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China: 5-year plan

Chinese entrepreneurs welcome success

Kai Ryssdal Jul 12, 2011
China: 5-year plan

Chinese entrepreneurs welcome success

Kai Ryssdal Jul 12, 2011

Kai Ryssdal: Our series this week, the Five-Year Plan, takes us to China and the live broadcasts we did from there in 2006. We went back last month to see what’s changed for them and for us.

Economic growth in China has averaged 10 percent a year for the past three decades. Sometimes higher, sometimes lower. When we were there last month, we did see some signs of a slowdown. But wondering aloud about whether the boom can last forever, got us a lot of this:

Richard Wang: I don’t worry about that too much, because I believe it is not a bubble. I believe the urbanization is empowering all of that, so it has solid fundamentals.

Richard Wang’s the international business manager at TaoBao, kind of a Chinese equivalent of eBay and Amazon all rolled into one. It’s a sentiment we came to call “unbridled optimism.”

Train announcer: Ladies and gentlemen, welcome aboard.

The trip from Shanghai inland to the tourist city of Hangzhou used to take about three hours. At 210 miles an hour on the new bullet train, though, it takes a little over an hour now. It’s a handy metaphor, perhaps, for the pace of change here.

Today, honestly, it’s just a train that gets us to this guy.

Huang Bin: My name is Huang Bin, CEO of Wonder Zada.

Huang Bin’s company Wonder Zada sells cosmetics online with just a modest ambition.

Huang: In the future, all women on the Internet, who buys things on the Internet, would be our customers.

Ryssdal: You’re sure of that?

Huang: I’m sure of that.

That’s lofty, right? It’s hard not to get swept up with his enthusiasm, because growth has been both fast and furious. Since Wonder Zada launched — and no, we don’t know what Wonder Zada means either — but since it launched back in 2007, annual sales have grown to 200 million yuan, about $30 million.

Huang says that’s going to more than double next year.

Ryssdal: Who are your customers now? Who buy cosmetics from you?

Huang: Most of them are women.

Ryssdal: Yes. What do you think about the place of China in the global economy? It’s the number two economy in the world, it’s a growing economic power. What do you think about that? Do you think about how you’re contributing to that?

Huang: Maybe a little bit. I want to be the biggest cosmetic company in the world, to help people to find the right product and to make them more beautiful and confident.

It’s confidence, Huang shows me, that comes in bottles.

Ryssdal: This is peach nectar bath soap. French right?

Huang: Yeah, French. Very famous in France.

Ryssdal: Yeah, and this is anti-fatigue foot gel. It’s for your feet.

Huang: I don’t know.

Ryssdal: You don’t use this?

Huang: I don’t use this.

His 300 employees are scattered across three floors in a non-descript, slightly rundown industrial park on the outskirts of Hangzhou. Most of them sit in front of computers, chatting online with customers.

Ryssdal: These are instructions? So read one for me.

Huang reading in Chinese

Ryssdal: ‘Hello, welcome to my company, I am very glad to be of service to you.

Huang: Yes, yes.

There is a late 1990s Silicon Valley vibe going on here, what with the ping pong tables and 20-somethings in shorts and flip flops. But this growth is only partly about Mr. Huang and his very impressive — if still relatively small — cosmetics company. It’s about the incredible potential of the Chinese economy, and of e-commerce specifically, because a good chunk of this country just doesn’t have access to traditional brick-and-mortar retail.

Again, Richard Wang, TaoBao’s head of international business.

Wang: In other countries, the number of people who shop online and the number of people that use the Internet is basically the same. But it’s really different in China. People who have access to Internet are still not shopping — two-thirds of them — are not shopping online.

There are, plus or minus, 500 million people online in China. The two-thirds of them that don’t actively shop online right now? That makes for a potential e-commerce market of more people than live in the United States.

That’s why Huang Bin back at Wonder Zada went for online retail — not traditional.

Huang: I’m very impressed by one of my uncles. He told me, ‘whoa, you are doing e-commerce? It is very popular right now. The whole office now in my department go on the Internet to buy things.’

‘Course, for our ambitious but unlikely CEO, there’s another upside to this whole online thing.

Ryssdal: Why did you chose e-commerce instead of regular retail? You’re a salesman, right?

Huang: That’s a very good question. In China, offline selling is very complicated; they should do a lot of entertainments with the buyer, you see.

Ryssdal: You are shy and you don’t like to go to parties?

Huang: Yes. I like very simple relationships. E-commerce also needs less complicated relationship and I choose it. I cannot drink!

So we skip the drinking, but do go to lunch after the interview, with a stop for a personal sample on the way.

Ryssdal: Now, let me just ask you for myself: do you have any men’s products?

Huang: Yes, men’s products.

Ryssdal: This is a men’s product?

Huang: This is a men’s product. You can read it.

Ryssdal: Helps relieve razor burn. Oxygen booster. You know what’s funny though? This does not smell like me at all. This is not my smell.

It was all in all kind of an interesting day, traipsing around a medium-sized Chinese city visiting dot-com companies.

But on the bullet train back to Shanghai late that afternoon, the ride through the countryside was different. Interesting became challenging. Visibility outside was basically nothing — just farmers were burning off their fields. You could smell it even inside the train. It felt for all the world like a space age trip backward through the Industrial Revolution. And reminded us — despite the unbridled optimism — of all the problems that China still has.

So that’s where we’ll go tomorrow: the downsides of a rising economy.

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