The Secret to Success in Northern China’s Bag City

SHIJIAZHUANG, Sept. 20 (Xinhua) — Despite the slowdown in the global economy, Baigou New Area in northern China’s Hebei Province has enjoyed steady growth in exports.

Baigou is one of the largest bag production and marketing bases in China, accounting for about 28 percent of the domestic market. Selling to 195 countries and regions worldwide, the small town is especially popular with traders from Eastern Europe and the Middle East, some of whom flock here year-round.

One morning recently, three different groups of foreign traders from Europe and the Middle East were spotted in the lobby of a local hotel.

Among them was Hafiz Abubakr, a Pakistani businessman who now lives in London. “I spent over $60,000 in just five days,” he said.

It was his first visit to China and he planned to make a “big investment” to sell wheeled suitcases to the UK.

“This customer started contacting us through Alibaba’s livestream,” said Nancy Zhang, a sales representative at Omaska, one of two local companies Abubakr has signed deals with. “It’s not our biggest order. Two months ago, an Indian buyer ordered 10 containers of products.”

She added that her company’s total sales this year are expected to exceed 200 million yuan (28.18 million U.S. dollars), up more than 30 percent from a year ago, with most of the sales coming from foreign trade orders.

With an area of just 50 square kilometers, Baigou has created an industrial cluster that provides jobs for more than two million people nearby. Every year, more than 800 million bags and boxes are sold worldwide from this small town.

Despite the global economic slowdown, Baigou’s total export value of bags and suitcases in the first half of 2024 was 7 billion yuan, up more than 17 percent year-on-year. Such numbers have left many wondering about the secret of the city’s success.

The Baigou bag industry began in the 1970s, when people sold handmade bags, toys and food at roadside market stalls. For two decades, manufacturers tried to achieve mass sales by setting low prices. However, this development path was unhealthy for the industry.

“Because we didn’t attach much importance to brand and quality back then, it was hard for small factories like ours to make a profit when sales were declining,” said Wang Jinlong, founder of the leather goods company.

Things began to change in 2003. Within five years, Baigou businesses had registered more than 1,400 brands. Through brand building, the small town’s influence in the bag market grew. With a household population of just 60,000, Baigou had formed a complete industrial chain for bag production, including raw material supply, product design, production and sales.

In recent years, Baigou’s live shopping has grown rapidly. It now hosts nearly 10,000 live shopping events every day, showcasing products to domestic and international customers in more than 20 languages.

The total sales value of Baigou bags and suitcases increased from about 10 billion yuan in 2020 to 41.9 billion yuan in 2023, with more than 70 percent of this amount generated by online sales.

At a cross-border e-commerce enterprise in Baigou, workers package goods, analyze customer preferences and add women’s bags to online stores accordingly. The company sells products to nearly 50 countries around the world through about a dozen international platforms, such as Shein, Amazon and Shopee.

“It’s easier to boost online sales by offering high-quality goods that meet the preferences of overseas buyers and the selling styles of international platforms,” said company owner Wang Lei, who is also executive vice president of the Baigou New Area E-Commerce Association.

He noted that Baigou is also making efforts to build cross-border e-commerce industrial parks and is developing a professional live broadcast team through training courses and competitions.

According to Wang Weinan, director of the Baigou Investment Promotion Office headed by the local government, a group of young Chinese entrepreneurs visited luggage companies in seven countries last year to gain experience and seek larger overseas markets.

“We’re leaving immediately. In September we’re going to Japan and the Republic of Korea, and in October to Indonesia and Malaysia,” he added.

Along with 38 other marketplaces, Baigou Bag Market is part of China’s pilot market procurement trade program. This new mode of trade offers a channel through which micro, small and medium-sized enterprises can export bags and suitcases, thus participating in international trade. It provides many preferential policies and services, such as value-added tax exemption and simplified customs clearance.

Baigou’s handbag industry still relies heavily on craftsmen rather than automation, due to the difficulty of producing rapidly updated products with irregular shapes and complex processes. But the city is trying to combine its design and production methods with artificial intelligence.

In 2022, an industrial transformation center was established in Baigou new area to provide accurate digital services to over 20,000 companies in the local bag and case industry. In the center, companies can capture the latest trends, design new products, and generate 3D simulations through online systems.

Another foreign trader hanging around the hotel lobby was Behnam Fadavi. This is the seventh year the Iranian trader and his brother have been working with Chinese companies. They mainly import backpacks and handbags from China to the UAE.

Fadavi said that what he values most is good design.

When asked how much he intended to spend at Baigou this time, the businessman replied: “We have no purchase limit as long as the design is new and good.”