characterize the secret for this year’s development course: Confidence and Moral when facing crises, Courage and Vision in tackling crises, and Wisdom and Innovation to ride out crises.
This arguably most severe financial meltdown in a century brought enormous difficulties for Yuyao’s economy. Yet what matters most when facing hardships is the resolve and confidence on the one hand, and decision and action on the other. Based on this wisdom and confidence and guided by the scientific outlook on development, the city’s people’s congress and the city government carried out measures to implement decisions made by provincial and Ningbo people’s congress in an all-around manner. With due courage and vision, the city authorities studied the international and economic situation from a broad and holistic perspective. With comprehensive analysis and decisive measures, they forged a responding alliance by pulling together people from all walks of life and channeling the difficulties into driving forces so as to promote the stable and relatively fast growth of the city economy and make the target of “maintaining growth, people’s livelihood and stability” a reality.
Series of stimulus measures were introduced in an orderly and timely fashion, including measures related to foreign trade and export, corporate innovation and market expansion. Throughout the year, a total sum of RMB 347 million were handed out as policy supporting fund to stimulate economy, up by 72.1% from the previous year. In addition, various taxes and fees totaling RMB 370 million were also reduced or removed, 2.7 times that of 2008.
Thumbing through the note book, I (correspondent) can still remember clearly how, on Feb. 1st last year, the first workday after the Spring Festival break, major leaders from the city’s congress and the city government visited struggling enterprises, bringing confidence to workshops, getting back first-hand information and helping to solve difficulties, an unexpected tour that greatly lifted the moral of both the executives and the rank and file. To mark the year of “enterprises service”, since the beginning last year, cadres of government departments and authorities at different levels walked out of their office buildings to deliver the “one policy for one company” service, helping companies to solve problems and seek growth while encouraging industrial restructuring and upgrading. Within a year, 1350 problems were identified and 1218 of them solved, translating into a 90.8% problem-solving rate.
In the mean time, in order to help ease the financing difficulties for small and medium sized enterprises (SMEs), efforts were also made to enhance communication between banks and enterprises to promote mutual trust and greater corporation, a move that has effectively made the moderately loose monetary policy a real benefit for SMEs. On the SME Financial Forum, various banking institutions reached tentative financing agreements totaling RMB 1.1 billion with 123 enterprises. As of December last year, total loans denominated in both local and foreign currencies issued by the city’s financial institutions reached RMB 67.3 billion, a surge of 42%, or RMB 19.9 billion from the beginning of the year.
Powerful measure yielded positive effect, which saw greater confidence and capability of enterprises in withstanding financial crisis, sped-up economic restructuring and upgrading, a large number of enterprises getting out of predicament, as well as a steady and orderly development.
Blazing New Trails to Move out of the Bottom
Facing hardships and challenges, confidence is a vital asset, even more precious than gold. However grim the situation was, there were always enterprises facing up to the difficulty, taking the initiative to deal with challenges actively.
Entrepreneurs were searching for new economic growth points: There are serious problems with the high homogeneity of our portfolio; We need to upgrade our pipeline.
Decision makers were laying out new marketing strategy: Our marketing strategy needs adjustment; With the flagging export market, we should give equal attention to both domestic and international market.
Executives were contemplating new profit areas: We need to improve our cost management and cut our energy consumption to embark on a low-carbon development path.
Chronicling last year’s interview and inspection, it is easy to identify a shared vision gradually taking root in Yuyao’s business community—to spur the transformation through development and to seek development via transformation. Facing a fast worsening external environment, people grit their teeth, sailing off into an uncharted water to explore new business opportunities, new industry, product and market amid their uphill battle to climb out of the bottom.
Better Lighting Co., Ltd. is an export-oriented company specialized in manufacturing lawn lighting, yard lighting and solar lighting. The economic downturn dealt a severe blow to the company, sending its export volume declining for 5 consecutive months. Just as the enterprise fell to its lowest ever point, the decision makers timely and decisively adjusted their strategy. On the one hand, the company set up a subsidiary in Europe, taking on tasks such as new product design, market information collecting and product selling. On the other hand, the company launched a credit-business campaign, pledging to take back all products unconditionally whether or not the products in question do have flaws so long as purchasers raise the request. These timely responding measures helped the company quickly get out of the depression and for the first 11 months of 2009, the company managed a 121% year-on-year jump in its profit.
Yuyao Biaohua Electronics is yet another typical example. The grim outlook of the internal market substantially dampened the demand for small home appliances. Yet the company was eyeing another potential business opportunity opened up by the European and American consumers turning away from restaurants into homes amid the crushing financial crisis. To make most of this emerging inch, the company upgraded and improved its existing toaster and developed various styles of new products. The products were so well received that supply quickly fell short of demand. In this way, the company not only managed to consolidate its European market, but broke new grounds among American consumers, as well.
The time of crises gave a perfect interpretation to what means the entrepreneurship that defies any hardship and challenges and dares risks to fight for survival and growth. It is estimated that last year the share of new products reached 21.9% of the total output by over-scale enterprises, representing a 4.2 percentage point increase from the previous year. A total of 32 products were newly inscribed as famous products at Ningbo or above level.
Combating challenges by Strengthening Tendons and Bones
The spread of global financial crisis brought to Yuyao’s economy as much shock and jolt as sense of urgency and vigor for transformation. The city’s people’s congress and city government called for a further clarification of the focus of industrial development, accelerating industrial restructuring and optimization, intensifying efforts in the development of new-and-high-tech industry and “sophisticated manufacturing”, with a view to further enhancing the strength and competitiveness of Yuyao’s industry.
According to the city’s Bureau of Science and Technology, in 2009 alone, the city added 2236 newly granted IPOs, including 79 inventions with proprietary intellectual rights, up by 33% and 41% from the previous year, respectively. Industrial investment fulfilled RMB 4.943 billion in the first three quarter of last year, up by 12.2% year-on-year. These figures bear testimony to the inspiring advancement in the city’s bid of developing advanced manufacturing industry and heralded an important breakthrough in the promotion of the strategy by the city’s leadership to build Yuyao into an “innovative city” in an all-round manner. By relying on scientific and technological advancement and independent innovation, Yuyao’s economy will usher in a crucial turning point in the transformation of its development mode, turning from a production factor driven economy to an innovation powered one which will put more emphasis on internal quality as a way to strengthen tendons and bones.
Since last year, the city has been building on its existing achievements while working out long-term vision, seizing key opportunities while focusing on making breakthroughs, and continuously pushing for industrial structure optimization and upgrading. Mid-and-long term industrial development blueprints were drawn out for 10 industries, including small home appliance, lighting, metal hardware, electric tools, and special industrial economy was boosted for a healthier and faster growth. In the mean time, in order to speed up the construction and development of Yuyao Economic Zones, efforts were made to consolidate and upgrade various zones. In an effort to press ahead with another round of sound and rapid development of Simen county, a document concerning the work of deepening the reform and accelerating the development of satellite communities in Simen county was put forward. Through a series of measures such consolidation, upgrading and concentrating for better development, the city has built up an increasingly resilient economy on an ever-strengthening ground.
While uplifting sophisticated manufacturing industry, the city also spared no efforts in developing modern service sector, tapping into increasingly higher consumption level for growth. To that end, the city authorities made a major decision to spur the development of modern service industry by laying out a “one plus X” policy framework for the development of the sector to substantially push forward the construction of producer service complex and actively nurture the growth of E-commerce, creative design and other new type of city economy. The aim is to facilitate more coordinated development of both modern service sector and industrial economy to make the twin-force a “new engine” for the city’s economy growth.
Now, having gone through the tough 2009, we are marching into the 2010, a year of hope and challenges. Let us yet again pool together our wisdom and efforts to embrace new challenges and dedicate ourselves to the shared path of exploring scientific development. Let us commit our further efforts to transform the pattern of economic growth and ensure that Yuyao’s economy sail a steady and fast trip on its way toward an even broader international stage.
