The EconomistMay 16th 2020 China 35S
ince ancienttimes, Chinese poets have revered the purple-
flowering paotongas something rare: a tree in which a phoenix
will land. Musicians cherish lutes made from its wood. The fast-
growing plant, often used in sandy areas prone to soil erosion,
even has a place in the Communist Party’s iconography. It is the
subject of a rare poem by President Xi Jinping, who wrote of water-
ing a paotongwith his tears, shed in memory of a Mao-era official
who battled cancer to supervise mass-planting of the tree.
Chaguan, a flintier-hearted sort, would like to propose the pao-
tong(Paulownia elongata to botanists) as a metaphor for something
less romantic: a distinctive Chinese business model that rarely
makes international headlines, but which has helped to power the
country’s rise. Governments everywhere are debating the future of
globalisation in general, and dependence on China in particular.
Politicians and ceos fret about supply chains that cross oceans in
search of value, but that now look vulnerable to trade barriers
thrown up by pandemics or ideological disputes.
In Washington, China hawks talk of “decoupling”, unveiling
plans that would see medicines, microchips and other sensitive
products made in America again. In Japan the government has ear-
marked $2bn to help firms move high-value production back
home from China. Meanwhile, Chinese officials seem bent on
trampling their own country’s reputation for reliability. Chinese
diplomats, playing the role of nationalist “wolf warriors”, have or-
dered foreign governments to offer vocal thanks if they wish to buy
Chinese medical equipment. Chinese ambassadors have threat-
ened trade boycotts against countries that displease the party’s
leaders in Beijing. On May 12th a Chinese spokesman announced a
ban on many beef imports from Australia. The official cited food-
safety reasons, but almost in the same breath condemned Austra-
lia’s “erroneous words and deeds” in calling for an international
probe into the origins of covid-19.
In this turbulent moment, the paotongtree is a timely reminder
that globalisation, China-style, does not always involve globe-
spanning supply chains of the sort now causing so much political
angst. Since the country embraced capitalism more than 30 years
ago, its astonishing growth has also been driven by an intensely lo-
calised variety of globalisation, in which a specific export sector isdominatedbya singleChinese city or county.
The coffin-makers of Zhuangzhai, a leafy township of 100,000
people in the eastern province of Shandong, are a case in point. Be-
tween them, Zhuangzhai’s three main manufacturers export
740,000 coffins annually, almost all of them to Japan. With just
under 1.4m deaths in Japan last year, that gives one Chinese town-
ship something around half the Japanese coffin market.
But when Japanese television journalists visited Zhuangzhai in
2017, they treated its share of the market as cause for larky curiosity
rather than alarm. Their calm reflected the obvious synergies be-
tween Japan and this corner of Shandong. The largest local firm is
Yunlong Woodcarving, which ships 20,000 coffins to Japan each
month. Its 56-year-old founder, Li Ruqi, has coffin-making in the
blood. His grandfather and father made caskets as well as furniture
for locals, defying the superstitious horror that many rural Chi-
nese feel for anything linked to death. In 1995 his firm began sup-
plying a Japanese coffin-maker with panels decorated with phoe-
nixes and lotus flowers. Most were carved from the wood of the
paotong, which grows all around Zhuangzhai. Historically, Chi-
nese preferred coffins of heavy cypress or cedar. They thought of
paotongwood, which is creamy in colour and light in weight, as fit
only for burying the poor. In modern Japan, where cremation in
pale-coloured coffins is the norm, paotongis ideal.
Yunlong began making complete coffins for export in 2000, as
labour costs in an ageing Japan soared to ten or 20 times those
found in Zhuangzhai. Back then Mr Li’s Chinese workers were in
their 20s, freshly graduated from local schools. In contrast, when
Mr Li visited his Japanese customers, their workshops “didn’t have
a lot of young people”. Now China is catching up. With about one in
nine citizens over 65, China is at the point on the ageing curve that
Japan hit in 1987. Today Mr Li’s 600 workers are mostly in their late
30s and 40s. Youngsters prefer service-sector jobs, he sighs.
Cold commercial logic sent Japanese coffin-makers to Zhuang-
zhai. Shandong offered skilled artisans, easy access to the right
trees and a good climate for woodwork—neither dry nor too hu-
mid. Japanese clients came with “very high requirements”, Mr Li
recalls without resentment. Over the years his firm and its cus-
tomers have innovated, using hollow panels so that a single tree
now provides the wood for 20 coffins or more, rather than two or
three as was once the case. In one corner, workers are checking a
new line of flat-pack coffins. With their pegs and holes and drop-in
end panels, they eerily resemble caskets that ikeamight make. Mr
Li demonstrates the way that two small doors in each coffin lid
would open to reveal the face of the deceased. Their hinges must be
perfectly silent or risk causing tremendous offence, he explains.Demographics trumps politics
Mr Li is unfazed by talk of the rich world decoupling from China.
Some Japanese clients did try sourcing coffins in Vietnam and In-
donesia, he concedes. But they found that workers in South-East
Asia lacked “discipline”, so returned to Shandong. His corner of
China has paotongtrees, skilled labour and trusted suppliers.
“Price-wise, talent-wise, this place is pretty far ahead,” he says.
Demography is a bigger worry. It is not just Zhuangzhai’s work-
ers who are ageing. With more than one in four Japanese over 65,
coffin sales are brisk. But clients from Japan remind Mr Li that Ja-
pan’s population is shrinking fast. “They told me I’ve got about 30
years in this line of business,” he says. China’s hyper-local version
of globalisation may prove surprisingly resilient in the face of de-
coupling. But some storms will overcome the deepest roots. 7Chaguan Keeping it local
Lessons in globalisation, from the small Chinese town that makes half of Japan’s coffins