WENZHOU, Zhejiang: From his home perched on the 13th-floor of a high-rise building, 64-year-old Lin Guohua looked out at the vast expanse of this boom town of never-ending construction and constant traffic jams with the satisfaction that he and a group of his fellow Taiwan businessmen started it all.

Having spent 20 years in the over-crowded chemical coating industry in Taichung City in central Taiwan, Lin moved his business lock, stock and barrel to Wenzhou 14 years ago looking for new adventure in what was then a virgin market. He read in the news that the Zhejiang provincial government issued a directive ordering the repainting of the outer walls of all buildings. To him, that sounded like "a gold mine was opening and up for grabs," Lin recalled.

Since then, he has bought a home, raised a family of a second marriage and grown his business, which, he said, was responsible for the coating of the outer walls of "most" tall commercial buildings and hotels in Wenzhou. Naturally, he loves Wenzhou, which he calls his "primary" home now. "My wife is a native of Wenzhou, and I have gone totally native as well," he declared.

Indeed, Lin and some of the other 400 Taiwan business people working and living in Wenzhou are taking great pride in having helped build this city that used to be a remote market town in one of the poorest regions in Zhejiang into an improbable economic miracle. Now, so many fortunes are made in Wenzhou that the very mention of its name conjures up the ghost of mysterious hot money that has been blamed for pushing up property prices in various mainland cities.

Manufacturing for export has remained the primary source of wealth in this town where the dusty roads are almost permanently clogged by mammoth container trucks, expensive limos and exotic sports cars. Wenzhou merchants are known to have pooled their newly gained wealth in acquiring trophy buildings and well-known landmarks in Shanghai, Beijing, Hong Kong and, more recently, Dubai.

If a monument were to be built to commemorate those pioneers of economic reform in Wenzhou, the early Taiwan investors would have secured a prominent mention, because they were instrumental in laying the foundation of industrialization in this city when most other overseas investors were crowding into neighboring Ningbo, Wuxi and, of course, Shanghai. The rush by Taiwan industrial investors to Wenzhou began in the early 1990s after the relaxation of restrictions in Taiwan.

Admittedly, the industrial migration from Taiwan to Wenzhou in the 1990s was tiny in scale compared to that from Hong Kong to Shenzhen in the 1980s. But it was sufficient to help establish Wenzhou as a low-cost manufacturing base that has blossomed into one of the mainland's most prosperous export centers.

Export wealth has fuelled rapid growth in the local economy, which, in turn, is helping to attract Taiwan investment in retail and other sectors of the service industry.

"My business, which is not a type of outwardly-oriented enterprise, didn't benefit very much from any form of export preferential policies," Lin said. But "the market trend on the mainland, especially in Wenzhou, is much better than Taiwan," he said. "The excitement of the marketplace makes me feel young despite my age," he added.

Chen Qinle, the 40-year-old chairman of Taiwan Merchant Association in Wenzhou, agreed. He came to Wenzhou after graduating from university in Taiwan to take over his father's business, which includes a shopping center and a hotel. He said that his company, Taian, and a few other Taiwan enterprises were among the first to invest in Wenzhou properties. "We practically started the property market here," he said.

As for future plans, Chen explained that he will follow the trend of economic development and the alternative demands of the market in the mainland to change his investment strategy from time to time.

"I probably will shift my investment focus from property to chemicals," Chen said. His father owned several chemical factories in Taiwan before coming to Wenzhou. However, "I will keep searching for potentially profit-making projects on the mainland," he said. Chen has invested in properties in Shanghai and highway construction in Anhui province in addition to several chemical plants in both Shandong and Fujian provinces.

Of course, the mainstay of Taiwan investment in Wenzhou has remained in manufacturing. But as 34-year-old Xu Jiantai put it, "it's not my father's factory."

His father moved part of the eyeglass manufacturing facilities from Taiwan to Wenzhou in the early 1990s to take advantage of the plentiful supply of land and labor. It was just a low-cost production base, while the design and market functions of the operation had remained firmly rooted in Taiwan.

This is changing. Xu said that he has established design and marketing departments in his Wenzhou operations to take advantage of the growing supply of local talents, as local businesses have taken a dramatic step up in design, quality and marketing.

China Daily

(HK Edition 04/09/2010 page8)