The market is the literal and figurative heart of Yiwu, a metropolis of 1.3 million people that bustles under the sticky, industrial haze of Zhejiang province. Journalist Tim Phillips has called Yiwu the "Wall Street" of China's counterfeit goods industry—an accurate, if somewhat narrow, label. The city's factories flood the shelves of Commodity City and the rest of the world with a lot more than just knock-off iPhones and pirated Hollywood DVDs. They relentlessly pump out the type of cheap consumer goods you're used to seeing at shopping mall kiosks and street-side trinket stands.
It's in part because of factory cities like Yiwu that Etsy, an online marketplace that specializes in handcrafted goods, has become so successful. Since launching in 2005, Etsy has ridden an Internet-powered counter-industrial revolution, adding a personal and DIY touch to goods—everything from sweaters to Christmas ornaments. Craftsmakers have fled to Etsy to escape the price-cutting effects of big-box stores and their walls of factory-made products.The crafts marketplace has formed an alternate commercial universe with 30 million members and nearly 1 million stores, all ostensibly running on human labor and handmade goods.
It goes without saying that If Yiwu-type products began infiltrating Etsy, they'd upend the market—the same way Walmart destroyed your local department store or Barnes & Noble ended the era of the corner book shop.
Take a look at the "Infinity Ring," a delicate brass loop coated with a silver sheen and topped with rhinestones and crystal. In pictures of the factory where it's made, you can see rows of workers in surgical masks bent over dusty tables, not far from bulky industrial machines. From ports in Ningbo and Shanghai, the Yiwu Daihe Jewelry Corp. exports the ring to anywhere in the world at 50 cents a piece.
You can buy it on Etsy's most popular jewelry store for $15.
How? To most Etsy users, the obvious answer is that Laonato, the store, is buying the rings wholesale from the factory, then pawning them off as handmade goods, reaping a monstrous 2,900 percent profit. That practice is known as "reselling," and it's a subject of intense controversy on the site. But like with a lot of things on Etsy—where the entire economy operates behind the shroud of the Internet—easily drawn assumptions and reality rarely align as neatly as you'd expect.
As its leaders struggle to redefine the company's corporate identity, the blurry, ungraspable truth about the Infinity Ring hints of a chronic ailment at Etsy's core—one that could undermine the company’s ambitious plans and the marketplace as a whole.
by Kevin Morris, Daily Dot | Read more:
Image: Jason Reed
