High-end Pinduoduo players are hidden here. Welcome to the world of white-label (non-brand) products where pragmatism reigns supreme. Here, brand prestige is not valued; extreme low prices and product utility are the only two evaluation criteria. Raw material imports are not emphasized, but "local industrial clusters" often bring overwhelming, world-dominating competitive advantages. When buying leather, check if it ships from Haining, Zhejiang; for snow boots, pinpoint Sangpo Village, Mengzhou, Jiaozuo, Henan; for makeup brushes, filter for Cangzhou, Hebei; for home textile bedding sets, choose Nantong, Jiangsu... Generally speaking, almost every sub-category has its own "best origin", located in different fourth- and fifth-tier cities or remote counties, towns, and villages across the country. Of course, there are also some super white-label cities that have the capacity to take on an entire product category. For example, 80% of the world's massage guns, one-third of thermos cups and glass cups, more than half of the country's power tools, nearly 70% of security doors... as well as electrical kitchenware, leisure equipment, scooters, technical equipment, and all other modern hardware products you can think of— All come from the "Capital of Chinese Hardware": a fifth-tier small city in Zhejiang, Yongkang.
01 China's Little Dubai? "When I usually use a ride-hailing app, it's like they're trying to give you an Audi." Starting from Hangzhou, driving south for over 200 kilometers, crossing the low mountains and hills in central Zhejiang, when hardware processing factories gradually appear along the provincial road, Yongkang is near. "Yongkang is a county-level city under Jinhua," Qi Feng introduced while driving. "If you often shop online, you'll notice many shipping addresses show Zhejiang Jinhua, but Jinhua actually has few factories; the factories are basically in Yongkang." Qi Feng is tall and slender, and like most Zhejiang people I've met, he speaks with a gentle smile. Although he looks just over 30, he is a seasoned e-commerce veteran, running a small to medium-sized daily hardware enterprise locally in Yongkang. Entering Yongkang's urban area, the cityscape is unremarkable, and the roads are relatively narrow. If you haven't done your homework, it's hard to associate this place with "one of the richest counties in Zhejiang" at first glance. Aerial view of Yongkang (image source: internet) As for how rich it is, I asked Qi Feng for confirmation. I heard that Yongkang is known as "China's Little Dubai" and has the highest density of luxury cars among county-level cities. He laughed and casually pointed to the road: "Look, that Mercedes, that BMW—they're very ordinary cars here. When I usually use a ride-hailing app, it's like they're trying to give you an Audi." A bit show-off, but compared to the rumors circulating, this statement is already very restrained. The most circulated version before was that there are 58 registered Rolls-Royces in Yongkang, mainly top models like Ghost and Phantom; at street-side snack shops, you often see Yongkang bosses finishing a meat pancake or a simple fast-food meal, then getting up and returning to a Maserati or Bentley; if the sound of a top luxury car engine suddenly roars on the road, locals are used to it. Luxury cars are just one facet of hidden wealth. ** Although Yongkang is a regular on the list of top 100 counties, after conversion, it can only be positioned as a fifth-tier city. But the average housing price here has reached 20,000 to 30,000 yuan, and in areas where the rich gather, it has risen to a high of 50,000 to 60,000 yuan. Many luxury cars, high housing prices. These signs of wealth overflow are mostly supported by countless local private bosses. Just from tax contributions, in 2021, 13 enterprises in Yongkang paid over 100 million yuan in taxes, and 47 paid over 30 million. In 2020, when the epidemic first hit, locals even went against the trend, with 24,800 new Yongkang bosses emerging. Now, in this county with a permanent population of less than one million, not only have star enterprises like Wangli, Xingyue, BuYang, Chaoren, and Haers been born, but there are also over 130,000 bosses of all sizes. And most of them are involved in hardware-related industries. Various hardware stores visible everywhere in Yongkang (image source: internet) According to local scholars, "The Yellow Emperor is the ancestor of hardware, and Yongkang is the source of hardware." Probably starting from the Song Dynasty, Yongkang's ancestors carried a load of tools, traveling north and south with their hardware skills, laying the foundation for the hardware industry in this land without metal mineral resources. In 1992, the China Science and Technology Hardware City was established in Yongkang, and subsequently, modern hardware such as power tools, thermos cups, and security doors were introduced, accumulating a strong industrial cluster advantage locally, continuously building national titles like Capital of Doors, Capital of Cups, Capital of Power Tools, and Capital of Cookware. The version most people know is that the China Science and Technology Hardware City has long developed into China's largest and the world's third-largest hardware trading market, and "Capital of Chinese Hardware" has become Yongkang's most important business card. But Qi Feng told me that today's Yongkang is not only the capital of hardware but also the birthplace of global hardware "explosive products." Here gather the most "calculating" high-end players from e-commerce platforms like Pinduoduo, Taobao, Douyin, Kuaishou, and overseas markets.02 Explosive Products Targeted by Yongkang Enterprises Will Explode Again Completely "If you want to know where the wind is blowing on Pinduoduo, Xiaohongshu, Douyin, and Kuaishou, just look at what Yongkang factories are stocking." In Yongkang, whether you walk into a large factory in an industrial zone or a dimly lit unknown workshop, the noise of stamping machines, die-casting machines, laser cutting, and other processing equipment colliding disorderly immediately fills your ears. On a larger scale, the roar of machinery is like the footsteps of a city moving forward. On a smaller scale, it's the sound of quick money jingling into pockets. Small white-label factory (image source: internet) These white-label factories, filled with chaotic noises, are the natural enemies of brands, the makers of super hits, and the paradise for mass replicating wealth. The so-called "brand enemy" roughly means that any brand product that falls into Yongkang can be perfectly replicated, and the manufacturing cost will be quickly reduced by local factories, completely crushing the brand in the market with absolute price advantage. Yongkang people once targeted an Italian brand double-valve coffee pot originally priced at over 500 yuan. They bought one back to study it, and an experienced mold maker quickly figured out the core design principle of the "double valve," and local factories immediately invested in imitation. "The first generation might only score 50 points, but by the second or third generation, it can reach 90 points," Qi Feng said. "In the end, the cost is compressed to about 90 yuan. Even if you earn a 50% profit, the market price won't exceed 200 yuan, which is still much cheaper." More subtly, because the factory price is so low, this product is often re-imported to Italy, transforming into cross-border OEM for other Italian brands. Extremely low-priced domestic double-valve coffee pot It's nothing less than a cuckoo taking over a magpie's nest. I couldn't help but ask, how are these extreme low-price advantages achieved? Qi Feng summarized two points: one is Yongkang's supply chain agglomeration advantage, and the other is the reaction ability of local factories. When Yongkang people produce a massage gun, they can find all the parts suppliers within two hours. Even if problems arise during production, they can quickly find the corresponding manufacturers to solve them together. However, the high coordination between factories is only the essence of supply efficiency. When it comes to cost, it's not an exaggeration to call every Yongkang boss an "actuary." Qi Feng tried to recreate the "cost calculation" process of Yongkang's high-end players: Suppose a Yongkang boss smells a business opportunity in massage guns and decides to invest in producing 5 million units. The first thing is to disassemble the sample into the smallest units (even down to a piece of packaging film), list all the costs involved in a table, and then compress each cost item to the extreme. The usual style of Yongkang bosses is to call a few supplier friends "out for tea" , tell them the quantity and standards of parts they plan to purchase, and the profit margin they are willing to share, then wait for each supplier to quote. After receiving the quotes, the boss calculates. If it meets expectations, they can finalize the list of suppliers and quickly put into production. "What if everyone is producing the same product?" "Then it's very competitive, and prices will only be lower." The competitive pressure of product homogenization increases exponentially, which tests the reaction ability of Yongkang bosses. "Usually, when people chat casually, they basically know which things will become hits," Qi Feng said. Those who react quickly will go find the goods as soon as they get the news. Searching for "camping equipment" on shopping websites, most shipping locations are in Jinhua (Yongkang) For example, when camping suddenly became popular recently, factories with battery material foundations immediately transformed to produce flashlights and outdoor power banks. Bosses who originally made beach chairs also straightened up upon hearing the news and invested resources into the production of hit products like folding chairs and hand carts the next day. Thus, products like camping equipment, which originally sold well only among urban middle-class groups as "high-priced brand products" , will completely explode again as "low-priced white-label products" as Yongkang factories follow up, flooding e-commerce platforms like Pinduoduo, Douyin, and Kuaishou, becoming true explosive products for mass consumption. It's not hard to imagine that this super hit model has long become a golden path for Yongkang's "white-label kings" to replicate wealth. Massage guns were a super hit in Yongkang two years ago. Today, 8 out of 10 massage guns on the market, regardless of price or whether imported or domestic, come from Yongkang. I asked Qi Feng, if you're lucky enough to catch a super hit like the massage gun, what would the annual output value be? He paused and said, as long as the factory is big enough and customer resources are wide enough, it's estimated to be 1 to 2 billion yuan. The reason why Yongkang people are indifferent to million-yuan luxury cars probably comes from here.
03 No So-Called Consumption Downgrade; White-Label Demand Has Always Existed "Consumers with low disposable income also have a lot of consumption needs; that's the value of white-label enterprises." Qi Feng is not actually a typical Yongkang boss. His family didn't originally do business, and he gradually entered from e-commerce. But precisely because of this, he can accommodate the rationality of both "white-label" and "brand" paths, examining the most real mass market with an unbiased and self-honest perspective. He knows that many people have questioned Yongkang's "imitation-based" money-making model, believing that the products are just knockoffs, imitative and trend-following, lacking innovation and low technical content... They won't last long and shouldn't be promoted. The "Zotye Automobile" built by Yongkang boss Ying Jianren is jokingly called the "Porsche Tai" by netizens (image source: internet) In fact, Yongkang bosses have indeed suffered for this a few times. Once, Yongkang Yongjiang Company used the same "disassemble-replicate-compress costs-low-price competition" model to set off a nationwide scooter consumption trend, causing local factories of all sizes to rush in. But because the threshold was low, vicious price wars intensified, and the market price of scooters fell from 300 yuan to below 60 yuan, causing many factories to fall into the quagmire of "losing money on every unit produced." Yongkang people began to realize that this hit model is only suitable for making quick money and must stop while the going is good. So, the straightforward imitation behavior evolved into flexible market-following behavior, forming a phenomenon called "wave economy" by local scholars and officials: When a replicable product with large profit margins appears, Yongkang people can immediately capture it and quickly put it into production to make a quick buck; When the wave recedes and signs of losses appear, they will stop production as soon as possible, take the quick money, and move on to find new products. Production workshop in the era of "wave economy" (image source: internet) Although one must admit the strong speculative nature, Qi Feng still believes that compared to brand enterprises, the white-label enterprises scattered in Yongkang target another group of price-sensitive consumers, and there is no distinction in market value. He said bluntly that white labels are more oriented towards consumers outside the Fifth Ring Road. These people don't deliberately pursue brands and have low disposable income, but they also have strong consumption needs. They also want to use newly popular small appliances and gadgets. White-label enterprises serve as the exclusive "supply connector" for this group, creating value in specific consumer markets. "I once saw a statistic that said 70% to 80% of the population still have an annual disposable income of less than 3,000 yuan," Qi Feng paused and emphasized again, "a year, less than 3,000. That's the most real current situation." Qi Feng continued, usually Yongkang bosses do business by ensuring quality and then earning about 50% profit. But now there is a type of "Pinduoduo merchant" who exists specifically to lower profits and prices. Simply put, as long as it doesn't affect the product's use, corners are cut, express boxes are made from recycled waste cardboard, customer service might be handled by relatives like uncles and aunts. In short, everything that can be saved is saved. As a result, prices are hit to the lowest, profits are thinned to the minimum. Although each order only earns one or two yuan, they ship out four to five thousand packages a day. "So, it's equivalent to low-price demand customizing the production process in reverse?" Qi Feng nodded. "After all, there must be merchants to respond to these demands."
04 The "White-Label King" Will Never Disappear Under Qi Feng's guidance, I visited the hardware city and found that it exudes a high-density smell of plastic and metal inside and out. Walking through it, you can see many self-built houses with "living upstairs, shop downstairs," small trucks, and along the street, hardware stores are quite complete in variety, but the signs are not impressive. Most are just a few large characters printed on aluminum-plastic panels, and the faded, whitened spray-painted doorways are unappealing. Primitive, rough, pragmatism first. This is the most real source trading market of Chinese manufacturing that every ordinary person can perceive. To this day, the hardware industry still accounts for 90% of Yongkang's total industrial economy. Shops are hardware, luxury cars are hardware, tea chats are hardware, and dreams and wealth are also hardware. At the same time, countless white-label enterprises silently support Yongkang's progress and development. Products are white-label, factories are white-label, competition is white-label, and prices and value belong to white-label. I see that this is the Capital of Chinese Hardware, and also a super white-label city named after hardware. Here, the demand of the sinking market is eternal, and the "White-Label King" will never disappear. Note: All names in the article are pseudonyms. Source: Wu Huan Wai (ID: wuhuanoutside) Author: Jingzi