Yiwu, a small town in China’s Zhejiang province, is suffering from a heavy trade imbalance.

That may not come as a surprise to most. After all, most developing and under developed countries in the world, including Nepal, have been weighed down by heavy trade imbalances—with the volume of imports far exceeding the exports made.

The problem Yiwu is are currently undergoing, however, is completely different. While its export volume stands at a staggering 99 percent, the import volume takes up a meager one percent of the city’s trade volume. According to the local government, Yiwu had a trade volume worth 34.2 billion USD in 2015; out of which, the total export volume stood at USD 33.8 billion, while imports only amounted to USD 360 million. So much so, local authorities have been working on policies that boost the import ratio, a move that should perk up ears of Nepali businesses scouting out prospects in the international market.

“It may seem good having the export volume dominating imports. However, in the long run imbalance of this sort is not sustainable,” Xiong Tao, vice mayor of Yiwu Municipal Government said. “Hence, we are encouraging countries to supply goods to Yiwu. This city can be a gateway for local products to the international arena.” He adds that, on an average, 2,000 containers full of goods are dispatched from Yiwu every day. In 2015 alone, Yiwu exported goods worth USD 820,000 to Nepal.

Yiwu was established around 222 BC as part of the Qin dynasty and has remained a trading hub for the better part of two millenniums. Owing to its sparsely arable land and its proximity to China’s eastern shoreline, early wholesale markets emerged in the town as early as the 1700s. Today, it has been estimated that Yiwu exports around 75 percent of the Christmas goodies—ornaments, gifts and trinkets—sold all across the world. The city has over 75,000 shopping booths, which means it would take visitors a whopping 18 months to visit all the shops if they were to dedicate eight hours to shopping each day and visit a shop for three minutes on average. According to the 2010 Chinese census, the city has a total population of 2.2 million but stocks approximately 1.8 million different types of commodities. In recent years, Yiwu has seen a boom in the sale of daily consumer products, offering unlimited opportunities for big and small businesses from around the world. It comes as little surprise to the local authorities that the town has been lovingly dubbed “The Capital of Small Commodities”.

Yet, identifying the lack of imports as a major concern, Yiwu authorities have come up with several policies to balance out the imbalance, including providing tax exemptions and rewards for companies working towards that goal. To that end, a huge marketplace for imported commodities has been built, wherein pavilions flaunting a plethora of imported goods welcome curious shoppers who arrive in the thousands. “Yiwu presents a great opportunity for your (Nepal’s) market. We are willing to expand imports,” Xiong said, adding that any country exporting goods to Yiwu will have access to the market all across the entire nation as every city in China receives products dispatched from the city. As China continues to witness a brisk rise in its number of medium-income households with substantial disposable incomes, the scope for small brands imported from foreign markets, says Xiong, is huge. “All they need to care about is quality. They have an incredible platform waiting already,” he said.

With Yiwu establishing itself firmly as a hub for small products, Nepali traders, according to Xiong, have an added advantage. Anything from watches to idols and statuettes of deities have a huge market in the town, a potential that has yet to be fully realised. According to him, smaller businesses can thrive in a town like Yiwu, unlike other mega cities in China and beyond which tend to focus on high-end and tech products. 

Moreover, developing e-commerce falls under one of the three strategies devised by the Yiwu authorities. The city is already the number one online market in all of China. According to the local government, the city on an average dispatches 1.6 million parcels to buyers across the world every day. Local authorities plan on retaining their focus on the thriving e-commerce market which means imported or indigenous products from this city can and will be purchased from locales across the globe. Goods entering to Yiwu thus, according to local authorities, not just penetrate the Chinese market, but make themselves available the world over. It is a commitment Yiwu’s locals have taken to heart. In 2014 an international airport was established in the city to increase its connectivity. Yiwu already has a 13,000 kilometer railway line that connects it to sunny Spain. The route cuts through the span of two entire continents and eight different countries.

Apart from establishing itself as a trading hub, Yiwu has also set an example that resources, be it natural, geographical, or human are not the sole deciders that shape up fate of a city. Thirty years ago, when China embarked its industrial renaissance, Yiwu was not even a bit-part player. “We didn’t have any significant advantage compared with other cities in China. However, we turned stone into gold, generated something out of nothing,” Xiong says. When private businesses in China were still a taboo in the post-Cultural Revolution China, Yiwu promoted entrepreneurship and encouraged its locals to set-up businesses of all sizes. The city, in this way, developed the first generation of the modern businesses that became the stepping stones for the boom the city would experience in the decades that followed. The then leadership of Yiwu did not wait for others, neither did they ponder over the pros and cons of such policy. Their only focus was to create jobs through entrepreneurship.

That early vision has today paid back its worth in gold and the development of this once little-known town into a major trading hub can be a case study for Nepal and other countries looking to emerge out of stagnating inaction and the dearth of political will. Standing at a busy shopping complex in Yiwu, one cannot help but feel buoyantly optimistic. The city stands testament to the fact that rags-to-riches stories are alive and well, and that there can be such a thing as too much prosperity.