Supporting failure no success at all

The collapse of a major lighter manufacturer and a shipbuilder in Wenzhou has sparked speculation that it signals the onslaught of another wave of closures in what was once a celebrated boom town on the coast of Zhejiang province.

Since the town's many small and medium-sized manufacturing enterprises were clobbered by the global economic recession in 2008, the local government has been busy salvaging some of those that went under. The wide publicity given to the broken dream of Wenzhou prompted the government to introduce a sweeping financial reform that is to serve as an example to be applied nationally.

A major objective of the reform is to create a proper, and adequately supervised, platform to provide funding to the struggling enterprises that are being hard pressed by diminishing overseas demand and escalating costs, particularly labor costs. In so doing, the government is effectively trying to push out the underground lenders who, for years, have been these enterprises' major source of funds.