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

(i) Skillful technicians, sales people, managers and retired people who used to work for
state-owned or collective enterprises set up their own private enterprises. At the turn of the 1980s,
when China's command economy was starting to transit into a market economy, footwear products
were undersupplied. However, the strong market demand and economic return attracted many
people working in state-owned or collective footwear factories, especially technicians, to set up
their own footwearstalls or family workshops and produced the whole shoe by themselves. Due to
the highly technological requirements for the production of a whole shoe, the newcomers were
mainly technicians who typically used little machinery and manually produced shoes . A
representative enterprise is the state owned Dongfanghong Leather Footwear Factory. Three
enterprises were derived from it, namely Jierda Footwear Co., LTD., China Aolun shoes Co., LTD.,
and Wenzhou Dashun Footwear Machinery Manufacture Co., LTD. In addition to these three big
ones, there are also numerous smaller enterprises, such as the Tailong Footwear Last Factory etc.
Table 4 displays the former work background of these four enterprises’ founders.

Table 4: Backgrounds of the founders of 4 enterprises derived from the

Dongfanghong Shoemaking Factory

Source: authors’ field survey.

(ii) The master-apprentice mode boosted footwear production and technology diffusion in
Wenzhou. The most typical example is Mr. Yu Ashou, the founder of Jierda FootwearCo., LTD.
He taughta total of 16 students of whom 15 set up their own companies while the last one became
his son-in-law and worked in Jierda Footwear Co., LTD. (Yuan Yaping, 2003).

(iii) Copying and spin-offs further increased footwear production and the rate of technology
diffusion. As a matter of fact, the formation ofan industrial cluster is also a process of production
and technology diffusion and dissemination through copying of others. Success of one enterprise
often lures others to copy, resulting in numerous enterprises being duplicated. As far as Wenzhou’s
diffusion and dissemination channels are concerned, this process is accomplished throughrelatives
and friends (Zhu Kangdui, 2005). This phenomenon pushes industrial diffusion and boosted the
formation ofthe Wenzhou shoemakingr cluster¹⁰.

3.3 Division of Labor Lowers Technological Threshold

¹⁰ Aokang and Hongqingting are two typical examples. Two carpenters, Wang Zhentao and Qian Jinbo left home
and worked elsewhere and later sold shoes together until in 1988 when they co-founded a leather shoe factory. In
1995, due to difference in personalities, the factory was separated into the existing Aokang Group and
Hongqingting Group. Following this, the two groups made great progress and became leading companies of their
type in China.

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