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Zhili riot reveals need to accelerate tax reform
2011/11/11

                                       2011-11-11 12:54    Ecns.cn     Web Editor: Wang Fan

(Ecsn.cn) 鈥� Thousands of mostly unlicensed "couple" spinners and weavers have contributed to building up a town dominated by the manufacture of children's clothing in Zhili, located in east China's Zhejiang Province. But a recent slew of regulatory measures against them resulted in violent unrest that shook the local community.
Last month, attempts to collect an increased "sewing machine tax" caused an outcry in Zhili, resulting in riots between children's clothing manufacturers and tax collectors. As crowds of enraged protestors gathered in the streets and began vandalizing public property, the government sent in special policemen to disperse the mob.
Though taxation leverage is a time-tested tool, in this case it exposed a blind eagerness by the government to regulate the market. And as the rioting shows, policy guidance in a less aggressive manner might have been the more rational approach.
Town built on children's clothing
Eight years ago, when Tan Jielin arrived in Zhili for the first time, the children's clothing industry had already achieved a large scale there. He still remembers the bustling scene, as workers kept their noses to the grindstone, spinning and sewing little garments.
Cartoon logos and brands such as "Golden Childhood," "Happy Baby" and "Stormboy" are emblazoned in his memory.
Tan's hometown is Anqing, a city in east China's Anhui Province. As he walks the streets of Zhili, Tan says he frequently hears people talking in his hometown dialect. According to him, about 80% of the 200,000 migrant workers in Zhili are from Anhui Province, and half of those are from Anqing.
Zhili, which literally means "a native place of spinners and weavers," has historically had the reputation as "the home of silk." However, the processing and sales of children's clothing started only about 20 years ago.
During the early 1990s, there were only two manufacturing bases for children's clothing in China. One was in Fujian Province, and the other was in Guangzhou. At that time, a weaver from Zhili smelled the future of the kid's wear market, so he purchased various popular types of children's garments and brought them back for reference. Not long after, his family started their own business.
At first, Zhili's children's clothing manufacturers were all home-based workshops, where fathers worked as tailors, sons and daughters operated sewing machines and mothers did part-time jobs. In this way, a family could earn up to 200,000 yuan ($30,920) a year.
Soon, the whole town became involved in the business, and in only a decade Zhili developed into a major manufacturing base for children's clothing.
Today, there are 12,200 enterprises related to children's clothing in Zhili. Among them, 7,647 are home-based manufacturers, 4,553 are related enterprises and 47 are large-scale companies, reported China Newsweek.

 

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