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source: http://blog.yoyoor.com/

The answer to the question to the title is: both. I got to take my second trip to Yiwu last month. The goal was to find some prices and samples for Mardi Gras beads—that’s right, those beads they throw on flashing girls on the spring break videos. I guess the beads have other purposes too but I am from the northern US and not too familiar with this product.

Anyway, it was clear that my sourcing mission for this trip was not actually to find a legitimate supplier of Mardi Gras beads. My boss had an important contract with a large US packaging company and someone from this company had a personal friend looking for the beads. In order to keep this packaging contract moving along, he offered to help the client’s friend look into the Mardi Gras beads in China. I asked Yoyoor’s Helpline where they suggested I look for this type of product, and they suggested heading to Yiwu’s “International Trade City”.



The Yiwu International Trade City is a massive complex covering several buildings and offering everything from electronics to furniture. The building that housed the beads had 4 floors: artificial flowers and vases on the 1st floor, hair ornaments and jewelry on the 2nd floor, holiday items and gifts on the 3rd floor, and the special “factory direct” section on the 4th floor. Of course, the 4th floor was pretty empty, and every booth at every other floor had the same “factory direct” promise.

I found the beads, but the next step depended on how “factory direct” each sales booth really was. Some people offered me to take me to their Yiwu factory later that afternoon, while others were vague as to their factory’s location (if there even was one) and other important details. If the booth was not actually a representative sales office of a factory, almost all the other booth owners said they were the “sister” or “brother” of a factory making this product— always a worrisome sign in the sourcing business. Some booths welcomed me to take samples, while other said I had to pay, and other said I could not take any samples and could only take pictures.

There are a lot of certainties about Yiwu: it is full of junk, the world’s consumers need this junk, and a lot of people (both Chinese and Westerners) have gotten rich through Yiwu. Yiwu refers to their junk as “commodities,” and there is no shame in being a “commodity” supplier, especially when you take into account the 3rd certainty that I just mentioned. I have a friend who used to work for a promotional gifts company in the US. After the company sent him to China, he had much success with Yiwu suppliers, and now runs his own promotional gift company from China. He is my Yiwu expert when I visit, which is a useful person to have because not all of Yiwu’s sales offices are located in the International Trade City or the Small Commodity Market.



After finding a few beads suppliers and passing business cards around, I asked my boss to inform him of the leads I had. My boss was honest and said, “this is the lowest rung on the sourcing ladder. We are not trying to sell Mari Gras beads here”. This may be his opinion, but beggars can’t be choosers, and I was not planning on being so picky.

Whether or not the beads contract succeeds, it was a worthwhile visit to Yiwu. Yiwu is a fascinating city— it reminds me of Shenzhen only focusing on “supplying” instead of “manufacturing”. Like Shenzhen, Yiwu was a farm village only a few years ago. In fact, the “uncivilized” nature of the city is still easy to find, even right after you get off the sleek high-speed train The ride from the train station to the downtown is either farmland or new buildings with newly erected traffic lights along the new expressway. The downtown consists of basically one street, with the International Trade City at one end, the Small Commodity Market at the other end, and the bus station and hotels in between. But Yiwu is still an anomaly: the city has a larger Middle Eastern population than Shanghai (and some excellent and authentic Middle Eastern restaurants); a larger foreigner population than Hangzhou. Nobody turns and stares at foreigners in this city that was only recently a farming village. They have a stadium and an airport with frequent departures to Hong Kong. Chinese bosses drive their Porsche Cayennes between 5-star restaurants and 5-star hotels. I got around mainly by 3-wheeled pedicab. Except for the pedicabs, all of these developments are new within the past 5 to 10 years.



But will it last? China is currently experiencing a huge downturn in exports. One of my main complaints with Yiwu is that the city is full of middle men, and in China’s supplier field, one of the biggest problems I have found is the prevalence of too many middle men. Why add more middle men to the equation? With prices being squeezed, won’t the middle men make your price even more unaffordable? Then again, won’t the competition of having 500 hair ornament supplier booths in a 2,500 square meter area keep prices down?

In my opinion, if China is to remain competitive in the export industry, they are going to have to “trim the fat” in all industries, especially the commodity industry. This is bad news for Yiwu, but does not mean the end is near. In fact, there are still plenty of opportunities in this wild west town; after all, the real secret to success is all in the guanxi. There is one more certainty about Yiwu: it’s worth checking out. With the high-speed train making it just an hour from Hangzhou, plus a good bus network to cities all over China, this place is worth writing home about, even if you are not in the sourcing field. After all, you’re in China to see China, and nothing says “China” quite like the scenes at Yiwu. So enjoy some greek salad and kebabs and check out the International Trade City to see just deep China’s sourcing industry can go.

(The end)from Shanghai and Hangzhou and arrive at the train station only to find a giant blob of taxis at the taxi queue. The scene was chaos, with some taxis driving up to the queue in reverse, almost all of the drivers leaving their cars running to go out and look for more passengers (everyone is going to the same place, after all), and horns blaring.