Entrepreneurs in east China return to real economy
Updated: 2012-02-04 15:08
SHAOXING, Zhejiang - Ji Guomiao has been busily recruiting factory workers for the past week, hoping to run ranks of textile machines at full blast as soon as possible.
The board chairman of Huatong Color Spun, based in the city of Shaoxing in east China's Zhejiang province, has spent more than 1 billion yuan ($158.7 million) to develop hemp fiber products and apply for related patents.
This wouldn't have been an option for Ji three years ago, when he invested all of his money into cotton futures and made colossal profits.
However, when he lost over 50 million yuan in the futures market last year, the once-major trader of futures decided to return to the manufacturing industry.
Ji's textile enterprise is one of many businesses along the southeast coastline that have responded to the central government's call for a real economy.
According to a statement released at an annual central economic work conference held in December, China will take a firm hold on real economic development and create a social atmosphere that encourages acquiring wealth through entrepreneurship.
"Real economy" refers to the part of the economy associated with the actual production of goods and services, including agriculture,manufacturing and the service trades. It is regarded as the foundation of a country's comprehensive strength and the material basis of people's livelihoods, according to economic analysts.
The real economy, especially the manufacturing sector, is key to Zhejiang's economic transformation and development and an important force for scientific innovation, said Zhao Hongzhu, secretary of the Zhejiang provincial committee of the Communist Party of China (CPC).
He urged enterprises to optimize resource allocation and form a real economy cluster.
Coastal private businesses, which have been faced with financing problems, high interest rates and a more competitive market in recent years, have been struggling to make ends meet. Many entrepreneurs turned to speculating in stocks, futures and the real estate industry.
Others, such as many residents of the province's city of Wenzhou, invest in the informal lending market, which promises higher returns than other investments.
However, this type of lending comes at a price. More than 90 heads of private companies in the city are reported to have disappeared, committed suicide or declared bankruptcy -- invalidating debts worth about 10 billion yuan -- due to debt incurred through the informal lending market of 2011.
To draw private capital back to the real economy, the province's first private finance management guideline went into effect in December 2011, encouraging private businesses to fund infrastructure, municipal engineering, and welfare housing projects.
Entrepreneurs said they are willing to embrace the real economy and tackle the problems they are currently facing.
"We should focus on scientific innovation and add value to our products to make greater profits," said Zong Qinghou, board chairman of the Wahaha Group, the country's top beverage company. He said if enterprises are well-operated, the burden of high taxes and fees will not stop their development.
Some, however, have asked for further government support for private enterprises.
Many companies are still facing systematic barriers, operating pressures, rising costs and financing difficulties, said Zhou Dewen, director of the city's small- and medium-sized enterprise association.
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