Ｗｅｎｚｈｏｕ’ｓ Ｅｎｖｉｒｏｎｍｅｎｔａｌ Ｇｒｏｗｉｎｇ Ｐａｉｎｓ

ＬＩＵ　ＱＩＯＮＧ

IN Wenzhou, waxberries are about to ripen in May on the hill of Jiedai Village, Lecheng Town, Yueqing City. An old man named Huang, owner of the hilly orchard, is full of excitement about the coming harvest. Several years ago, no one dared to eat waxberries from these trees, since they were adjacent to an electroplating factory.

The Price of

Development

Chengnan Electroplating Factory was established more than a decade ago on a slope north of Jiedai Village. Initially, the villagers did not notice any changes. But then the color of the river darkened and some trees withered. The villagers began to suspect the factory was the culprit, whose discharge into the river was later found to contain cyanide, chrome, copper, zinc and lead.

In 2008, the production value of Wenzhous electroplating sector reached RMB 5 billion. With the rise of this industry, Wenzhous products have won a greater market share, which has brought about the rapid development of the leather and other light industries. Unfortunately, rapid development and poor pollution control also means the town has become mired in regional contamination.

There used to be more than 600 similar electroplating enterprises in Wenzhou City, most small in size and backward in technology. The pollution treatment equipment was shabby, and most of the wastewater was discharged directly into rivers. As a result, the river network of the plain was all polluted to some degree. “We took the path of ‘polluting first and tackling the fallout later,” said Xu Yue, a professor at the Zhejiang University of Finance and Economics. In addition to the electroplating operations, many other polluting enterprises were concentrated in Wenzhou, such as textiles, papermaking and leather processing. Environmental pollution became serious.

In 2005, Zhejiang Province selected eight river systems to establish pollution control and set up 11 key monitoring points. Wenzhous electroplating industry was designated one of these 11 key monitoring points. Illegal electroplating enterprises were closed down, and legal enterprises were upgraded with more effective technology, so the treatment of wastewater, waste gas and residue could be standardized.

Hopeful Land

On the homepage of the citys Environmental Protection Bureau, the banner consists of four Chinese characters meaning “Green Wenzhou.” This represents the desire and determination of Wenzhou people to improve their environment.

“This is a lesson for Wenzhou,” said Hong Zhenning, vice-chairman of the Wenzhou Municipal Federation of Social Sciences Circles. He points out that most of Wenzhous industrial groups are labor- and capital-intensive and based on obvious low-cost advantages. While these industrial groups promote rapid economic growth, they have also brought about over-consumption of resources and serious environmental pollution.

In his opinion, the main obstacles hindering pollution control of these industrial groups are high treatment costs and incompetent environmental supervision. The present policy in China is to hold those who cause the pollution responsible for the cleanup. While this is feasible for large enterprises, it is difficult to enforce this policy with most medium-sized and small enterprises, since they do not have adequate financial strength to raise funds for pollution control facilities. Very often the fine they pay for environmental pollution is smaller than the losses caused by the suspension of production and the costs of purchasing and maintaining pollution treatment equipment. If they operate according to waste discharge standards, there will be no profits. As a result, some enterprises just act perfunctorily. When there is an inspection, they just go through the motions, or, if caught, pay the fine. This has seriously retarded pollution control.

Meanwhile, Chinas laws and regulations on environmental management need to be refined. In general the penalties for violation of environmental protection laws are excessively lenient. The cost of law violation is low and the cost of law-abiding is high. This actually encourages polluting practices.

Environmental Protection Incentives

The municipal environmental protection department has enacted various measures to encourage enterprises taking the road of environmental protection. For instance, once an export-oriented enterprise is found to violate an environmental law, its right to export is suspended for one to three years. Its right to export will not be restored until the local industrial administrator receives the notice from the environmental protection bureau saying the enterprise is up to standard.

Environmentally compliant enterprises are given loans with preferential interest rates, while polluting enterprises are marginalized in their ability to obtain loans for investment in new projects and floating capital; whats more, the interest rates are high. Environmental behavior records also find their way into bank credit ratings: banks are cautious about issuing loans to enterprises that have been punished by the environmental protection bureau. No lending will be approved for serious violators of laws or polluting enterprises that are facing forced shutdowns.

Shuitou Town is well known nationwide for its leather production. The development of this industry is also guilty of serious pollution. Starting in 2006, the Shuitou leather processing base was ordered to stop production and rectify malpractices. A large number of leather processing enterprises turned to producing low-pollution high-class leather products. They have introduced new technologies to diversify their product lines, promoting structural adjustment and industrial upgrading. Facing the challenges of controlling pollution, Zhejiang Shengxiong Leather Co., Ltd. and Sichuan University jointly developed chrome-free tanning technology to produce oxhide car cushions and sofa leather. This new production line has eliminated more than 75 percent of the main pollutants that old equipment and procedures generated.

The transformation of Shuitou Towns leather processing industry is successful by any standard. The domestic market share of belt and wallet producers has expanded rapidly and their leather processing industry reborn along the lines ofsustainability – finally going the route of environmental protection and brand name reputation.”

Link: Wenzhou in Foreign Media

Wenzhou Private Enterprises Leave Big Shoes to Fill over 30 Years of Reform and Opening-up

Professor Fei Xiaotong, a renowned Chinese anthropologist, described the Pearl River Delta economic boom as “the Pearl River Delta model, “ characterized by the use of foreign investment for development of an export-oriented economy; the swift ramp-up of township enterprises in Suzhou, Wuxi and Changzhou as “the southern Jiangsu model”; and the Wenzhou model as one featuring “small commodities for big markets, with commerce taking the lead.”

According to Fei Xiaotong, Wenzhounese have very little land to farm, so engaging in the reaches of commerce was their only way to make a living.

The Wenzhou model, regarded as the most dynamic, is nevertheless facing a serious challenge in the global financial crisis. For Wenzhounese, fast financial returns are vital. Beginning in 2003, they seemed to put less and less into business expansion, and instead turned to real estate abroad. Two years later, they developed a strong interest in stocks and gold, and later, risk investment and loan markets.

The sub-loan crisis in the U.S wiped all “quick buck” opportunities off the map. Without their own brand names, and with the loss of their low labor cost advantage, Wenzhounese have found it hard to compete internationally. Their magic business model is threatened.

Author: He Xiwei, Singapores United Morning Post, April 27, 2008