The world's most "money-burning" business, this small Chinese county has become

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The world's most "money-burning" business, this small Chinese county has become

Introduction

Gunpowder, invented by the Chinese, is now at an awkward position where, despite being the world's leading producer of fireworks, we face the embarrassment of being technologically inferior:

"Learning Japanese technology, slapping on foreign trademarks, being throttled by foreign countries."

This is not self-deprecation, but a harsh reality.

Liuyang, the city of fireworks, whose rise and fall and industrial changes are the most vivid portrayal of the awkward situation of China's fireworks industry.

When it comes to fireworks, this is the most expensive business in the world, where millions are spent just to hear a "bang," and Liuyang, a county in Hunan, is indispensable.

Both historically and in reality, Liuyang is the king of this industry.

The "Chinese Industrial Records · Hunan Chapter" records:

"The manufacturing of firecrackers in Hunan Province began in the Tang Dynasty, flourished in the Song Dynasty, and originated in Liuyang." Li Tianfei, who was personally titled "Ancestor of Firecrackers" by Emperor Taizong of Tang, is also from Dayao Mountain in the southern countryside of Liuyang, Hunan.

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The fireworks for the Beijing Olympics, the Beijing Winter Olympics, the Qatar Asian Games... all these international events come from Liuyang.In the international market, China is the largest exporter of fireworks, and Liuyang is the first among the firsts—Liuyang's domestic sales account for 50% of the national market, and its exports make up 60% of the country's total.

Despite Liuyang's leading numbers, a significant portion of its exports consists of mid-to-low-end products or OEM (Original Equipment Manufacturer) products that profit from the price difference made by middlemen.

The orders for these products come from manufacturers in countries such as Japan, Italy, and Spain.

In the more high-end and specialized market, these companies are far ahead in terms of creativity and technology.

The most famous fireworks artist in China, Cai Guo-Qiang, is a returnee from Japan.

Moreover, when it comes to professional fireworks displays, such as those in large cities, the performance companies will invite professional Japanese masters for guidance and exchange, and even organize the processing and production of raw materials according to the requirements of Japanese suppliers.

It's one thing for chips and automobiles, but even fireworks, which have been leading for over a thousand years, have become a contract manufacturer and are even being strangled by the Japanese.

The root cause is closely related to the ban on fireworks.

With the comprehensive implementation of the "ban on fireworks," more than 90% of the central areas of large and medium-sized cities in the country once banned the setting off of fireworks and firecrackers, leading to a cliff-like decline in the market demand for fireworks and firecrackers.

In response, some regions have regarded fireworks and firecrackers as backward industries, either directly eliminating them or imposing restrictions.Data indicates that 16 provincial-level administrative units in China have completely exited the fireworks and firecrackers industry, with over 4,000 related factories shutting down over a decade. After this round of rectification, several major production areas have also suffered significant losses. Historically, Liling and Liuyang in Hunan, along with Shangli and Wanzai in Jiangxi, were the "Golden Triangle" of China's fireworks industry. Although Liuyang ranks first, it is not the only one and faces fierce competition from the other three regions. However, under this round of crackdown, most of these historically traditional Chinese fireworks production areas have declined. Liuyang has become the "lone standout." So, why was Liuyang spared? The governance of fireworks and firecrackers enterprises in Liuyang is more flexible, only forcibly eliminating backward capacities that do not meet requirements, leaving the rest to be naturally phased out by the market. The other consideration of flexibility lies in human relations. As a local industry with a development history of over a thousand years, the Liuyang fireworks industry involves a wide range of employees. Although high-tech industries can bring higher GDP, the Liuyang fireworks industry also plays an important role in stabilizing employment, enriching the local area, and reducing the number of left-behind children.During this cycle of bans, Liuyang has paradoxically become the absolute leader in the fireworks and firecrackers industry, with production and exports far ahead of others. Liuyang has also strategically used fireworks as a cultural and tourism calling card for the city. As a result, this once backward industry has made a leap to become a fashionable and trend-following cultural industry.

The seeds of enterprises have been preserved, but the suppression on the demand side remains unresolved. The ban on fireworks has been in place for over a decade, and with the addition of the pandemic, it has significantly impacted the fate of several generations of pyrotechnics professionals. A lack of demand implies a lack of innovation motivation; as the market contracts, who would care about research and development?

Therefore, many fireworks factories have turned to fulfilling orders from overseas markets. Compared to the high risks of original creations, processing materials provided by others is more secure. After all, the most important thing is to survive. Although Liuyang has donned the mantle of a cultural industry, its core remains the "processing" aspect of industry.

The "Gatling" that was a sensation in 2023 was actually developed in 2019. China's original design capabilities have fallen significantly behind those of countries like Japan. More importantly, there is a significant brain drain and a gap in expertise.

Take professional pyrotechnic displays as an example; this is a specialized category that requires skill, an understanding of music, art, and fireworks.At present, there may be no more than 50 pyrotechnicians in the country who can meet the requirements, and it may take 10 years to train such a proficient pyrotechnician!

In contrast to China's view of fireworks as a backward industrial sector, countries like Japan have shaped fireworks into a cultural calling card for cities and nations, and have made a name for themselves in the world.

Now, Japan hosts thousands of fireworks festivals every year, with the longest-standing ones exceeding 100 years, becoming a must-visit attraction for Chinese tourists.

These large-scale projects have driven the development of Japanese fireworks craftsmanship and creativity, and have cultivated more core talents—fireworks masters.

Due to the lack of restrictions on high-altitude fireworks displays in foreign countries, Japan has even produced and set off the world's largest fireworks, the "4-foot Jade" (with a diameter over 1 meter and weighing 460 kilograms), creating a 732-meter-wide bloom.

As the birthplace of fireworks, it is undoubtedly regrettable that China, in the most value-added fireworks industry, is still being constrained by its own apprentice, Japan (which was introduced to Japan during the Ming Dynasty).

While the Japanese are having a heyday with fireworks, the Liuyang fireworks industry is merely surviving in a "subservient" manner.

Although the Liuyang fireworks industry is still developing rapidly, young people are no longer optimistic about it.

After all, when a creative industry is compressed to only processing, its added value decreases, and it is destined not to be a profitable business, let alone attract high-end talent.

It seems that the ceiling for the Liuyang fireworks industry has arrived—contract manufacturing fireworks for Western countries.But this situation may improve with the lifting of mask mandates and the release of demand.

Data shows that during the Spring Festival of 2023, there were about 500 large-scale fireworks performances across the country, with a cost of over 200 million yuan, equivalent to the consumption volume of the entire year of 2022.

In the context of localities accelerating the promotion of cultural and tourism brands, many cities see fireworks as a shortcut, hoping to create an IP similar to the Fireworks Festival.

At the same time, since last year, the National People's Congress and governments at all levels have also been easing the ban, which has stimulated the long-suppressed demand from consumers.

Some industry insiders estimate that by this year's Lunar New Year, the sales volume of Liuyang fireworks and firecrackers is very likely to exceed 50 billion yuan!

As Liuyang is a highland of China's fireworks industry, it is easier to gather talent and restore production capacity compared to other production areas.

In 2023, facing the unexpected surge in demand, people in Liuyang have been able to calmly respond to the explosive demand, and some talents are also returning to the fireworks industry in Liuyang.

To meet the demand for urban fireworks, practitioners in Liuyang have also started to develop high-end fireworks and urban fireworks, reflecting high appearance, strong social attributes, and low pollution.

Due to the strict control of the number of new local fireworks enterprises in Liuyang, the surviving enterprises avoid falling into a state of low-price internal competition, and are more focused on optimizing their production and quality.

Therefore, in the years when the fireworks industry was dormant, these enterprises produced more stable quality, and the production scale, production efficiency, raw material environmental protection, and enterprise production standards have been continuously improved.People from Liuyang have transitioned from a time when every household had children involved in making firecrackers to an era of digitalized industry.

Although, humans are still an essential part of the process, full-process monitoring, production safety, and process optimization are all included.

In the past year, the Liuyang fireworks industry has already enjoyed the benefits of a rebound in consumption.

Products that used to be produced and sold annually have now become produced annually and sold seasonally, with the peak season not only in winter but also extending from winter to October of the following year.

In media interviews, some industry practitioners have said that while they used to have full stock in the winter, this year it has been cleared out.

The demand that has returned several times over will provide new momentum for fireworks to move towards high-end and cultural innovation.

Fireworks, once a backward industry, are finding new life through culture, and Liuyang will become the biggest beneficiary.

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