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RENEE MONTAGNE, host:

All this week on MORNING EDITION, we're examining economic trends in China. Today we visit a town that has been wildly successful at making buttons. Chances are the buttons on your shirt came from that town. After all, it produces 60 percent of the world's supply.

As NPR's Louisa Lim reports, the story of the button town typifies both China's rise as a manufacturing power and the challenges it now faces.

(Soundbite of traffic)

LOUISA LIM reporting:

This is where it all began, on the dusty streets of the small town of Qiaotou. The story goes that three decades ago, three brothers were walking along the street when suddenly it caught their eye that some buttons had been thrown away had landed in the gutter. They thought, well, there's some money to be made here. So they picked up the buttons and decided to sell them on it. And it was that simple action that launched this town onto its trajectory as the button capital of the world.

(Soundbite of machinery)

LIM: Machines whirl as they buff buttons. These small plastic discs keep the town's 200 factories in business, supporting around 20,000 migrant workers. The secret to this area's success was its poverty and lack of land. This meant that inhabitants had to depend on trade rather than farming. That's according to Wang Chunqiao, the owner of two button factories.

Mr. WANG CHUNQIAO (Button Manufacturer): (Through Translator) When we started building factories like crazy, it was for our own survival. We had no capital. Everything came from the work of our own two hands.

(Soundbite of factory noise)

LIM: The clink of buttons can be heard all over Qiaotou. This cluster model with many factories making the same product is replicated in nearby towns. Three quarters of the world's cigarette lighters come from Wenzhou - 80 percent of the world's neckties from Shengzhou. Clubbing together gained these towns a foothold in global markets. Low labor costs helped them dominate those markets.

Mr. QUAN TONG MOU(ph): (Speaking Foreign Language)

LIM: Twenty-five-year-old Quan Tong Mou earns $120 a month at Mr. Wang's button factory. He's happy with that, so he stayed here for four years. But many workers are now starting to look beyond unskilled jobs and a labor shortage is emerging. For bosses like Wang Chunqiao, that means offering extra enticements.

Mr. WANG: (Through Translator) Now workers are demanding more. They want food, accommodation, and cultural activities on top of their salaries. We're planning to build a library and sports facilities.

LIM: Despite their success, his factories are facing other difficulties, too. Mr. Wang complains that profit margins are too low on such a low-tech product, so he's diversifying into lace borders. And last year, the cost of commodities worldwide soared in part because of demand from China. The affect was to double the price of each copper button produced by the factory - not good when metal buttons were all the rage. Global trends dictate the factory's products, and sales executive Lili(ph) sums up the latest look.

LILI (Sales Executive): (Through Translator) This year, the materials we're using are more environmentally friendly. Buttons made out of shells or coconut or wood are very popular.

Unidentified Men: (Foreign language spoken)

LIM: These fashions are formed far away on Italian catwalks or even perhaps on the streets of Iran. That's where buyer Asham Bastou(ph) and his partners sell most of their buttons. As they browse through huge books of buttons, Asham Bastou explains how China has shaped his buying patterns.

Mr. ASHAM BASTOU (Button Buyer, Iran): I think ‘96, at that time was buying buttons - most of the buttons coming from Italia. So now even cannot buy a one piece of the button from Italia because the price, you know, I guess maybe 10 times - maybe more, maybe 15 to 20 times different. On the quality, I think, not that much different, really.

LIM: And when your life is in buttons, it seems you start to get philosophical about them. Asham Bastou has even come up with his own button theory of political freedom: the more closed a society, the better buttons sell there. More open societies, he says, favor zippers and Velcro fastenings. But buttons sell particularly well in places where women wear the chador, a full-length black robe that buttons up the front.

Mr. BASTOU: But Iran is still now, the lady - the woman cannot come out free, you know. So they stick close, so they have to use the button.

(Soundbite of laughter)

Mr. BASTOU: So a lot of buttons is still we can sell in Iran.

Mr. WANG: (Speaking Foreign Language)

LIM: Buttons are my destiny says factory owner Wang. And his rag to riches story is China's story. His hard work, eye for opportunities, and determination to seek out new markets played their tiny part in transforming his town and his country into a manufacturing powerhouse.

(Soundbite of traffic)

LIM: But now Qiaotou's button manufacturers are victims of their own success. Their global domination means there's no place left to go, and now they're cannibalizing each other at cutthroat prices. In these days of plenty, buttons lie scattered across the town's streets - so cheap they're practically worthless.

Louisa Lim, NPR News, Qiaotou.

MONTAGNE: Our series continues tomorrow when we examine violations of intellectual property rights. Bluntly put: fake products.

Unidentified Woman #1: All the fake goods - Gucci, Prada. They have everything.

Unidentified Woman #2: And how much cheaper are they here than you would be paying in the U.S.?

Unidentified Woman #1: Hundreds of dollars. Thousands.

(Soundbite of laughter)

MONTAGNE: Copyright piracy in China tomorrow on MORNING EDITION. And you can read more about China's fast growing economy at our Web site, npr.org.

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