Cradle of China's private economy offers a blueprint to counter US tariffs

Editor's note: Ankit Prasad is a CGTN biz commentator. The article reflects the author's views and not necessarily those of CGTN.

Given the US administration's on-off tariff impositions on virtually every country, one would expect global manufacturers to be tentative about their growth prospects. It is natural that uncertainty and fluid terms of engagement may impact businesses that rely predominantly on global trade flows. That is not, however, the situation in one of China's most fertile entrepreneurial hubs.

Wenzhou transforms US tariff pressures into opportunities, ensuring enterprises thrive across generations

In the eastern Zhejiang Province, the city of Wenzhou has long been known as the country's capital of private and family-run manufacturing businesses. Now, something about the 'Wenzhou model' may offer a new template in combating the impact of the tariffs. At the core of this model is a mindset - one that many entrepreneurs around the world may be familiar with - that adversity can often lead to opportunity.

Wenzhou is well known in China for its vertically-integrated manufacturing clusters that cater to a set of important industries. These include optical eyewear, footwear, electrical products, new energy equipment, advanced materials, auto parts, among others, in which there are a number of private firms operating at various ends of the supply chain. The origin of many of these companies traces itself to China's reform and opening-up in the late 1970s. What began as humble piecemeal businesses have gradually evolved into thriving high-end industry leaders, now led by the founders' children or even grandchildren.

At Zhejiang Bridgold Copper Tech Co. Ltd. (Bridgold), a maker of a variety of copper wire and busbar products, third-generation promoter Shi Wen told CGTN Biz that her 43-year-old company's braided copper wire has approximately 20 percent of the global market-share and 30 percent in China. "I think the amount of wire we produce in a year can wrap itself around the Earth's circumference 2.7 times," Shi estimates, adding that Bridgold's main market is Europe. As a result, the tariff impact on Bridgold is indirect: via its European clients who in-turn export to the US, and hence want to pass some of the tariff impact down the chain.

"Most of our big customers in Europe are in the electric vehicle industry and it is not easy for them to change current suppliers like us," says Shi, Bridgold's director and general manager of international business, recounting how Bridgold has integrated itself deep into the R&D process of its clients. "We make flexible busbars for a wide range of industries and are quite experienced at it, so the customers trust us." At the same time, she isn't simply banking on her company's indispensability. "One more strategy is for us to maybe explore more Asian countries, especially those that are part of the Belt and Road Initiative." Her thought process is clear: "Every time we meet a big problem or big challenge, there may be a chance for us to find a way to grow."

Enterprises strive to balance fierce international competition with traditional local preferences

On another side of Wenzhou, at another industrial cluster, Zhejiang Tongda Optical Co. Ltd. (Tongda) is involved in the production and bulk export of eyewear - specifically sunglasses. At their integrated corporate office, design hub and factory, Virginia Huang, who is the sales director, spoke to us in a glitzy fourth-floor showroom-esque area. The ornate room is lined with plush armchairs and shelves full of very trendy eyewear, often with confidential designs. It's like a high-end gallery of sunglasses and you can tell its primary purpose is to host clients and prospective buyers.

"The company started in 1986 with watch repairs. Now we produce eyewear and most of our clients are from Europe and the US. Our main clients are the very top of the eyewear business - like the top-five," Virginia, who is also daughter-in-law of Tongda's founder, tells us. She's upfront that the US tariffs have caused uncertainty, though she too is bullish about the need to look at different markets. "For our company, our strategy is we will look for different markets like the Middle East and also spend some time and effort investing in our own brands for the domestic market."

While the luxury apparel and eyewear market is known for its premium pricing, this is not the case in the domestic Chinese market where Virginia says competition is very strong and consumer preferences are more traditional. "Each market has a different preference for design and materials, so when we expand in the domestic market we have to plan it very well. But this is a thing we have to do eventually, because we have a lot of sourcing, designs and professionals from the Chinese market."

One thing both Tongda and Bridgold have in common is their insistence on high-tech manufacturing. Their factories use the latest in automated manufacturing and operational MIS. When asked if upgrading technology is a matter of courage, Virginia replied defiantly that it is not; rather that it's a necessity. "I think for us, as a manufacturer, as a company, we really need to do these things by ourselves."

Another Wenzhou business, the century-old footwear company Laorentou, has a different vantage point to tariff uncertainties. General manager Ye Qihao, also son of the current promoter, says his sales are mostly domestic. However, if the economic environment deteriorates, he too will face turbulence. But support is to be found among the thriving Wenzhou footwear cluster. "If foreign buyers come to us, we refer manufacturers who engage in foreign trade, and if the export companies hear of domestic opportunities, they refer us," Ye says, explaining the tradition of cooperative competition.

The Wenzhou model works well with a focus on deep client integration and high quality manufacturing

What comes across clearly is that something about the 'Wenzhou model' is working. The city's GDP reached $32.9 billion in the first quarter of 2025, up 6.7 percent year-on-year, which is higher than the national and Zhejiang averages. All three major sectors contributed to the growth: the primary industry grew by 3.6 percent, the secondary by 7.2 percent, and the tertiary by 6.4 percent. At the recent 137th China Import and Export Fair (Canton Fair), Wenzhou sent a record 774 companies with 1,623 booths. And now it is bidding to measure up to tariff headwinds.

From conversations and visits to Tongda, Bridgold, Laorentou and other companies in Wenzhou, a pattern and a blueprint emerges. The focus is on deep client integration and uncompromisingly high-quality manufacturing. The company corridors are replete with plaques and awards noting how highly they prize innovation. The leaders of the business have an intricate knowledge of their product and are fleet-footed when it comes to seeking geographical diversification. They are candid in admitting that it is often a single client or market that opens the floodgates, but it is unwise to get too dependent. Diversification is the name of the game, and while tariffs and other business challenges may come and go, the rule of thumb remains as Tongda's Virginia says: "You have to be creative, you have to be strong to survive."