From inferior to superior products: an inquiry into the Wenzhou model of industrial development in China

Although the vitality of small private enterprises as the prime mover of the substantial economic growth in Wenzhou is widely recognized, empirical research investigating the development process of such private enterprises is useful. Based on a survey of enterprises producing low-voltage electric appliances, we find that the entry of a large number of new enterprises producing poor-quality products was followed by the upgrading of product quality and the introduction of new marketing strategies. Hence, we attempt to identify statistically the mechanisms underlying this evolutionary process of industrial development. Journal of Comparative Economics 32 (3) (2004) 542–563.