Government actions

The Shanghai municipal government has said it would launch a 160-billion-yuan economic stimulus package, following the central government's call to boost the economy by increasing investment. The spending over the next two years would focus on areas such as transportation, scientific innovation, industry upgradation, environmental protection and projects related to the 2010 Shanghai World Expo.

Earlier, the city's urban construction and communications bureau rolled out plans to spend 500 billion yuan over the next several years on a wide range of infrastructure projects, including the improvement of affordable and low-rent housing, building programs in the suburbs, construction of an international shipping center and investments in urban transportation facilities.

"It's really hard times for Shanghai, but a string of policies and measures will help business and boost consumption," Han said at the opening of the annual meeting of the municipal people's congress last week.

Jiangsu, on its part, is slated to spend 300 billion yuan by the end of this year and another 650 billion yuan in 2010 to boost domestic demand. In the initial injection, about 80 billion yuan, will be spent on improving people's livelihoods and environment, including building 6,000-km roads in rural areas and a comprehensive managementproject around Taihu Lake.

The other 220 billion yuan will be used on infrastructure construction and supporting enterprises. Among these are the Beijing-Shanghai high-speed rail, a city-bound rail connecting Nanjing and Shanghai, the Taizhou bridge and the Lianyungang Port. Funds would also be used for setting up 100 major independent innovative industrial projects and 100 large-sized enterprises with independently-developed intellectual properties .

With similar spending plans, Zhejiang governor Lu Zushan says the province will handle the "greatest challenge ever" with measures in foreign trade, investment and consumption.

That means the government will support export of competitive labor-intensive products in light textile sector and big-sized mechanics and equipments with self-developed brand and core technology.

Brand power

Entrepreneurs say that in lean times, brand reputation and product quality are the vital cogs that would help in combating the shrinking demand for products.

Kangnai Group, China's largest shoemaker, says it plans to concentrate its business on mid- to high-end market in what it terms as a tough year ahead, after the slowdown dented its sales volume by 5 percent last year

"Our brand and a steady market would help offset the financial crisis," says Zhou Jinmiao, executive vice general manager of the Wenzhou-based company.

A forerunner of the 2,700 shoemakers in Wenzhou, Kangnai carefully built its brand through its 2,600 chain shops in the country and 200 overseas stores. The shoemaker with a track record of over 28 years employs 4,000 people and achieved a sales income of 2 billion yuan in 2007.

With 10 percent of its sales from overseas markets, the shoemaker could not afford to sit back and watch the crisis unfold, said Zhou.

The company started the process of introspection in 2007 when it hired a prestigious consulting firm to re-analyze its growth strategy, and decided to remain focused on the footwear industry rather than diversify into industries they were not familiar with.

"Consumers can never give up shoes. In lean times, winners are those who produce merchandise that fit the needs of customers and market," said Zhou.

To have a greater say in customer choice, the company expanded its designing team with professionals from Italy and Spain. Other efforts included further investment in technological innovation and eliciting suggestions from frontline workers for process improvement.

Zhou said Kangnai's sales in France surged 35 percent in November, whereas many overseas shoe biggies were forced to cut prices by nearly 30 percent.

"Products made in China have a price advantage," Zhou said. Kangnai sells it shoes for 70 euros a pair, compared with 200 to 300 euros charged by overseas manufacturers.

Other big players in the region say they will stick to their major business and inject more funds for R&D and technology innovation. It's the proper time to enhance the company's management, said Xu Lejiang, president of China's biggest steel maker Baosteel.

(China Daily January 19, 2009)