Sitting in his office fitted out with stylish black leather furniture and sipping green tea, Zheng Xiaozhong, who owns a garment exporting business in the southern Chinese city of Dongguan, is already looking ahead to next year.
He plans to open a second factory employing 2,000 workers. Because orders from Europe have declined, production will be aimed at the domestic market – sold through a chain of shops named after his four-year-old daughter. Mr Zheng is part of a global network of businessmen from Wenzhou, a city near Shanghai renowned for the entrepreneurial flair of its people.
As China’s economy has started to slow, albeit to gross domestic product growth of 9.1 per cent in the third quarter, and small and medium-sized enterprises have struggled with higher labour costs and an appreciating renminbi, Wenzhou has made headlines because of its loan-sharks. There is no solid data about the size of underground financing in China, though the central bank estimates it could be up to Rmb4,000bn ($627bn), or 8 per cent of formal lending in the economy. Wen Jiabao, China’s premier, visited the city a fortnight ago, along with Zhao Xiaochuan, central bank governor, and directed banks to provide credit support to small firms.