Development of Yiwu market and its impact on the world’s economy.

 

Development of Yiwu market and its impact on the world’s economy.

 

Name

 

 

 

 

 

 

 

 

 

 

 

Institution

Subject

Instructor

Date

 

 

 

 

 

                                   Abstract

Purpose of dissertation

The purpose of this dissertation is to show the development of Yiwu market over time and what these developments mean for the Chinese and world economy. All previous studies have focused on either the development of Yiwu market or the economic significance of the Yiwu market to China. This in turn created a knowledge gap that this study aims to bridge by linking the development of Yiwu market to both the Chinese and world economy. From the above premise, it can be seen that the study is justified and with merit.

Design/methodology

This thesis adopted the secondary analytical survey. The main objective of this type of research method is to test hypothesis / theories. In this dissertation, the theory being tested was whether the development of Yiwu market had any impact on the world’s economy. Most of these published data was obtained from past surveys conducted by governments, organizations and researchers.

Study findings

The study findings highlighted the developments of Yiwu market over time. The study went further to test the theory that development of Yiwu market has had an impact on the world’s economy. From all the deductions and results, it was concluded the development of Yiwu market over time did indeed have  an impact on the world’s economy.

Implications of the study

From all the deductions, conclusions and implications from these study four recommendations can be drawn. These recommendations are; (1) Reduction of government involvement and promotion of free trade will increase profit and build even more global appeal. (2) Plan for more expansions to ensure Yiwu market supplies more demand across the world and increase influence on the world economy. (3) Reduction of trade restrictions to allow more sales and increment in GDP.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abstract 2

Chapter 1 Introduction and background (1000 words) 7

1.1 Introduction. 7

1.2 Background. 7

1.3 Research statement 9

1.4 Justification of the study. 9

1.5 Research objectives. 9

1.6 Research questions. 10

Chapter 2 Literature review (3000 words) 11

2.1 Introduction. 11

2.2 Literature review.. 11

2.3 Conclusion. 19

Chapter 3 Research methodology (1000 words) 21

3.1 Introduction. 21

3.2 Research method adopted. 21

3.3 Qualitative vs. Quantitative study. 21

3.4 The pilot study. 22

3.5 Data analysis. 23

3.6 Validity and reliability. 23

3.7 Ethical concerns. 24

3.8 Limitations and delimitations of the study. 24

Chapter 4 Data findings and presentation of results (1600words) 25

4.1 Introduction. 25

4.2 Restating the Aims and objectives of the study. 25

4.3 Data findings and results. 25

4.4 Conclusion. 31

Chapter 5 Data analysis and discussion (1200 words) 33

5.1 Introduction. 33

5.2 Discussion. 33

5.2.1 To outline and establish the development of Yiwu market over time. 33

5.2.2 To identify the impact of development of Yiwu market on the world economy. 34

5.2.3 To identify the factors that have facilitated to the rapid growth of Yiwu market 35

5.3 Conclusion. 36

Chapter 6 Conclusions and recommendations (1000 words) 37

6.1 Introduction. 37

6.2 Overall conclusions. 37

6.3 Implications. 39

6.4 Recommendations. 39

References. 40

Sources 10 to 25 sources (mainly 2005 to 2015) 40

 

 

 

 

 

Total maximum word count 8800 words 32 pages (double spaced, 275 words per page)

Style: APA

US English

 

 

 

 

 

 

 

 

 

 

 

Development of Yiwu market and its impact on the world’s economy

Chapter 1 Introduction and background (1000 words)

1.1 Introduction

According to Ke (2006) Yiwu market is commonly referred to as the China commodity city (CCC), with an estimated Growth Domestic Product of 28200 million Yuan by 2004. From this premise,Ke (2006) established that the Yiwu market was the largest small commodity – wholesale and retail market in the world. This sentiment was also shared by Yang & Chen (2006) who argued that Yiwu market is the largest commodity market in the world just by its sheer size. In agreement with Yang & Chen (2006) and Ke (2006), a research done by the Singapore food and manufacturers association in 2014 estimated that a whopping 407,000 foreign buyers visited the Yiwu market making it the largest small commodity market in the world. Just like Yang & Chen (2006) and Ke (2006), Han (2013) established that Yiwu is the largest small commodity market in the world from all aspects of a small commodity market. Han (2013) describes these aspects as physical size, theamount of money that changes hands in a day, month or year, number of shops, operators, commodities sold and buyers in the market at a given time.

In this research study, previous studies on the Yiwu market that are available will be scrutinized and deductions made on the social, economic, cultural and political importance of Yiwu market to China and the world. This will be achieved by using the secondary analytical survey to draw conclusions and results from the existing studies on Yiwu market.

1.2 Background

According to research done the University of Sussex (2015) Yiwu market is located in Yiwu city, Zhejiang province, China about 300km from Shanghai. Yiwu is home to 15,000 foreign traders and 1.23 million indigenous localsaccording to the 2010 Chinese census (Bhattacharjya et. al. 2015). The market was founded in 1982 and experienced rapid since then (Han 2013). As of today, Yiwu market covers 4.3 million square meters in size and is home to over 75,700 shops selling over 1.8 million different Chinese made products (Yiwu China Commodities City Group Official Website 2015). In addition Han (2013) argues that the Yiwu market is comprised of three complex markets the international trade mart (the Futian market), Binwang market and the Huangyuan garment market. The Futian marketor the international trade market has over 70,000 shops selling over 1.7 million Chinese-made small commodities. The Binwang market has over 20,000 business entities and 8,000 booths trading in agricultural products.While the Huangyuan garment market has 5,700 shops selling sportswear, jeans among other garments across the world.According toa studydone by the University of Sussex (2015) establishes that approximately 1500 shipping containers leave Yiwu city every single day. These containers are transported to over 200 countries in the world. All the commodities sold in Yiwu market are bought from factories within China Han (2013).An estimated 14,000 traders from all over the world reside and work in Yiwu City (University of Sussex 2015). This is seen by the availability of multicultural restaurants in the city to cater for the visitors from different countries.

Yiwu market is owned and operated by the Zhejiang China commodity city group company limited. This is a government owned company (Han 2013). This company owns the shops, godowns and stalls. Thus the operators and traders rent this premises. The Yiwu market is divided into 5 districts each built to handle trade of certain products.

1.3 Research statement

This study will aim to outline the development of the Yiwu market while highlightingits economicimpact in China and the world as a whole. This will be achieved by carefully studying, scrutinizing and drawing results from the available data on Yiwu market’s development overtime.Also, the research study will identify and highlight the factors that have led to the rapid growth of Yiwu in the past 3 decades.

1.4 Justification of the study

The purpose of this study is to show the development of Yiwu market over time and what these developments mean for the Chinese and world economy. All previous studies have focused on either the development of Yiwu market or the economic significance of the Yiwu market to China. This in turn created a knowledge gap that this study aims to bridge by linking the development of Yiwu market to both the Chinese and world economy. From the above premise, it can be seen that the study is justified and with merit.

1.5 Research objectives

This thesis will clearly aim to outline the development of Yiwu market and its impact on the world’s economy. This study will focus on thedevelopment of Yiwu market from all perspectives from the social to the political and from the economic to the cultural perspectives. The specific objective of this study will be:

  1. To outline and establish the development of Yiwu market over time.
  2. To identify the impact of thedevelopment of Yiwu market on the world economy.
  3. To identify the factors that have facilitated the rapid growth of Yiwu market.

1.6 Research questions

As established earlier, there is a significant knowledge gap in existing in all previous research on Yiwu market. The knowledge gap was identified as the failure by previous authors to link or show the correlation between Yiwu market development and the resultant effects on the world economy. For the thesis objectives to be achieved,a few questions and issues must be addressed. These questions are:

  1. What are the evident developments in Yiwu market in the past 3 decades?
  2. How much has developments in Yiwu market impacted the world economy?
  3. What are the factors that have facilitated the rapid growth of Yiwu market and do these factors give Yiwu market the edge?

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 2 Literature review (3000 words)

2.1 Introduction

According to Nikolov (2013) the main objectives of a literature review will is to highlight previous studies on the subject matter. Thus, the main objective in this juncture is to highlight the development of Yiwu market and its impact on the world’s economy. This will justify the need for the proposed research.

2.2 Literature review

Dissertation topic

The main aim of this of the literature review will be to take an in-depth look at the development of Yiwu market and its impact on the world’s market. According to Han (2013), Ke (2006) andYang & Chen (2006) Yiwu market is the largest small commodity market in the world. Working from this premise, the dissertation will aim to identify and highlight the factors that facilitated the rapid growth of Yiwu market. This will entail a detailed study of what makes Yiwu market stand out, the products on sale and the importance of Yiwu market to both China’s and world’s economy.

According to a research done by the University of Sussex (2015) an approximated 1500 containers are shipped out of Yiwu city every single day. These containers are transported to over 200 countries in the world.This thesis will take a further look at what the above arguments means to the world economy and how it is tied to the development of Yiwu market.This will aid in bridging the knowledge gap identified earlier in the study (previous studies have solely focused on either the development of Yiwu market or the economic significance of the Yiwu market to China. This creates a knowledge gap since no studies have tried to establish a relationship between the development of Yiwu market and both the Chinese and world economy. From the above argument, it can be seen that the study is justified and with merit.

History of Yiwu market

According to the Yiwu municipality website (2015), Yiwu city was established back in 222 BC in the Qin dynasty. Yiwu city’s history of trade can be traced back to the 1600’s when it was established as a trade center. This was as aresult of the agricultural activity in the area. Most of the residents of Yiwu at that period were peasants and farmers. They adopted trade as an income generating activity. The first commodities of trade were predominantly sugar and chicken feathers which were used in the production of fertilizers and weaving baskets. As products of trade increased so did the number of traders and this developed different trading cultures. One of these cultures was exportation that developed around that period where the surplus from trade was sold to foreigners from other countries. The other culture was capitalism where every trader did business for personal gain. By the 1700’s the traders had embraced the culture of wholesale which led to the exponentialof the market from that period into the modern China.

In the early days trade exclusively capitalistic with every trader looking for a purchase or sale that benefited him/her. In 1949, the Peoples republic of China was formed. The formation of the country came with a strictly communist government that viewed capitalism as conducting business for personal gain as ‘dirty pool’.This led to theestablishment of stringent laws on trade thus resulting in a big decline in trading activities and the rise of the black market. This severely halted the growth of Yiwu as a trade city all through the 1950’s to the early 1980’s the (Yiwu municipality website 2015).

According to the Yiwu municipality website (2015), in 1982 there was a paradigm shift in China when the local government laid the first building stone in Yiwu for a free marketplace. Among the first structures to be built were 700 stalls and with that Yiwu market was launched. Over the last 3decades, the market has undergone changes that can only be described as phenomenal (Yiwu International Trade City 2013). By 2015 according to research by the University of Sussex, Yiwu markets have well over 70,000 stalls. Yiwu market’s profits in a year today are in billions (USD $) and with more than 400,000 foreign visitors/traders a year the growth and development of Yiwu market has been subject to admiration the world over.

The growth of Yiwu market has been fueled by the constant changes and establishment of new trade cities over time. Empiricalexamples are the constructions ofthe International trade city 1 in 2001, international trade city 2 in 2002, international trade city 3 in 2004, and international trade city 4 in 2008 and so on. The argument above shows the development of Yiwu market over time. To this day, the specialized wholesale markets in Yiwu total up to 20ranging from agricultural markets to textile, from Christmas ornaments markets to jewelry market, from stationary markets to cosmetics markets among others.

Yiwu market economy

According to the Yiwu municipality website (2015) Yiwu market covers well over 4million square meters with more than 70,000 shops. The trade products available in Yiwu market are well over 1.7 million different types spread across 4,100 categories and 43 industries. In a day over 1,500 containers leave Yiwu market for 215 countries and regions in the world (University of Sussex 2015).An article from E-Chinacities (2015) shows that Yiwu market receives over 400,000 foreign traders a year and is the backbone of Zhejiang province’s economy.

According to E-Chinacities (2015) by 2006 Yiwu city’s economy had an annual Gross Domestic Product (GDP) of 35.2 billion dollars with an annual growth of 15%. The Yiwu municipality website (2015) goes on to show the growth of the Yiwu market from 2001to 2010 as seen in the table below.

Yiwu market GDP (USD) 21.2B 23B 24.8B 26.7B 28.8B 31.5B 34.8B 38.1B 41.2B 45.6B
Annual growth (%) 9.8 8.5     8 7.49  8.1  9.2  10.6   9.6   7.8 10.8
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Table 1.1 Annual GDP growth of Yiwu city over ten years.

From the above statistics, it is evident that with the development of Yiwu market the economy has followed suit. Thiseconomic performance and growth can be attributed to the constant development seen in Yiwu market. An example is the jump from 21.2 billion USD in 2001 to 24.8 billion USD in 2003 can be attributed to the construction of the international trade mark 1. According to Bhattacharjya et. al. (2015) Yiwu market average 92% of the GDP in exports every year. A large portion of the sales in Yiwu market has been wholesales averaging at 75% of the GDP year in year out. This means that the table above can also be used to show exports and wholesales performance over time (Bhattacharjya et. al. 2015).

            According to the Yiwu municipality website (2015) the economy of Yiwu market is not only about income generation but other economic advancements have been realized too. These advancements range from a high employment rate in Yiwu to high local government revenue, from theprosperity of other industries e.g. hospitality industry due to the numerous visitors dailyto infrastructural advancement in the area among other numerous economic gains (Cissé 2002).

 

 

Place of Yiwu market in the Chinese economy

According to Han (2013) the Yiwu market sells commodities from over half of all the industries in China. In like manner Jacobs (2009) argued that Yiwu market’s economy drives almost all production related industries in China. Sun and Perry (2008) attribute the growth of manufacturing industries in China to competition and demand from Yiwu market. In addition, the Yiwu China Commodities City Group Official Website (2015) the importance of Yiwu market to the Chinese economy cannot be understated from afinancial perspective. Martin and Berger (2011) established that the recent Chinese export boom comes on the back of a growth in influence of the Yiwu market on the Chinese economy.

The contribution of Yiwu market to the Chinese economy is seen in the fact that the market has been ranked number one among small commodity markets in China for 19 straight years (Yiwu China Commodities City Group Official Website 2015). Yiwu market is recognized as one of the leading foreign exchange earners in China.Yiwu market receives 3,500 foreign traders a day and 1,500 containers of commodities leave the market daily (Yiwu municipality website 2015). Working from this Martin and Berger (2011) argued that the daily exports from Yiwu market contributed to about 11% of total Chinese exports. Another contribution of the Yiwu market to the Chinese economy is employments. With more than 500,000 business stands and booths, 70,000 shops and numerous warehouses it can be said that the Yiwu market offers employment to well over 1million Chinese citizens (Yiwu China Commodities City Group Official Website 2015). According to the Yiwu municipality website (2015) the Yiwu market is the main reason the city of Yiwu has the third best infrastructure development in China. Due to the number of visitors per day the Yiwu Airport has frequently been expanding to cater for the number of visitors as they increase and with the plans in place that airport will be the largest in China within the next 10 years. The airport is just one among the numerous infrastructural advancements experienced in Yiwu. The rise and development of Yiwu market have seen roads constructed, hotels built among other structures. It can be said that Yiwu market has spearheaded the Urbanization and globalization of Yiwu city.

Statistics from theChinese national bureau of statistics (2011) show Yiwu market has been essential to the growth of the manufacturing sector. This canbe seen in the statistics provided by the Yiwu China Commodities City Group Official Website (2015) that Yiwu market that the market sells over 1.7million commodities from 43 manufacturing sectors around China. Other sectors to benefit from the Yiwu market in China are the hospitality industry, transport industry, energy industry, and agricultural industry among others (Yiwu China Commodities City Group Official Website 2015). One of the most surprising industries to grow from the Yiwu market is the tourism industry. The Yiwu market itself has become a tourist attraction for people coming from the world over just to the legend that is Yiwu market (Yiwu municipality website 2015).

Of all the contributions of Yiwu market to the Chinese economy, one stands above the rest. This is the contribution to government revenue in theform of rents, commodity taxes, exercise duty, export tax and all other revenues that comes from the industries that feed the Yiwu market from other parts of China. Directly and indirectly the Chinese government collects Billions of USD from Yiwu market-relatedactivities (Chinese national bureau of statistics 2011). All this while promoting the spirit of free trade in a very conservative country (Zhikai (2009) and Mao (2005)). According to Mao (2005) and Zhikai (2009),all financial gains from Yiwu market overshadow one major gain, and that is the steps made towards China adopting a capitalistic economy.

Impact and place of Yiwu market in the world economy

According toa study by the University of Sussex (2015) shows the impact of Yiwu market to the world’s economy can only describe as phenomenal. This is seen by the fact that the market welcomes 400,000 foreign traders a year all with the aim of acquiring commodities to sell back in their countries. This canbe seen in statistics provided by the Yiwu China Commodities City Group Official Website (2015) that over 1,500 containers leave Yiwu market daily for 215 countries and regions around the world. According to Roache (2012) the commodities Yiwu market exports in a year are enough to alter prices of similar or substitute commodities around the world. Yiwu exports in 2014 totaled up to 43.16 Billion USD with leading importers being Europe (37% of total exports), UAE (16% of total exports) and the US (17% of total exports).All the above arguments to one undeniable fact that Yiwu market has its place as the largest small commodity market in the world.

One of the effects of being the largest small commodity markets in the world is the ability to affect economic trends around the world (Roache 2012). Roache (2012) established that the exports from Yiwu market to the outside world are so numerous that they prices of similar or substitute commodities. This is a sentiment shared on the Yiwu China Commodities City Group Official Website (2015) that argues Yiwu market exports are of high quality and low prices thus they drive prices of similar commodities down across the world. This is a major impact on the Yiwu market on the world’s economy. But it doesn’t stop there Roache (2012) argues that Yiwu market’s Impact on the world’s economy can be seen from all aspects of life (social, political, cultural, economic and even environmental aspects). This is a sentiment shared by Jacobs (2009) and the Chinese national bureau of statistics (2011), the argument being that more the 200,000 Traders have immigrated to China to live and work in Yiwu market. Politically Yiwu has become one of the most important and powerful cities in China and thus politically strategic for the government. Social and culturally Yiwu market is the only place in China one can find people from almost all corners of the world thus better cultural integration. On a negative note concentration of that many people has adverse effects on the environment(Yiwu municipality website 2015).

Focusing on the economic impacts Yiwu market has on the world’s economy. First is the indirect employment of people around the world. As noted earlier 1,500 containers leave Yiwu market daily. These are mostly wholesale items that are to be resold in the 215 countries and regions around the world. Thus meaning the traders provides employment in their respective countries. With the quantities of commodities leaving the market daily, it will be safe to assume that the employment opportunities created are in millions of people worldwide (Cissé 2002). Secondly are the low prices of commodities sold in Yiwu and the negative impacts on similar commodities prices from other countries, poor sales by factories that produce similar commodities in other countries among other negative impacts. Thirdly is the amount of revenue collected by governments all over the world from importers. Statistics from the Yiwu China Commodities City Group Official Website (2015) show that the US leads in imports from Yiwu market followed by the UAE, India among others that represent billions in revenue per year for those governments. Fourth is the promotion of the trade culture around the world.Commodities from Yiwu market end up in 215 countries and regions in the world that is almost every country in the world that trades with China (University of Sussex 2015). Fifth is the provision of choice to consumers around the world. Export of numerous commodities ensures consumers around the world have choices on what commodities to consume (Roache 2012). Sixth is providing competition for other producers of similar commodities around the world thus improving quality and value of products while lowering prices (Roache 2012).

Factors that have facilitated the rise of Yiwu market as a global market

Yiwu market’s ability to affect the world market and economy can be attributed to the constant development and expansion of the market (University of Sussex 2015). But what makes this market superior to other markets? Or what are the Factors that have facilitated the rise of Yiwu market as a global market? This thesis will aim to answer these questions and in that showing why for so long Yiwu market remains the largest small commodity market in the world.

First, is the government involvement in thedevelopment and subsequent running of the market that gives Yiwu market both a financial and administrative edge in other markets. Secondly is the low prices and high quality of commodities in the market. Thirdly is the direct contact between the traders in the market and factories that ensure prices remain low and no costs incurred from middlemen (distributors). Fourth is the quick delivery of commodities after purchase thus the market is efficient and effective. Fifth are all year round exhibitions and fairs that enhance the markets appeal to traders. Sixth is comprehensive product coverage and specialization. This ensures a trader does not waste time walking around shopping. Seventh are the constant product innovation thus latest products on sale all the time. The advantages are endless, but the above factors are the most influential (Cull et. al (2013), Cissé (2002) and Stone et. al. (2015)).

2.3 Conclusion

From the above arguments, it is clear that Yiwu city is the largest small commodity market in the world. This comes on the back of constant increase and growth in size, Gross Domestic Product (GDP), foreign trader’s numbers, commodities and product variety among other variables.The previous studies on Yiwu market have established relationships between the Chinese economy and world economy with the Yiwu market; other studies have linked low prices in Yiwu market commodities with the world market and so on. But none has linked the development of Yiwu market over time with the growth in influence of the market on the world economy.

Every single year from 1985 the GDP of Yiwu city has grown in tandem with Yiwu market. While this happened, one other aspect of the market and city grew as well. This aspect was the structural and economic development in Yiwu market. This is seen by the increase in thestructural standing of the market over time, infrastructure development around the market, immigration of traders from all over the world to live and work in the market (cultural development), and improvement in standards of living around and within the market among other developments.

 

 

 

 

 

 

 

 

 

 

Chapter 3 Research methodology (1000 words)

3.1 Introduction

According to Nikolov (2013) this chapter highlighted the methods used to collect, analyze and present data to get the desired results for this study.

3.2 Research method adopted.

This thesis adopted the secondary analytical survey. According to Gray (2013) the main aim of this type of research method is to test hypothesis / theories. In this dissertation, the theory being tested was whether the development of Yiwu market had any impact on the world’s economy. This was achieved by carefully and critically analyzing the published data available on the development of Yiwu market and the impact of trading activities there on the world’s economy. Most of these published data was obtained from past surveys conducted by governments, organizations and researchers. Gray (2013) defines secondary analytical surveys as putting emphasis on systematically selected samples to draw a desired inclusive result.

According to Gray (2013) this type survey was structured to show the level of relationships (correlation) between the theory being tested and the desired outcome. In this case, the relationship being tested was between the development of the Yiwu market and the resultant impact on the world’s economy if any.

3.3 Qualitative vs. Quantitative study

In line with Gray (2013)’s argument on the secondary analytical survey, this study applied both qualitative and qualitative study approaches. The choice of the approaches was determined by nature, objectives and desired result of the research study. A qualitative study thataccording to Gray (2013) was a critical research analysis that aided the researcher obtains the desired results by filling the gaps in other studies through information generated from content analysis of the available literature on the topic. The qualitative study was essential to this thesis due to the content analysis needed to test the theories and hypothesis available. On the contrary, Gray (2013) described quantitative study approach as the use of the numerical values obtained from other studies to generate a correlation model that gives a numerical representation of the study. This approach aided in the better understanding of the research gaps identified by the research questions and objectives. Both this approaches enabled this thesis to show deductions from the content analysis by the research objectives.

3.4 The pilot study

According to Nikolov(2013) a pilot study is a pre-testing research study that sheds light on the study to be conducted in the thesis.

According to Yiwu market official website (2015) India is the fourth largest importer of commodities from Yiwu market in 2014 behind Europe (37% of total exports), UAE (16% of total exports) and the US (17% of total exports). India imports commodities worth 3.9 Billion USD a year. An observation was made that as the imports from Yiwu market grew the Indian small commodity economy started altering behavior.These imports have both adverse and positive effects on the Indian economy. An example is a reduction in sales for many Indian factories that produce goods and commodities imported from Yiwu market due to the low prices of Yiwu market products. Since most of Yiwu market products imported to India are for resale, a lot of employment opportunities have been created. Another impact on the Indian economy is the revenue the Indian government collects from these imports. Cultural integration has also been another side effect of the Yiwu market as the Indian importers and traders interact with people from all over the world in Yiwu among other impacts.

Since the foundation of Yiwu market in 1982 India has been one of the constant importers. A relationship or trend has emerged over the years, as Yiwu market grew, GDP and other aspects (development) the impact of trading activities between Yiwu and India increased. This led to Yiwu market having more effect on the Indian economy, especially on the small commodities. From the above argument, it is evident the development of Yiwu market over time has had an impact on the economy of India (an economy that is not within China). From that premise, it can be deducted that indeed Yiwu market development over time has had and is having an impact on the world’s economy.

            3.5Data analysis

As discussed earlier in the chapter the data analysis method to be used was secondary data analysis. This thesis was more suited to adopt the Meta – analysis due to the data sources. Creswell (2014) definedMeta – analysis as the analysis of a set of results from past literature or data. In layman terms Meta – analysis is the analysis of a set of analyses.

3.6 Validity and reliability

According to Gray (2013) reliability and validity are used to measure the accuracy and consistency of data being used in a research study. Reliability of the research was exhibited in the pilot study conducted by showing the levels of relationship between the variables under study after analysis. Validity was essential since it measured the accuracy of the study.On the other hand, reliability was to measure the intended construct by via a set scale. Both validity and reliability were tested in the pilot study to determine if the study is feasible or not.

3.7 Ethical concerns

The adoption of secondary data analysis method was to highlight concepts, key themes and discourse in the research this warranted the need for ethical consideration. Ethical concerns were important aspects of the study that protected the rights of both the researcher and the research source. For the research source in a secondary data analysis the need for protection from plagiarism and other issues concerning copyright. While for the study is because conclusions were drawn by applying this method and the researcher needed to use ethical guidelines in place to ensure the outcome was reliable and valid (Gray 2013).

3.8Limitations and delimitations of the study

Since the study was a secondary data review, and most of the literature is readily available, the limitations of this study were few. Some of the limitations in this study were;

  1. some of the sources were difficult to validate since every author worked from his / her perspective.
  2. time frame for the study was not sufficient to fully cover all the areas of concern.
  3. Most of the study sources date back 5-10 years and thus no real time sources.

 

 

 

 

 

 

Chapter 4 Data findings and presentation of results (1600words)

4.1 Introduction

According to Nikolov (2013) this chapter attempts to represent case study results obtained in chapter 2. This is necessary to the desired results that justify the need and merit of the study being conducted. These representations are used in conjunction with the literature review in chapter 2 to develop the discussion presented in chapter 5.

4.2 Restating the Aims and objectives of the study

As discussed earlier the study objectives of this study were:

  1. To outline and establish the development of Yiwu market over time.
  2. To identify the impact of thedevelopment of Yiwu market on the world economy.
  3. To identify the factors that have facilitated the rapid growth of Yiwu market.

4.3 Data findings and results

Development of Yiwu market

According to the Yiwu municipality website (2015) since the foundation of Yiwu market in 1982, a lot of development has been seen over time. Yiwu China Commodities City Group Official Website (2015) outlines some of the developments experienced in Yiwu market from all perspectives, social, economic, cultural and political developments. Since the government of China runs and develops the Yiwu market through the Yiwu China Commodities City Group Co. Ltd it is safe to assume that all the developments experienced in the market are political consequences. From this argument, it can be argued that as the market grew so did the political power of the Yiwu China Commodities City Group Co. Ltd.

On the social and cultural development front Yiwu market is the most culturally integrated area in China. With people from all cornersof the world visiting and some staying to work, Yiwu’s social structure has been constantly changing over time. Lately, there has been a boom in country based restaurants, indigenous places of worship (churches, temples among other foreign amenities) and hotels popping up all over Yiwu city and market (Cisse 2002). According to Cisse (2002) this social development was the driving force behind theestablishment of African based stalls in Yiwu market and the rise in African imports from the market. Now all over the world most traders that visit Yiwu take back Chinese trading practices to their countries, and this is evident especially in India. Another social and cultural development is theusage of a common language to trade. Studies by the University of Sussex and ABLES international in 2015 established that by 2006 only 3% of Chinese traders in Yiwu market spoke English and by 2014 the number was at 12%. Other developments are seen in change clothing among visitors and locals, intermarriages among many more social and cultural paradigm shifts.

On the economic development front, many changes have been experienced for the over 3 decades of theexistence of the Yiwu market. First is the job and employment creation. Secondly is the rapid urbanization of Yiwu city. Thirdly is the infrastructure improvement e.g. Yiwu airport expansion. Fourth is the stable rise in GDP over the years. Fifth is the improvement of standards of living among locals. The sixth and most importantly is the growth in size and structure of the Yiwu market over time. This has seen the systematic construction of international trade cities. Seventh is the boom of other industries across China that feed the Yiwu market. All these developments among others (Yiwu China Commodities City Group Official Website 2015). The argument above aims to show the development of Yiwu market over time from all aspects thus later these developments will be linked to the impacts of Yiwu market on the world’s economy.

Yiwu market structural development

Since 2001, the Yiwu market has experienced major structural development in size, infrastructure, and architecture (Yiwu municipality website 2015). The structural development the Yiwu municipality website (2015) alludes to is the construction of the 5 major districts in Yiwu market. As is evident Yiwu market has over 20 specialized markets dealing in distinct products e.g. Agricultural markets, textile markets, Christmas ornaments markets and others distinct small commodity markets. The Yiwu authority in 2000 developed a plan that would see these small distinct markets clustered into 5 districts to create efficiency in trade activates (Roache 2012).

That project began in 2001 with the foundation of International trade district 1. In 2002, the district was opened for business hosting 9000 booths and 10500 businesses. The district was dividedto 5 main areas the subject market area, food court, manufacturing outlet center, warehousing and shopping center each dealing with distinct products. In 2004 the International trade district 2 was opened, hosting 8000 booths and 10,000 businesses. This district specialized in financial and commercial services, electronics, kitchen appliances and mostly social services e.g. police office, post office among others. In 2008,districts, 3 and 4 were launched dealing specifically in textile products and clothing. In 2011, the 5th district was launched dealing strictly in imported product from other regions in the world.

Pic 1.1 Shows some of the structural developments in Yiwu market

Growth of Yiwu markets GDP and exports over time

Statistics from the Yiwu municipality website (2015) shows the growth of the Yiwu market from 2001 to 2010 as seen in the table below.

Yiwu market GDP (USD) 21.2B 23B 24.83B 26.7B 28.8B 31.5B 34.8B 38.1B 41.2B 45.6B
Annual growth (%) 9.8 8.5     8 7.49  8.1  9.2  10.6   9.6   7.8  10.8
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Table 1.1 Annual GDP growth of Yiwu city over ten years.

The data above is essential since the 95% of the GDP generated in Yiwu market is exported specific and 75% wholesale specific. Thus, it is safe to argue that the statistics above also indicate the rise in exports over time (Bhattacharjya 2015).

Chart 1.1 Yiwu market Gross Domestic Product in Billions USD since 2001 to 2010.

The chart above was carefully selected to shoe the growth of GDP, exports and local sales over time. The timeline chosen coincides with the largest structural development in Yiwu market and will be essential to the research objectives (Yiwu municipality website 2015).

Leading importers from Yiwu market

Yiwu market receives 3,500 foreign traders a day and 1,500 containers of commodities leave the market daily (Yiwu municipality website 2015). According to Roache (2012) Yiwu market exports in a year, enough commodities to alter prices of similar or substitute commodities around the world. Bhattacharjya et. al (2015) established that Yiwu exports in 2014 first quarter totaled up to 43.16 Billion USD with leading importers being Europe (37% of total exports), UAE (16%), and the US (17%), India (9%) and Africa (6%).The US remains the largest one country importer of commodities from Yiwu market.

Chart 1.2 Shows the percentage imports by countries from the Yiwu market.

According to Cisse (2002) an influx of imports of products from Yiwu market in 2001 almost destroyed the African economy as local industries in Africa faced tough times trying to compete with the prices of products from China. This led to the rise in imports as the prices were low and goods of high quality and this was seen as the foundation of the idea to build the international trade district 5.

Effect of Chinese Exports on the world’s economy

According to Martin &Berger (2011) and Roache (2012) argued that the recent Chinese export boom is fueled by the rise in exports in Yiwu market. The graph below will compare the Chinese total exports compared to Yiwu market export from 2001 to 2010. The statistics used were extracted from the Chinese national bureau of statistics (yearbook 2011)

Graph 1.3 Shows the total Chinese export in Billions USD

From the chart above it is evident the Yiwu market export have an influential stake in the total Chinese exports. From this premise, it is safe for the study to assume that any effects of the Chinese exports on the world’s economy can be termed as the effect of Yiwu market exports. According to the Chinese Bureau of statistics (2011) Chinese product are appealing to the world economy due to the high quality and low prices. In 2006 at the height of Chinese exports the world economy experience deflationary effects on the products exported to China. This was attributed to the fact that Chinese product were cheaper than similar commodities from other countries especially agricultural products. This led to the falling in general prices for agricultural products around the world. It is this type of impact that this thesis will aim to show.

4.4 Conclusion

From all the above results the researcher conducted a Meta – analysis (Analysis of analyzes Gray (2013)) to try and establish a relationship between development of Yiwu market and the impact of the Yiwu market on the world economy. One of the early indicators that development does affect an economy is in 2007-2008 when the Chinese exports slowed down. In Yiwu, growth was still evident and stable coincidentally this growth came after thefoundation of the International trade district 4 (development). This growth in exports in Yiwu helped stabilize the total Chinese export al through to 2010. With the construction of the trade districts throughout the 10 year period Yiwu market export grew in impact in the total Chinese exports and consequentially the world economy.

As already established the total Chinese exports are large enough to effect price changes in the world economy. As the Chinese exports grew over time fueled by the growth of exports from Yiwu market so did the influence on the world economy. All this can be traced to the growth and development in Yiwu market.

Development of Yiwu market.
Increase in Total Chinese Exports

 

 

World economy

Increase in                                                     Increase in

Yiwu markets                                                Impact

Exports

Chart 1.1 Shows how the development in Yiwu market impacts the world economy.

From the above argument it can be concluded that indeed the development of the Yiwu market does indeed have an impact on the world economy.

 

 

 

 

 

Chapter 5 Data analysis and discussion (1200 words)

5.1 Introduction

According to Nikolov (2013) in this chapter, the study aimed to discuss the results generated in chapter 4 compared to those generated in chapter 2. In chapter 2 the study focused on the previous studies on the growth and development of Yiwu market and what that meant to the world economy. In chapter 4 the study focused on deductions made from the arguments in chapter two.

5.2 Discussion

In this juncture, the study focused on the results generated in chapter 4 compared to those in chapter 2 and line with the objectives of chapter 1.

5.2.1 To outline and establish the development of Yiwu market over time

As established earlier, Yiwu market has faced constant development over the last 3 decades of existence. The study identified the developments from all perspectives namely; economical, cultural, structural, social and political. On the political front, the study in chapter 2 and 4 identified the growth in political power of the Yiwu political authority due to the growth in Yiwu’s economical influence fueled by the Yiwu market (Yiwu China Commodities City Group Official Website 2015). On the cultural development front, Yiwu market was identified as the most multicultural city in China. This was punctuated by the construction of foreign places of worship, restaurants, and the international trade district 5 that is essentially a foreign trade center (Cisse (2002), Yiwu municipality website (2015) and Yiwu China Commodities City Group Official Website. (2015)).

On the social development front as established in chapters 4 and 2 is the interaction of the people from all over the world has led to intermarriages that would have never happened before, Chinese adoption of English as a trade language and Chinese embracing other cultures (Cisse 2002). On the economic front, a lot of developments have been realized e.g. promotion of free trade, growth in GDP and profits, job and employment creation, improved infrastructure, standards of living and transport, anincrease in government revenue among others. Finally on the structural front Yiwu market over the last 3 decades has seen massive changes in size, architecture, construction and building renovations. This structural were punctuated by the construction of the five international trade districts (Yiwu municipality website 2015)..

5.2.2 To identify the impact of development of Yiwu market on the world economy.

As it was established earlier in chapters 2 and 4, Yiwu market developments over the years has had an effect on the world economy on different aspects. The constant visits by traders to Yiwu market has led to exchange and adoption of new trading practices. It is evident that most countries have embraced the Chinese economic approach e.g. India and this in turn has altered the world economy. Another impact is the direct influence of commodity price. As Yiwu market developed over the years so did its influence on the Chinese total export thus as Chinese exports affect commodity prices in the world so does the Yiwu market exports. Another alteration of the world economy is the ability of Yiwu market to trade with 215 countries and regions in the world. This affects the world economy greatly as almost all countries in the world trade Chinese made commodities. This has been achieved by the constant growth and development in Yiwu market to ensure its commodities are found in every economy the world over.

One of the major impacts of the Yiwu market on the world economy is the change in behaviors of other countries’ economies owing to imports from Yiwu market. Commodities from Yiwu market are cheap and of high quality. This has ensured that the demand for the commodities grows with each year. Yiwu market in turn has grown and developed to supply this growing demand. In some countries as the imports from Yiwu markets grow, local industries opt to stop production. This is as aresult of stiff competition from imported commodities and at lower prices the industries eventually fail thus imports become essential. This is evident in many countries especially in Africa where economies are essentially dependent on imports from China (Roache 2012).

5.2.3 To identify the factors that have facilitated to the rapid growth of Yiwu market

As was highlighted earlier Yiwu markets has a big advantage over other markets in the world resulting in low prices, rapid growth, and global appeal. This advantage is driven by a few factors that facilitate its growth to a global market in 30 years. The factors are many, but the thesis focused on the major advantages.

First is the fact the Yiwu market is owned and operated by the government through a parastatal (Yiwu China Commodities City Group Ltd) this gives the market a financial and administrative edge. An empirical example is the construction of the 5 international trade districts in a time span of only 10 years. A project like that requires intensive financial backing. Secondly is the direct contact between the manufacturers and traders. This reduces costs and drives down the price thus the low prices for commodities. Thirdly is the backing from the city authority.  This ensures the infrastructure and any supporting services are readily available e.g. the Yiwu airport expansion to accommodate the rise in trade numbers.The fourth is the quick delivery of commodities after purchase thus the market is efficient and effective. Fifth are all year round exhibitions and fairs that enhance the markets appeal to traders. Sixth is comprehensive product coverage and specialization. This ensures a trader does not waste time walking around shopping. Seventh are the constant product innovation thus latest products on sale all the time. The advantages are endless, but the above factors are the most influential (Cull et. al (2013), Cissé (2002) and Stone et. al. (2015)).

5.3 Conclusion

From the above arguments the researcher assumed that all the objectives were adequately and sufficiently addressed. This chapter addressed all the objectives individually by drawing deduction and conclusion from chapters 2 and 4. First it can be concluded that the thesis highlighted and identified the factors that facilitated the rapid growth of  Yiwu market. Secondly the chapter addressed the development of Yiwu market from all perspectives ranging from economic to cultural, from structural to social and even political. Lastly, the study developed and highlighted a correlation between the development of Yiwu market and the subsequent impact on the world’s economy.

 

 

 

 

 

 

 

Chapter 6 Conclusions and recommendations (1000 words)

6.1 Introduction

This chapter aimed to identify the main areas of this study that were highlighted in the chapters above. The chapter also aimed to analyze how much the research objectives and the research questions were addressed during the study. The general objective of the study was to establish a relationship between development of Yiwu market and its impact on the world’s economy. This chapter aimed to scrutinize, evaluate, compare and analyze the literature available on previous studies on Yiwu market. The research questions were: What are the evident developments in Yiwu market in the past 3 decades? How much have developments in Yiwu market impacted the world economy? What are the factors that have facilitated the rapid growth of Yiwu market and do these factors give Yiwu market the edge?

6.2 Overall conclusions

In this juncture, the study tested how adequately the research questions were addressed and if the results generated the desired outcome of the study.

Regarding the research question, What are the evident developments in Yiwu market in the past 3 decades? As it has already been established development in Yiwu market can be seen from all perspectives ranging from economic to cultural, from structural to social and even political. A summary of the evident developments from the cultural perspective is the embracement of other cultures e.g. learning new languages to enable trade with over 215 countries and regions in the world. On the social development is the association and acceptance of people from other parts of the world in Yiwu market. This canbe seenin the construction of foreign restaurants, places of worship and international trade district 5. In turn giving Yiwu market the title of themost multicultural region in  China. On the economic and structural development, the construction of the 5 international trade districts and supporting infrastructure (roads and airport) in the last 10 years comes to mind.

Regarding the research question, How much has developments in Yiwu market impacted the world economy? This question was addressed from all perspectives ranging from economic to cultural, from structural to social and even political. A summary of the evident developments from the cultural perspective is the export of Chinese trade culture into the world economy. Political perspectives is the export of direct government involvement in trading markets into the world economy a practice that is being embraced all over the world. On the social perspective is the embracement of foreign cultures and beliefs that is enabling Yiwu market to trade with almost all countries in the world. On the economic perspective is the manipulation of commodity prices in the world by theproduction of cheap commodities. Altering the economic practices in other countries in the world among other. On the structural developments is the expansion of size and production to cater for the demand for small commodities in the world economy.

Regarding the research question, What are the factors that have facilitated the rapid growth of Yiwu market and do these factors give Yiwu market the edge? First, is the government involvement in thedevelopment and subsequent running of the market that gives Yiwu market both a financial and administrative edge in other markets. Secondly is the low prices and high quality of commodities in the market generate global appeal. Thirdly is the direct contact between the traders in the market and factories that ensure prices remain low and no costs incurred from middlemen (distributors). The fourth is the quick delivery of commodities after purchase thus the market is efficient and effective. Fifth are the all year round exhibitions and fairs that enhance the markets appeal to traders. Sixth is comprehensive product coverage and specialization. Among other numerous advantages.

6.3 Implications

The one and only implication of this study is that the development (on all aspects)of Yiwu market over time indeed has had an impact on the world’s economy. This was established by the results of the study.

6.4 Recommendations

Yiwu market can grow even more into a trade center that has alasting influence on the world economy be it a few changes have to be made. From all the deductions, conclusions and implications from these study four recommendations can be drawn. These recommendations are;

  1. Reduction of government involvement and promotion of free trade will increase profit and build even more global appeal.
  2. Plan for more expansions to ensure Yiwu market supplies more demand across the world and increase influence on the world economy.
  3. Reduction of trade restrictions to allow more sales and increment in GDP.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Sources 10 to 25 sources (mainly 2005 to 2015)

Bhattacharjya, S., Yan, Y. and Yuanquing, S. (2015). Merchants of Yiwu. China daily Europe, Yiwu, China.

Chinese national bureau of statistics (2011). Chinese Statistical yearbook. Chinese department of statistics. Beijing, China.

Cissé, D. (2002), African Traders in Yiwu: Their Trade Networks and Their Role in the Distribution of ‘Made in China’ Products in Africa. University of Alberta, Edmonton, Canada.

Creswell, J. (2014). Research design: Qualitative, quantitative, and mixed methods approach. New York; Sage Publication.

Cull et, al. (2013). Market facilitation by the local government and Firm efficiency; Evidence from China. World bank; Development research group. Washington DC, US.

Gray, D. E. (2013), Doing research in the real world, Principles and Planning for Research, Sage Publication, pp.14-38.

Han, Y. (2013). Success essentials of Yiwu Small Commodity Market. Savonia, Beijing, China.

Jacobs (2009) Extending linkages between organizational analysis and social structure: a case study of the celebrity-construction of a Chinese marketplace. William Davidson Institute Working Paper; University of Michigan. Michigan, US.

Ke, D. (2006). Distribution systems of China’s industrial clusters; Case study Yiwu China commodity city. Institute of developing economies (JETRO). Wakaba, Mihama-Ku, Chiba-Shi, Chiba, Japan.

Mao, Y. (2005).Institutional innovation and functional transition of local government and development of private sector in Wenzhou and Yiwu.Lund University; Center for East and South-East Asian Studies. Lund, Sweden.

Martin, R.F., Berger, B. (2011). The growth of Chinese exports; An examinations of the detailed trade data. International financial discussion papers. Washington DC, US.

Nikolov, P. (2013). Writing Tips for Economics Research Papers. Harvard University. Cambridge. Massachusetts.

Roache, S. K. (2012).China’s Impact on World Commodity Markets. International Monetary Fund; IMF Working Paper. Washington DC, US.

Singapore food and manufactures association. (2014). Yiwu food product centre. Singapore and food and manufacturers publications. Singapore.

Stone et. al. (2015). Import from China. ABLES International ltd. Yiwu, China.

Sun, Z., Perry, M. (2008). The Role of Trading Cities in the Development of Chinese Business Cluster. Department of Management, Massey University. Wellington, New Zealand.

University of Sussex. (2015). Trust, global traders and commodities in a Chinese international city. Department of Global studies. Falmer, Brighton, UK.

Yang, J., & Chen, L. (2006). Haining pige maixiang “pinpai jingji”.Beijing Leather: China and Foreign Leather Information 2, 28-29. Beijing, China.

Yiwu China Commodities City Group Official Website. (2015). Yiwu market. Yiwu China Commodities City Group Ltd. Yiwu, China.

Yiwu market official website (2015). Guide to Yiwu market. Yiwu market publications. Yiwu, China.

Yiwu municipal official website. (2015). Welcome to Yiwu Market. Yiwu city council. Yiwu, China.

Zhikai .W. (2009).The private sector development and regional independent innovation in China: case studies in Zhejiang. Department of Economics (College of Economics), Zhejiang University. Zheda Road, Hangzhou, China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: