Since 2007, Tengxu has invested more than 20 million yuan in building up a team of more than 30 designers, including professionals from Italy and Hong Kong. It branched out into children's clothing last year.

Xu Yunxu regards the economic slowdown as a catalyst to adjust operations and shake up management. "If we don't do it now, we'll be in trouble sooner or later," she says.

"Wenzhou people attach great importance to the level of production and quality. In the global garment business, Chinese products have attained a high level," Xu says.

"We have advantages in the rich domestic supply of fine fabrics, a long and rich cultural tradition, and a stable political situation. We have sophisticated production facilities. Our design capability is increasingly strong. Wenzhou business people have a good credit reputation. All these make us powerful in the world market."

Tengxu's exports accounted for 80 percent of its sales revenue in 2008. This year it expects to 10 to 15 percent growth in exports, but the proportion to total sales could fall to 70 or even 60 percent, Xu says.

Expanding domestic sales was a strategic change planned years before.

"China has a huge population and clothing is a daily necessity," Xu says. Tengxu plans to open sales outlets in north, south and central China this year. In addition to women's and children's clothing, it will also provide consumers with imported luxury garments.

"Competitiveness and innovation are vital to survival," Xu says.

It was said that business people in Wenzhou "prefer being head of a cock than tail of a phoenix", a Chinese saying describing a preference for decision-making power, even in an inferior status. This might explain why the great majority of local enterprises are privately owned and small.

Small businesses are more flexible and can adapt quicker to an unkind economic situation. But small firms are also more vulnerable, and need most government support.

In Xu's opinion, the government's help was timely and effective: it had stabilized exchange rates; increased export tax rebates and cut interest rates. Financing was easier and cheaper, and costs of raw materials and labor were down. The economic environment became friendlier in the second half of 2008, even as the global financial crisis intensified.

Zhou Qizheng reckons about 2 percent of businesses failed. "The figure is not significant. It would be similar at normal times."

Many companies made decisions before the most difficult time. The widely traveled Wenzhou people smelled the downtown early and the message spread quickly through their network of family, friends and business acquaintances, enabling those at home to prepare for the worst.

"Because we noticed the crisis early, there was no panic or bewilderment when it really landed," says Xu. "We were very clear about what we should do. We had a strategic plan and took countermeasures.

"There are still many unpredictable things ahead. The worst probably is yet to come -- and it might last several years. We should take the crisis as an opportunity. We have confidence in the future."

At the forefront of China's development of small private enterprises, Wenzhou's economy was affected early and deeply by the global turmoil. But the city maintained growth of 8.1 percent in gross industrial product value last year. In January, bank loans to businesses rose markedly, electricity demand rose, and employment, especially of technical skilled workers, was high. For most companies, it was business as usual.

"They are signs of an upcoming economic revival. Wenzhou has stood the test. It is likely to walk out of the economic difficulty ahead of other cities in this country," Zhou said.

(Xinhua News Agency March 16, 2009)