How China's business environment is helping its private enterprises thrive

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

Wenzhou in China's eastern Zhejiang province has long been a trailblazer in taking the reins of progress and enterprise into its own hands. Known as the birthplace of the country's private sector, it is well chronicled that about 99.5 percent of Wenzhou's companies are privately owned. Therefore, in a year that China has increasingly demonstrated its support for private enterprises, held symposiums, and even passed the first fundamental law dedicated to promoting the private sector, all eyes are on whether this kind of synergy can take Wenzhou and China's private businesses to the next level.

As things stand, Wenzhou stands on the cusp of a significant dual-milestone - a 1 trillion yuan ($139 billion) GDP as well as a 10 million population - dubbed the "Double Ten Thousand" goals. And the economic momentum can be seen in the data as well as perceived on the ground.  

The first four months of the year saw value-added output of Wenzhou's industrial enterprises above designated size rising 10.9 percent year-on-year, with high-tech industries, strategic emerging industries, core digital economy manufacturing and high-end equipment manufacturing all witnessing double-digit growth. In the company corridors, workshops and factories of Wenzhou's industrial clusters, the thrust is on new-quality productive factors and emerging high-growth industries.

Wenzhou's business layout and approach encourages specialization

At Zhejiang Tongda Optical Company, the bid to increase output can be drilled down to the fundamental shop-floor level. In a production line that is already automated to the extent that the manufacturing of optical frames and glasses requires minimal human intervention, the company's leadership is adamant that they must upgrade their machines to a version that can work on two frames at a time instead of just one at present. What's more, impressive and praiseworthy as Tongda's drive to scale up is, it is not unique to it. And this owes quite a lot to how Wenzhou's economy is geographically laid out.

Organically through history and increasingly by design, companies in related industries have come up in the same Wenzhou vicinity, fostering competitive growth and an innovation thrust. This has led to Wenzhou becoming a powerhouse in opticals, footwear, polymers, NEV-parts and electrical products. Travelling from one highly-urbanized coastal valley to another, one is likely to come across several agglomerations containing companies at various ends of the value chain. Recently, adding a layer of formal structure and new-age guidance to this, Wenzhou's policymakers have strategized the construction of "One Hub and Five Valleys" - a data security hub, laser valley, cloud software valley, smart valley, gene medicine valley and eye valley - aiming to build competence and momentum in these up-and-coming areas.

On the other hand, while the Hub & Valleys project serves as a platform and a driver for the city's industrial future, the government is also continuing with its core job of developing and expanding the infrastructure that businesses need to thrive. For instance, copper cables and busbars leader Bridgold has started to use the Wenzhou port for its export purposes this year, rather than the Ningbo port. Nor is it the only one to do so. Wenzhou port has recorded a 11.36 percent year-on-year increase in cargo throughput in the first four months of the year, with foreign trade throughput in the period rising by an impressive 32.36 percent. Better logistics and increased connectivity are clearly conducive factors for a city that locals say campaigned doggedly to establish its own airport some decades ago. In terms of energy too, the administration is doing its facilitator job. From the canteen windows at Bridgold's headquarters, a vast solar photovoltaic park can be seen stretching out into the mudflats. It provides power to the industrial cluster, the Bridgold executives say.  

Two other companies we visited - Shiny, which is into engineered plastics, and footwear-maker Laorentou - are looking forward to moving into new offices. Shiny's current factory is already quite impressive, even boasting a museum-esque area where one can walk through to learn the history of the company and what it does. The new campus promises to be even more spectacular. Laorentou's general manager says the government supported his company's application for land and they hope to move into the new facility in 2027. The signs are clearly there, that Wenzhou's companies, which have a history of generationally scaling up, expect to continue in that vein. And the environment is being created at the local and national level for them to do so, whether it be via facilitative policy, supportive infrastructure, or streamlined land, labor and finance support.

Government creates the environment for private economy to flourish

In many ways, this mould of business-friendly environment-creation in Wenzhou is a microcosm of a similar trend across China. In a briefing in May, the National Development and Reform Commission (NDRC) had assured that the private sector promotion law mandates equal access to factors of production, i.e. to utilize capital, technology, human resources, data, land, and public service resources. Another key factor of production - entrepreneurial intent - can be fronted by the private players themselves. Such a situation, sweetened by continued infrastructural upgradation and the golden promise of further reform and opening-up, has the potential to create fertile ground for growth and opportunity. 

The relevance of China's private economy cannot be understated. It contributes over 60 percent of the nation's GDP, nearly half of China's global trade, over 70 percent of its technological innovations, and in excess of 80 percent of urban employment. And it's increasingly not only a matter of size and scale or facts and figures. In just the last few years, Chinese private companies have produced a number of products and innovations that have made the world take notice. DeepSeek, Black Myth: Wukong, Ne Zha 2, the humanoid robots of Unitree Robotics, the Labubu monster dolls of Pop Mart and others have captured the hearts and minds of people around the globe. 

Goldman Sachs, in a recent report, coined a new grouping called the 'Prominent 10' comprising 10 Chinese stocks that it predicts will see cumulative earnings growth of 13 percent annually over the next two years. These 'Prominent 10', which have a combined $1.6 trillion market value, are different from the famed American 'Magnificent 7' in one key way - not all of them are tech giants. While the grouping does contain Tencent, BYD and Alibaba, it also contains home appliances maker Midea, pharma manufacturer Hengrui and sportswear maker ANTA, demonstrating that growth and scale can also be achieved by companies that use and adopt technology, not only those that build and sell it. 

Viewed together, it speaks of the kind of "sky's the limit" and "world's your oyster" business mindset that can only be unleashed when there an environment that's friendly toward innovative expression and commercial ambition. Like one Wenzhou entrepreneur told me, "I think the government has already helped the industry a lot. They even organize exhibitions so we can meet buyers. But they cannot get the client to place the order right? That's your job." And that's the job private players around the world have signed up to do.