The Formation of Wenzhou Footwear Clusters: How Were the Entry Barriers Overcome?

Abstract

Wenzhou used to be one of the poorest regions in eastern China. With limited arable land, poor road access to major cities, and little support from the government, it seemed to lack all the necessary conditions for economic growth according to the standard textbook. However, over the past several decades, Wenzhou has achieved one of the fastest growing rates and owned the most dynamic private sector in China. The footwear industry in particular has grown from a negligible place to the largest market share and has formed one of the largest industry clusters in China. Therefore, the footwear industry provides us with a good example to unde rstand the driving forces behind the dramatic rural industrial growth. For this study, we undertake a survey on about 140 enterprises at different scales in Wenzhou. The survey enables us to examine how the start -up capital, credit, technology, and institutional barriers have been overcome in the formation process.