Why you should care
Because towns like Dongwangji represent China’s path to economic domination.
On a freshly paved street in a Chinese rural county, a few doors down from a dog-meat restaurant, Midnight Charm Clothing produces transparent chemises and “erotic schoolgirl” outfits.
A decade ago, Dongwangji, a town in China’s eastern Jiangsu province, was mostly rice fields. Today it is the heartland for Chinese production of “emotional interest underwear” — a euphemism for lingerie.
Local officials are actively supporting Midnight Charm and 600 other lingerie producers as part of an initiative to develop “feature towns” that focus on specific industries.
This is a way to help our local residents escape poverty.
Tang Jingdong, Communist Party secretary, Dongwangji
The initiative illustrates President Xi Jinping’s vision of a government-guided market economy where the Communist Party channels private investment into favored sectors, in addition to controlling the largest companies through state ownership.
Industries should be chosen “based on each region’s natural endowments and comparative advantages,” the National Development and Reform Commission (NDRC), the state planning agency, said in December. “Every region must accurately comprehend the feature town’s intrinsically special characteristics.”
Most feature towns are on the outskirts of larger cities. The Ministry of Housing and Urban Development approved 127 feature towns in late 2016 and a further 276 in August. By 2020, the agency wants to develop 1,000 such centers.
Beyond lingerie, other themes include pets, chocolate, drone aircraft, traditional Chinese opera, glassware, fund management and poetry. Some are intended as tourist attractions, while others, such as Dongwangji, are production centers.
Lei Congrui, general manager of Midnight Charm, was one of the first entrepreneurs in Dongwangji to produce lingerie. The industry now employs 20,000 people in the town and surrounding county, accounting for 60 percent of China’s total lingerie production, according to the local government.
Midnight Charm has produced lingerie for a British high-street brand that Lei asked the FT not to name because he had acted as a subcontractor without the brand’s knowledge.
“This place didn’t really have any other industries besides farming, and people here didn’t really know how to do business,” says Lei, whose company booked revenues of 12 million renminbi ($1.9 million) last year, mostly from export to the U.S. “I taught a lot of my competitors how to do it. Now some of them are doing better than me.”
Many feature towns are located in poor, rural regions left behind by China’s rapid industrialization. Experts say that if properly executed, the idea makes sense. But they also warn that the concept could be misused to fuel property bubbles or other wasteful investment. “We must absolutely prevent the urban real estate model from migrating to small towns, which causes costs to rise and financial risks from property finance to worsen,” says Li Tie, director general of the China Center for Urban Development, a think tank under NDRC. “That’s the common problem with feature towns.”
Zhong county, a poor region outside the megacity of Chongqing in western China, is seeking to attract 5 billion renminbi in investment for a feature town devoted to competitive e-sports video gaming. A purpose-built 6,000-seat stadium hosted a national competition last year.
But at least five other localities are also developing online gaming towns. And unlike Dongwangji’s lingerie industry, Zhong county does not already have an existing e-sports economy.
Town and county-level officials have approved the plan for Dongwangji to gain official recognition as an “emotional interest underwear” feature town and are now seeking approval from the Jiangsu provincial NDRC.
Tang Jingdong, the town’s Communist Party secretary, says the project would enable small manufacturers to cut costs through collective purchasing of raw materials such as fabric. “Once it’s approved, we’ll have land support, fiscal support and lots of bank funding will flow in,” says Tang. “This is a way to help our local residents escape poverty.”
OZY partners with the U.K.'s Financial Times to bring you premium analysis and features. © The Financial Times Limited 2018.