IN the thick bamboo forests of the mountains surrounding Fuyang are the origins of how the city came to be known as the "badminton and tennis racquet capital" of China.

From simple bamboo cutters, villagers in the towns dotting Fuyang began turning the cane into something the world wanted: cheap sports racquets. Today, more than 80 percent of the low-to-mid-priced racquets made in China come from Fuyang.

It's been a good money spinner for villagers, like the older people of Longmen Old Town, who sit outdoors chatting as they string badminton and tennis racquets in piecemeal work farmed out by manufacturers in the city.

Sun Xinfang, 53, boasts she can string 60 badminton racquets on average every day. If she works harder, she can string at most 100. She earns 0.30 yuan (5 US cents) from each finished racquet.

"We don't care about the low payment we get since we have nothing else to do since most of our children have left the town for careers where opportunities are better," Sun said.

Fuyang's annual production of racquets is estimated at 100 million. Most of the finished products are exported across the world.

The center of the industry is in Shangguan Town, where some 400 racquet makers are clustered. The town has 12,000 residents, most of them engaged one way or another in making racquets or accessories.

"All the villagers, from three-year-old children to 80-year-old seniors, can string badminton and tennis racquets," said Zhu Jingguo, the town director.

Cottage industry

In the 1980s, enterprising villagers such as Chen Demin began a cottage industry, turning bamboo into racquets.

Chen, 50, initially borrowed 10,000 yuan to open a 40-square-meter workshop making bamboo racquets with his wife.

At first the business thrived. But in the 1990s, aluminum racquets took the market by storm and the villagers were forced to import materials instead of relying on the cane at their doorsteps.

Chen's business nearly went belly-up. "I had reached the end of the road at that time," he said.

Chen was forced to borrow 40,000 yuan to keep his business afloat. He struggled for three years to repay the loan. Then fortune struck from an unexpected corner.

The SARS epidemic that swept across China in 2004 resulted in a nationwide campaign to improve health, and part of the campaign rested on promoting participation in sports.

Badminton became popular, and demand for cheaper racquets soared.

Today, Chen's Boka Sports Goods Co is a leading company in Shangguan, with a daily production of 20,000 racquets.

Now, however, the company is facing new challenges.

"The monthly wages of workers have been increasing by 20 percent every year, to about 3,000 yuan now, and it's become difficult for the racquet makers to recruit workers," said Chen Yipeng, purchasing manager in his father's company.

Racquet-making in Fuyang is still labor intensive. Workers sit on simple modeling machines to process the aluminum strips into racquet parts, one after another.

More than 30 percent of the local population is comprised of migrant workers from poorer rural areas of Jiangxi, Hunan and Guizhou provinces. But fewer migrants are showing up nowadays, creating something of a labor shortage.

Migrant workers live in dormitories in the courtyards of racquet factories. They are paid on a piecemeal basis and left to decide for themselves how many hours they will work.

Similar benefits

Li Dan, 22, a migrant worker from Hunan Province, said she plans to return home soon to work in a factory there.

"My current pay is about 2,000 yuan, with room and board covered, but I can find a new job in my hometown with similar benefits now," said the woman, who has been working in Shangguan for five years.

The cost of labor has forced factories to trim staff. At Boka, for example, the number of workers at its factories in Shangguan has decreased to 80 from 130.

Zeng Tongjian, another factory owner in the town, was not as lucky as Chen. He got into the game too late. His badminton racquet company opened in 2007 and went bankrupt two years later because of rising labor costs.

"I dared not to accept big orders and lost many good opportunities," Zeng said.

He now works as an industry broker, shuttling between factories that make racquets and wholesalers wanting to buy them.

For racquet manufacturers, the simple solution is to move production inland to poorer areas where labor costs are relatively cheaper than in the Yangtze Delta regions.

Research and development

Boka plans to open a new factory in east China's Jiangxi Province.

The younger Chen will head up the new plant.

"The headquarters in Fuyang will do only research and development and make high-end carbon element racquets," Chen said.

Another solution is to upgrade products and raise profit margins, said town leader Zhu. Boka said margins increase to about 20 percent for carbon element badminton racquets, compared with about 10 percent on aluminum versions.

The company now does manufacturing for world famous brands like Japan's Yonex.

"During the SARS epidemic and its aftermath, manufacturers in town failed to grasp the best opportunity to upgrade their products," Zhu said. "Rising labor costs are now forcing them to do that."

The Fuyang city government has launched a "leisure sports" campaign to give the town a wider focus in its manufacturing. When people think of sports, they talk about Fuyang, said Sun Quanhong, deputy director of the Fuyang Sports and Leisure Office.

And by sports, the city means more than just badminton. The city has begun encouraging the expansion of kayak manufacturing. The Olympic teams of the United States and Britain chose Fuyang-made kayaks for training and competition at the upcoming London Games.

Production of kayaks topped 300 million yuan last year, about a third of the revenue stream of racquet-making.

The government has also invested 5 billion yuan to set up a national paragliding training center on the 400-meter Yong'an Mountain.

Visitors who want to try the sport benefit from the help of Li Tiemin, chief trainer of China's paragliding team.

Zhu Jingguo, director of the Shangguan Town, known as the "hometown of badminton and tennis racquets."

Shanghai Daily: What have you achieved during the past decade?

Zhu Jingguo: When I see many villagers driving their own cars nowadays, I feel that is my biggest achievement. In Shangguan Town, almost every family owns a car, and you even see expensive cars like Mercedes Benz and BMW. I have managed to make the one of the smallest towns in Fuyang among the richest places in the city.

SD: What's the biggest mistake most businesses in your area make in looking to the future?

Zhu: During the SARS epidemic and its aftermath, when badminton racquets became popular, Shangguan villagers failed to grasp their best opportunity. Local villagers should have upgraded their products to a higher quality, but most were just content to run out their stocks as quickly as possible.

SD: What would you most like to see in China's development?

Zhu: I hope the government will grant bigger export tax refunds on badminton and tennis racquets. About half of the town's racquets are exported. Bigger tax refunds would help racquet-makers here in their battle against rising costs.

SD: What's your biggest concern?

Zhu: It will be increasingly difficult for Shangguan Town to enter the high end of the world badminton market because of the dominance of racquet manufacturers in Japan and Taiwan.