A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration in International Business

Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2007

The private sector has developed fast since the China's reopen-up policy in 1978. Now it is one of the important contributors to the national economy. Wenzhou is regarded as the cradle of private enterprises in China and has a distinct development pattern named after the city as Wenzhou Model. It is a model of economic transition from planned economy to market economy which focus on the development of private sector and rural industrialization as a road leading to enrichment. It originated from the spirit of mass-imitativeness and was featured by household private business and special markets. Meanwhile, it is a dynamic economic development process and keeps adapting to the changing environment. The major successful factors of Wenzhou model is the entrepreneurship, cost leadership strategy and Wenzhouness network. Wenzhou model was formed in the particular period and has its own historical and culture background which help to form the distinct characteristics of Wenzhou model. However, with the changing environment especially the diversified consumer demands and China's entering WTO, Wenzhou model has faced challenges in many aspects such as corporate governance and fierce competition. It is the time for Wenzhou model to transit from labor-intensive, low value-added industrial structure to capital-intensive or knowledge-intensive, high value-added industrial structure. Wenzhou model has showed trends towards this target in the aspects such as introducing modem corporate governance and increasing R&D investment.