Promoting the Integration of Trade and Poverty Reduction Through Processing with Supplied Materials - Practices of Jianming Garment Factory & Women's Clothing Factory in Suichang of Zhejiang
- poverty reduction approaches
- endogenous poverty alleviation
- vulnerable groups
- targeted poverty alleviation components
- supporting policies
Promoting the Integration of Trade and Poverty Reduction Through Processing with Supplied Materials - Practices of Jianming Garment Factory & Women's Clothing Factory in Suichang of Zhejiang
Title : Promoting the Integration of Trade and Poverty Reduction Through Processing with Supplied Materials - Practices of Jianming Garment Factory & Women's Clothing Factory in Suichang of Zhejiang
Commencement Date : --
Implementing Agencies : Poverty situation of Lishui City,Lishui City Women’s Federation,Suichang County Government
Support Organizations : Jianming Garment Factory and Women’s Clothing Factory of Suichang County
Members of The :
CASE PROVIDER :
Sources of Funds :
Catalogue and Index :
Abstract Summary :
Over the three decades since the reform and opening up, China's economic take-off has changed the fate of many Chinese people, but China is still a developing county, so poverty reduction will be a long-term and difficult task. Under the new economic situation, many new models for poverty reduction are emerging and achieved good results. On the whole, the poverty alleviation work shows the trend of increasing efforts, increasing poverty standards and growing effects. In this context, based on the actual situation of local area, Zhejiang Province strived to implement the central government’s spirit of "increasing efforts, raising the level and enhancing the standards", and carried out a series of anti-poverty work based on local situation. The processing with supplied materials in Lishui City is one of the highlights.
1.1 Basic information of Lishui City
As the prefecture-level city with the largest land area in Zhejiang Province, Lishui is at the Yangtze River Delta in the West Coast Economic Zone, full of hills and mountains, and inclines from southwest to northeast. It has one municipal district - Liandu District, 7 counties, namely Qingtian County, Jinyun County, Suichang County, Songyang County, Yunhe County, Qingyuan County and Jingning County; and one county-level city - Longquan City. Covering a total land area of 17,298 square kilometers, Lishui City has a total population of 2,639,200 and an agricultural population of 1.83 million. At the junction of Zhejiang and Fujian in the southwest of Zhejiang Province, Lishui City is adjacent to Wenzhou in the southeast, Ningde and Nanping of Fujian in the southwest, connects Quzhou City in the northwest and Jinhua city in the north, and borders on Taizhou City in the northeast, with City Hall in Liandu District. It is 126 km away from Wenzhou, 122 kilometers away from Jinhua City, 292 km away from Hangzhou and 512 kilometers from Shanghai City.
1.1.1 Economic and social development situation of Lishui City
Since 2004, Lishui City has witnessed rapid economic development and GDP growth – Its GDP increased from 21.82 billion yuan in 2004 to 98.31 billion yuan in 2013, with an average annual growth of 15%.
1.1.2 Rural per capita net income of Lishui City
Since 2004, Lishui City’s rural per capita net income has been rising. In 2004, the rural per capita net income of Lishui City was only 1221 yuan. In 2013, this figure soared to 10024 yuan. From 2009 to 2012, Lishui City ranked first in Zhejiang Province for four consecutive years in terms of growth rate of rural per capita net income.
1.1.3 Poverty situation of Lishui City
In 2005, Lishui city government organized the field survey on poor villages and households to make clear the poverty situation of the city and discovered that 75095 rural households and 181392 people of the city lived below the poverty line of 1500 yuan, accounting for 8.7% of the total agricultural population, and 31907 households and 62864 people lived below the poverty line of 1000 yuan. Seen from the survey results, the low-income rural residents of Lishui City mainly fall into four groups. First, the farmers living in rural areas with harsh production and living conditions. Due to the long distance, inconvenient traffic and information occlusion, 85% of the source of income of the majority of local households came from primary industry, and only 23% of the poor labors went out to work in non-local areas. Second, the farmers of low quality without the ability to work (including those with disabilities). The families with no labor force or with members who lost the ability to work accounted for 51.1% of the total poor households, illiterate and semi-illiterate population accounted for 37.4% and farmers with primary school education level accounted for 38.8%. Third, the farmers returning to poverty due to illness. This phenomenon is prominent in the regions prone to geological disasters and the large and middle-sized reservoir areas. 13800 households fell into poverty due to illness, accounting for 18.3% of the total, and those falling into poverty due to illness or disabilities accounted for 29.73%. Fourth, the farmers who can hardly shake off poverty due to development fund shortage. Such farmers accounted for 11.8% of the total poor in Lishui City. Without development funds, even if the farmers have good opportunities for getting rich, they cannot seize the opportunities.
1.2 Information of Relevant Departments
1.2.1 Lishui City Women’s Federation
As a non-governmental organization, Lishui City Women’s Federation mainly unites and mobilizes women to participate in economic construction and social development, and represents and safeguards women's rights to promote gender equality. In this case, Lishui City Women’s Federation mainly played a leading role in the processing with supplied materials and the anti-poverty work. To this end, Lishui City Women’s Federation strived to create the “integrated” processing-based poverty alleviation mode by improving the organizational structure, formulating development policies and providing financial guarantee.
1.2.2 Suichang County Government
Located in the southwest of Zhejiang Province, at the upper reaches of Qiantang River and Oujiang River, Suichang County of Lishui City has a total population of 230,000 and is rich in labor resources. As a provincial poverty-stricken county of Zhejiang, Suichang County has a relatively low level economic development level. It is full of hills and mountains and has poor infrastructure and a large poverty-stricken population, arousing high attention of the provincial government. Based on the actual situation of local area, Suichang County Government actively promoted the processing with supplied materials.
Since 2004, Suichang County Government has attached great importance to the development of processing with supplied materials and, taking it as a project to increase the income of farmers and a relocation project to enrich people, provided strong support for processing industry. Under the guidance of women’s federations at all levels and with support from the relevant departments, Suichang County’s processing industry covered 20 towns and provided jobs for more than 10000 skilled women and more than 5000 skilled tailors.
In 2009, Suichang County set up the processed products display center in Beijie Town. This center mainly provides product display services, technical support, business contact and information services, with products falling into nearly 100 categories, including processed products and featured arts and crafts, providing a good platform for the "going global" of Suichang’s processing industry.
In 2010, the county’s processing fee amounted to 100 million yuan, more than 20,000 people were engaged in processing with supplied materials and the processing industry had more than 4,000 brokers. Currently, more than one hundred excellent brokers cooperate with local and non-local manufacturers to jointly promote the development and upgrading of processing industry of Suichang County, creating the processing mode with garment, luggage, raincoat and carbonaceous products as the core, supplemented by the processing of footwear, zipper heads and ornaments and tailored bulk processing, and creating the characteristic garment processing industry covering four towns and two townships with Beijie Town as the center.
1.2.3 Jianming Garment Factory and Women’s Clothing Factory of Suichang County
Jianming Garment Factory is one of the 20 large processing enterprises in Suichang County of Lishui City. Founded in September 2008 by broker Pan Jianming, the factory once had six or seven processing centers and more than 100 employees with annual salary payment of 1.5 million yuan, making a direct contribution to local poverty reduction. In a three-storied building at the opposite of the township government, Jianming Garment Factory has nearly 60 employees now.
Before the factory was set up, Fu Guojun, the director and broker of the Women’s Clothing Factory was a tailor. At inception, the Women’s Clothing Factory mainly processed for retail investors: The broker got the orders and raw materials from the upstream company and distributed them to the farmers in the village. After product processing, they deliver the products to the upstream company. The products for processing with supplied materials are mainly simple ornaments and toys. The flexible mode and simple processing procedures allow rural women to get involved in slack season, so the processing business is popular in the countryside of Suichang, Lishui City. After accumulating a certain amount of capital, Fu Guojun set up the centralized processing workshops and launched the processing of high-value-added products with orders from well-known enterprises in Lishui, Shanghai and Hangzhou. Different from the previous processing, the centralized processing workshops focus on flow line production. The production process is standardized and the products are more complex.
2 IMPLEMENTATION PROCESS & MAIN PRACTICES
2.2 Main practices
2.2.1 Main practices of Lishui City government
By summarizing the overall development situation of processing with supplied materials in the city, Lishui City government has got a good understanding of the processing mode. How were the pro-poor policies successfully implemented with government support? Lishui City government departments mainly did the following work:
188.8.131.52 Improve the environment, adhering policy first
At inception, processing business developed rapidly in Lishui City. Compared to the coastal regions, Lishui has cheaper labor force to sharpen the competitiveness of processing industry of local area. With the rising labor cost and the severe market competition, coupled with the 2008-2009 international financial crisis, facing the complex external environment, Lishui City continued to issue preferential policies and provide greater support to create a favorable external environment for the development of processing industry.
Specifically, the practices include three aspects. First, guarantee for the work. Continue to attach importance to processing with supplied materials. On the basis of further implementation of the “Opinions on the Development of Processing with Supplied Materials in Lishui City”, the city government kept a close eye on the development situation of processing industry, the city party secretary and mayor listened to the work reports many times, visited the processing sites and gave a lot of guidance on the work, providing a solid foundation for the development of processing industry. Second, policy support. The development of processing with supplied materials has been regarded as one of the top ten events of the city. The city actively set up the assessment system and further cultivated professional processing villages and civilized village industries, etc. Third, further financial guarantee. In recent years, processing development funds have been covered by the special annual budgets of the government. In 2009, for example, the city and county governments respectively issued 1.25 million yuan and 2.35 million yuan of special funds for processing, and applied for 5 million yuan of special funds for replacing subsidy with rewards for processing business, contributing to the long-term development of processing with supplied materials.
184.108.40.206 Fan out from point to area, adhering to key problem tackling
Processing businesses mainly develop in township and administrative villages, widespread with different levels of development. Based on the actual situation, thus, in the process of development of processing industry, Lishui City government always adheres to the guideline of “fanning out from point to area and highlighting key points”.
Generally speaking, the key work mainly covers two aspects. First, from the perspective of regions, it attached importance to the development of the villages concentrated with low-income rural households, resettlement areas, post-disaster reconstruction areas and mountain areas for poverty reduction. It first provided strong policy support for these areas, then provided personnel and financial support and, with these areas as the center, constantly improved their influence, gradually creating the pattern of fanning out from point to area. In 2010, for example, a total of 950 villages concentrated with low-income households became the processing centers, and the total processing fee earned by the villages amounted to 230 million yuan. Secondly, from the perspective of objects, the processing industry in Lishui City has been expanded towards low-income rural households, migrants in reservoir areas, people with disabilities and women, and created the new mode of scattered processing by families on the basis of factory’s centralized processing, creating good conditions for the participation of various groups. After several years of strong support, processing industry achieved significant results in developing key targets. In 2010, for example, the processing industry absorbed 21,000 low-income rural households, 11,000 migrants of reservoir areas and 12,000 farmers relocated from mountain areas, making a great contribution to farmers’ income growth, the transfer of surplus labors and social stability and harmony. Strong support for the key targets had, in a certain period of time, also a significant radiation effect, gradually showing an obvious scale effect.
220.127.116.11 Develop the market, adhering to transformation and upgrading
Primary processing industry: With raw materials provided by the market, local area is usually only responsible for processing to earn the processing fee. It is a simple business mode and has rather weak ability to resist market risks. Thus, market development for industry upgrading is of great practical significance to the long-term development of processing industry. Through years of exploration, Lishui City gradually began to attach importance to the position and functions of the market and got a series of its own market development methods and strategies.
Specifically, the work covers two aspects. First, continue to tap its potential, gradually achieve upgrading based on capital accumulation and create featured brands. Its practices include "convening a forum of key customers, visiting merchants for good communication, making brochures and feature programs", etc. Relying on the Internet, at the same time, it strengthened publicity to further enhance its reputation and finally created the brand of Lishui Women Processing Base. Second, continue to promote market diversification to provide a broader space for product sales, strengthen key market development in Wenzhou and Taizhou on the basis of consolidating Yiwu Market. Specifically, in the form of “market consultation” and “project promotion conference”, it strived to develop multi-market for processing industry.
18.104.22.168 Build a platform, adhering to development through joint force
In recent years, in addition to policy support, environment improvement and market development, Lishui City has been striving to promote the development of processing industry, continued to give play to the role of the long-term mechanism, made overall deployments to promote the scientific development and adhered to the guideline of sustainable development. In conclusion, relying on the resources and giving full play to the strengths of various departments, Lishui mobilized all circles of society for the processing work, and established the work mechanism characterized by “women’s federation leadership and department cooperation” to provide a full range of services for brokers and processors. The development of processing industry was supported by many departments. First, the cadres of the City Women’s Federation continued to build work teams in rural areas and vigorously developed the market to steadily promote the effective implementation of processing work in grassroots areas. Second, the City Finance Bureau promptly developed the special fund and optimized fund transfer program to provide financial guarantee for the development of processing industry. Third, the City Poverty Alleviation Office and Immigration Office actively promoted the work in the immigrants’ resettlement areas, post-disaster resettlement zones and the rural areas concentrated with low-income households, focusing on the development in key areas. Finally, the Municipal Environmental Protection Bureau, the City Economic and Trade Commission, Bureau of Foreign Trade and Credit Union also provided strong support for the development of processing industry. In short, Lishui City actively mobilized all sectors to play their respective roles and work with each other to build platform for development and create new economic growth points for Lishui City.
2.2.2 Main practices of Suichang County
On the whole, Suichang County adopted the following measures to promote the development of processing industry.
22.214.171.124 Supported by a strong organization, build a three-dimensional work system
A strong organization is the basic guarantee for unity of thinking and policy implementation. Suichang County attaches great importance to organization building in processing development, promoting the social stability and development of the underdeveloped areas. When it began to develop processing industry, Suichang County focused on creating the work pattern for internal and external communication and the linkage and coordination between departments, firmly implemented the guidelines of LGOP and the provincial poverty alleviation office, constantly strengthened organization building, and gradually established the three-dimensional work system under the leadership of the county government, with overall responsibility undertaken by the county women’s federation and with support from the county agricultural office, poverty alleviation office and township governments.
Suichang County always attaches importance in organization building in the whole process of promoting the development of processing industry. Taking the personnel adjustment in 2010 as an example, we can see from the “Notice on the Adjustment of Suichang County Leading Group for the Development of Processing Industry” the basic structure of the Processing Work Leading Group: With Subprefect as the head to take charge of the work, with relevant leaders of the county government office and the county women’s federation as the deputy heads, who are responsible for making overall deployments, with members from the county party committee’s propaganda department, economic and trade bureau, financial bureau and industrial and commercial bureau, as well as the township governments, the leading group gave full play to the role of its scientific organizational structure.
126.96.36.199 Guaranteed by a strict system, establish the incentive system characterized by the combination of rewards and punishments
In addition to a sound organizational structure, Suichang County government has set up a series of assessment systems in practice to provide institutional guarantee for the quality of processing work, and its incentive effect played an invaluable role in promoting the development of processing industry.
Specific practices cover the following aspects:
First, award the collectives and individuals with outstanding performance in processing work. Set up subsidy for professional processing villages and give subsidy of 30,000 yuan to each of the villages that newly grew into professional processing villages. Specific measures were implemented to encourage brokers. According to the "Notice on the Issuance of Policies to Promote the Development of Agricultural Industrialization in Suichang County" issued in 2009, the brokers who issue more than 200,000 yuan of annual processing fee and have more than 100 processing workers shall be awarded 2000 yuan; the brokers who issue more than 500,000 yuan of annual processing fee and have more than 300 processing workers shall be awarded 5,000 yuan; and the brokers who issue more than one million yuan of annual processing fee and have more than 500 processing workers shall be awarded 10,000 yuan. The special incentive policy of “one strategy for one event” is implemented for the project with processing fee of more than two million yuan. For the brokers engaged in machinery processing who issue processing fee of more than 500,000 yuan per year and have more than 40 processing workers, the government issues reward of 2000 yuan; those who issue processing fee of more than one million yuan per year and have more than 80 processing workers are awarded 5000 yuan; those who issue processing fee of more than 1.5 million yuan per year and have more than 120 processing workers are awarded 10,000 yuan; and those who issue processing fee of more than 3 million yuan per year also enjoy the policy of “one strategy for one event”.
Second, provide the appropriate interest payments on loans and issue preferential policies on freight subsidies and admission subsidies. Provide interest payment of 5‰ monthly for loans of 20,000 – 100,000 yuan of the brokers and processing enterprises with an annual processing fee of more than 200,000 yuan; provide 1% of additional processing fee as freight subsidies of processing enterprises; issue 3000 yuan of one-time subsidy for each processing enterprise supporting industrial agglomeration and relocated to the county industrial park or township industrial zones; issue 5000 yuan of one-time subsidy for each relocated processing enterprise with processing fee of more than 2 million yuan; and award the Top Three professional villages in the county with the best processing indexes every year 10,000 yuan, 5000 yuan and 3000 yuan respectively.
Third, establish the self-inspection system for processing business. It distributed the "self-inspection form of processing enterprises" to promote the development of processing industry and issued the “Assessment Indicators for Processing Work of Suichang County in 2011”. The township governments all developed relevant assessment systems and standards based on the actual situation of local area, represented by Longyang Town’s “Notice on the Issuance of Incentive Measures for Processing Work of Longyang Town in 2011” and Jiaotan Town’s “Notice on the Issuance of Processing Work Assessment Indicators in 2011”, etc.
Encouraged by these systems, the processing industry of Suichang County developed rapidly.
188.8.131.52 With a solid foundation of training, build a strong work team that can shoulder major responsibilities
In the processing work, brokers play an important role. They have their own processing plants and are responsible for contacting non-local manufacturers and the government and organizing villagers’ processing work. In order to promote the development of processing business, Suichang County organized the broke training courses, aiming at cultivating a high-quality broker team with strong organization ability.
In view of the above requirements, Suichang County Leading Group for Processing Business issued the “Notice on Convening Processing Brokers Training Courses in Suichang” and held a five-day professional training on the new processing brokers, covering basic policy and theoretical knowledge training, field visit to the processing bases and non-local field survey, significantly improving the basic quality of the new brokers and laying a solid foundation for the construction of a strong broker team.
2.2.3 Practices of Jianming Garment Factory and Women’s Clothing Factory
184.108.40.206 Obtain orders of processing with supplied materials from the market
Jianming Garment Factory and Women’s Clothing Factory’s production organization process is a typical processing mode. Specifically, brokers obtain orders from the market and then organize workers to produce in the processing centers. The orders usually come from Jinhua, Yiwu and Wenzhou of Zhejiang Province. To further reduce the risks, the brokers mainly get the orders from relatives and friends or from the old customers with a long-term cooperative relationship with them. Thus, like other processing businesses, upon completion of the order, probably it does not require the partner to pick up the way ahead, but mostly first delivery and then get fees, Jianming Garment Factory and Women’s Clothing Factory usually do not require the clients to collect the goods in advance, but take the processing fee after goods delivery.
220.127.116.11 Get workforce in nearby villages for centralized production
The workers of Jianming Garment Factory and Women’s Clothing Factor mainly come from nearby villages (mainly women) and get paid based on how much work they’ve done. In the assembly line work, different procedures have various degrees of difficulty and different length of time consuming. Usually the price of each procedure is determined by the team head based on the length of time consuming. The workers get paid based on the procedure types and number of products, mostly 150 yuan a day. The wages are issued once a month rather than soon after order completion, reducing the pressure of cash flow on the businesses to some extent.
18.104.22.168 Establish flexible staff management mechanism
The workers are, on the one hand, employed by the factory and can accompany their children after work (some even are allowed to take their children to the workplace). On the other hand, they also engage in agricultural production in busy season. In picking season, for example, the villagers would ask for a leave to pick tea-leaves, which is, to some extent, not in line with the strict schedule requirements of the factory. As clothing enterprises implement assembly line work system, requiring close cooperation of the workers, the garment factory has a strict schedule for the staff – the workers must starts work at 7:30 every day and are allowed to rest for one hour at noon and one hour of dinner break in the evening. When needed, they are required to work overtime. Many workers, however, cannot strictly comply with the schedule because they have to take care of their children. "We can’t go to work on time when something takes place to our families. We have no other choice and don’t think our wages should be deducted for it." As the workers were introduced by relatives or friends, the enterprises would not punish these people. "We are all locals and we cannot deduct their wages". By setting up an attendance bonus of 200 yuan, the factory encourages the workers to work on time. It should be said that the processing enterprises represented by Jianming Garment Factory has established a flexible people-oriented management system, attracting the local labors to the largest extent. Conversely, if it implements a very strict hierarchical management method like modern businesses, it will fail to attract local labors. Of course, this will also bring about some problems. In busy season, for example, many workers will not come to work and the factories will then support one another. The enterprises with fewer orders will support those with a large number of orders to help them deliver goods on time.
22.214.171.124 Established the network of acquaintances to form a fixed labor relation between businesses and workers
The workers are all farmers from nearby villages and know about each other very well, so there is actually a relatively stable relationship between the enterprises and the workers. The enterprises usually do not dismiss the workers or sign labor contracts with the workers as contracts are not binding for the workers. Some workers of Jianming Garment Factory and Women’s Clothing Factory will sometimes turn to other enterprises from which they’ll be paid more. On the whole, however, most workers will not suddenly leave the enterprises and will usually support the businesses to complete the order as scheduled.
3 Implementation Effect
3.1 Solved the problem of surplus labor force, changed the employment channels for farmers
Lishui is a typical mountain area with different traffic conditions, population density and geographic resources different regions. Thus, based on the actual situation and different poverty alleviation needs of various regions and groups in the city, Lishui implemented a variety of processing ways for poverty alleviation. First, factory processing mode. In the suburban or immigrants’ resettlement areas with convenient traffic and concentrated population, powerful processing brokers launch processing factories to hire the people of nearby areas for processing. Second, the centralized processing model. In the regions without the conditions for factory building but with a large demand for processing workers, design a reasonable layout and set up centralized processing centers mainly in the regions concentrated with farmers relocated from mountain areas, migrants of reservoir areas and left-behind women. Third, the scattered processing mode. It is specifically designed for the people scattered in remote areas with special difficulties such as the disabled and elderly people.
With the synchronous implementation of these "three models", Lishui City’s processing points cover 188 towns (sub-districts) and 2297 administrative villages. Processing industry has changed the traditional migrant work-based rural employment pattern, greatly eased the employment pressure on rural surplus labors and promoted the mechanism of poverty reduction mechanism.
3.2Made innovations to business management modes and helped farmers get rich
Fund shortage is an important factor restricting the development of impoverished regions, but processing enterprises do not need a large amount of start-up capital. In fact, other developed regions of Zhejing Province also implements processing with supplied materials to achieve economic development. The processing enterprises are only responsible for production and do not need funds to purchase raw materials and develop the market. In addition, social acquaintance can reduce the business cost. First, workers’ wage is an important business cost of labor-intensive enterprises. Jianming Garment Factory issues the wages every month rather than soon after the order completion, reducing the wage cost pressure on the business. Secondly, as the enterprises have established a close relationship with the upstream clients, the clients will often provide financial aid for the processing enterprises. For example, when Jianming Garment Factory was in urgent need of financial aid, a boss of Jinhua City paid some of the processing fee in advance “like a friend”.
3.3 Promoted local industrial development and cultivated a number of local hotshots
Langsha, Mona, Yearcon and other domestic famous brands have now arranged many processing procedures in Lishui. As an “underdeveloped region”, Lishui has now become the stable processing base of many enterprises. At inception, Lishui City promoted the development of processing industry in order to lift women and the farmers of mountain areas out of poverty. Now, the industry development brought by processing industry has become a highlight of the economic development of Lishui City. Based on their respective development characteristics and competitive projects, various regions of Lishui City strive to build their local brands and the processing bases are expanding rapidly with prominent brand effect.
With the rise of the processing industry, many processing brokers have emerged. As of 2012, there were a total of 657 first-class brokers across the city of Lishui, who had not only cultivated more than 2000 secondary brokers, but changed the development mode of Lishui’s processing industry from “processing with supplied materials” to “processing in accordance with orders”. As brokers have taken part in various trainings held by the government, they have certain professional knowledge, good credit and strong organizational capacity. Therefore, on the basis of the accumulation of a certain amount of seed capital and management experience, some brokers have raised funds to launch businesses. Currently, more than 100 brokers have set up processing enterprises in Lishui City and most of them set up processing points in the countryside, forming a virtuous circle of processing industry in the city.