«Contesting the streets Volume 18, number 1 • 2016 U.S. Department of Housing and Urban Development | Office of Policy Development and Research ...»
The Hsinchu Street Vendors’ Union The Hsinchu Street Vendors’ Union (HSVU) was first formed in 1958 by around 20 street-cart vendors in the downtown area. The main mission of HSVU was to protect the rights of its street vendor members by building a communication bridge between street vendors and the city government. By the late 1970s, the number of HSVU members had grown to around 400 street vendors, and it was the oldest and biggest of its kind in the city.
By the late 1990s, more than 1,000 vendors throughout the city were HSVU members. Approximately 300 of these vendors operated in what is now the ZL public market area, and the rest conducted their businesses in other SSVAs. To manage such a large group of people was challenging. To address this management problem, HSVU divided the vendors into roughly 40 subgroups, each consisting of 20 members, around 5 delegates, and 1 elected opinion leader. Together, these opinion leaders played a significant role in helping to manage HSVU’s daily affairs. They not only exerted strong influence on their subgroup members’ attitudes and behaviors toward major business issues, but they also offered advice and mediated disputes on the street. Any important HSVU decision could not be made without first reaching a consensus among these elected opinion leaders.
The opinion leaders elected a 12-member board of directors. The board was composed of an executive chairman, a vice executive chairman, a treasurer, and several directors. The board elected its executive chairman, who served as the head of HSVU and its members.
The Construction and Management of the ZL Market Building As Hsinchu City became more modernized and car oriented in the early 1980s, the city government’s policy toward vendors started to change (Mian and Chua, 1986; Tian, 2012). In 1986, City Mayor Rèn (1940–2010) planned a new four-story indoor market building to accommodate 500 booths and underground parking, less than a block away from where the ZL vendors were operating.
More challenging than construction, however, was how to cajole the street vendors into the market building and create a sustainable public market. Even after the ZL market building construction was finally completed, most street vendors were reluctant to move into the multistory market building. They claimed that contact with urban pedestrians would be very limited and their existing customer base would not follow them to the new location. As discussed previously in the literature review, fear of losing business is a common concern that deters vendors from moving into public market buildings as are the cumbersome application processes and the rigidity of market vending regulations.
Before the ZL case, public market buildings in Hsinchu City were built and then directly managed by the city government. This government management model, however, did not serve the purpose of running a successful public market very well.
To avoid repeating the same mistake, the city government conceived that a new management model was needed. In 1998, after reporting to City Mayor Tsai, the then Market Sector Chief Cheng, responsible for managing all street vendors in the city, decided to adopt a public-private partnership approach to managing the ZL marketing building. The city government would commission the operation of the ZL public market to a concessionaire. Upon expiration of the operation period, the right to operate would revert back to the city government. Sector Chief Cheng conceived that the concession contract could help solve the bureaucratic problems in traditional public service delivery and fix failures of the government-managed public markets. It was assumed that, to earn more profit, the concessionaire would have stronger incentives in attracting more customers and reducing the market vacancy rate than a civil servant would.
The Concession Negotiation Process In May 1997, after no tender had been submitted for two consecutive tendering periods, Section Chief Cheng personally reached out to the HSVU leaders and asked them to tender for the concession contract. Under tremendous pressure from Mayor Tsai, in the meetings Cheng threatened that if no tender was offered by the end of the summer, city government might use any means necessary (that is, forceful eviction and demolition) to relocate the street vendors into the market building and then operate the market without HSVU.
Having long been recognized by the city government as the “legitimate managing entity” of the four biggest SSVAs in the city for more than 30 years, some HSVU leaders said they felt a “moral obligation” to cooperate with Cheng. In addition, the HSVU leaders had the incentive to maintain their dominant position among other street vendor organizations. An HSVU leader recounted, “During that time, we had several internal meetings. Not everyone was confident about moving into the market building,” but, in the end, the late HSVU Chairman Huang agreed to sign a concession contract memorandum with the city government. For the concession right of the ZL market building, the HSVU leaders agreed to pay an annual fee of around 200,000 U.S. dollars (USD) for 9 consecutive years to the city government. In return, the city government promised to offer assistance in helping the HSVU leaders to operate a successful public market.
Due to the logistical and technical difficulties of relocating hundreds of street vendors into the market building, which needed to be redesigned and remodeled to fit the new demands of a modern public market, both sides agreed the concession contract would not enter into force until May 1999.
Redesigning the Market Building After signing the contract, the HSVU leaders decided to modify the existing circulation system of the ZL market. Under the concession contract—with the exception of two new proposed escalator ramps for customers—all other improvements had to be paid by the vendor organization. They decided to make the following improvements: (1) build a new car-parking ramp that would enable
vendors to more easily unload their wares, (2) upgrade two dilapidated cargo elevators, and (3) set up public seating and indoor landscaping to help foster a sense of community and invite customers to stay at the market.
The HSVU leaders also decided to install a new central air-conditioning system in the ZL market.
They wanted to reverse the stereotype in the public’s mind that public markets were muggy and smelly. In addition, they hired 10 full-time market cleaners to scrub the floors and clean the windows and contracted with a pest-control company to apply pesticide every 2 months. Next, HSVU leaders organized the market space into three different vending zones: (1) a wet-goods zone (for example, meat, seafood, and fresh produce), (2) a dry-goods zone (for example, handcrafts, textiles, and trinkets), and (3) a prepared-foods dining area.
The Opening of the Market Upon signing the concession memorandum with the city government, HSVU had already started recruiting street vendors to move into the market. To reach economies of scale and to share the renovation costs, HSVU leaders calculated they needed to rent out a minimum of 250 booths with each booth’s tenant(s) paying around 2,000 USD to share the cost of renovations. Although approximately 700 street vendors were conducting business outside the market building daily, at first, few vendors showed interest in moving into the market.
As the market remodeling work progressed, however, more and more street vendors, especially HSVU members, began to convert and move in. Those vendors tended to trust their leaders more than they trusted city government officials. Instinctively entrepreneurial, the street vendors became willing to take the risk. “During that time, everyone was skeptical and unsure about it, but I decided to take a gamble and moved in the market with my friends. In the worst scenario, we could always retreat to and re-occupy the street again,” said one street vendor.
In April 1999, the remodeling of the market was complete and approximately 250 street vendors moved in. HSVU’s office opened in the ZL market. The street vendors who did not move into the market migrated to other places in the city or rented stalls on private vacant lots abutting the street. In June 1999, the ZL market began its trial operation. After that, the city government sent in the bulldozers and police to evict the remaining few vendors on the street, demolishing the temporary structures and widening the road. Today, the ZL market building remains fully occupied and is viewed as the most successful public market in Hsinchu City.
Major Findings About the Zhu Lian Public Market Relocation Process Our case study analysis allows us to locate several reasons for the success of the ZL public market project.
Special Relationship Between HSVU and the City Government One of the most crucial factors that contributed to the ZL public market’s success was that its relocation process was implemented by a street vendor organization, the HSVU. The major reason the city government was able to ask HSVU to help relocate the ZL street vendors in the first place was that they had shared a special relationship with each other for more than 30 years. The HSVU leaders maintained social order among the vendors for the city government, and the city government maintained the commercial interests of the HSVU leaders.
In the past, in public market projects, booths were rented individually to street vendors at a symbolic price to “bribe” vendors to stay in the market. In the case of the ZL public market, however, the government adopted a very different approach. Instead of subsidizing street vendors on an individual basis, the city government subsidized the street vendor organization (that is, HSVU) through a relatively low concession fee, treating the organization as a concessionaire that could manage the renting of the booths. The low concession fee helped to assure a profit margin for the HSVU leaders with which to recruit street vendors.
The city government was willing to offer such a novel deal because of the credibility that the HSVU had gained over the years as an effective organization. At the same time, HSVU leaders were willing to assume the task of relocating ZL street vendors because (1) the low concession helped to assure a profit potential, (2) the city government supported their dominant position among vendor organizations, and (3) HSVU leaders also wielded some political influence because they were the biggest and oldest street vendor organization in the city. They could ask for governmental assistance if something went wrong. The successful ZL market relocation process was therefore first carried out on this foundation.
Market Tenant Selection Strategy Another important aspect of the ZL street market relocation process was that it had gone through a very careful planning process of the public market project both physically and organizationally. Although it comes from a very different context, the literature about the strategies of American shopping malls is a useful analogy (Brown, 1992; Forgey et al., 1995; Gerbich, 1998; Sweet, 1959; William, 1994).
The street vendors are not a homogeneous group but vary in their relative power and resources (see exhibit 1). When enlisting street vendors for the ZL public market, HSVU leaders mainly focused on recruiting their own members who were willing to share the improvement costs of the market (around 2,000 USD per tenant). Non-HSVU-member vendors who were willing to prepay the improvement cost voluntarily were given secondary consideration. Street vendors who were unwilling or unable to contribute to the improvement cost could not join the market. In this way, the tenant-selection policy excluded any uncommitted or low-margin street vendors from moving into the public market at the very beginning.
The result was a group of the most resourced and entrepreneurial street vendors. Therefore, they were more likely to be able to afford the capital investment necessary to secure new stalls in the new market building. In contrast, the street vendors who were unwilling or could not afford to share the upfront investment cost tended to either be stationary vendors who were still doubtful about the future prospects of the public market, or they were the mobile vendors who moved from
HSVU = Hsinchu Street Vendors’ Union. ZL = Zhu Lian.
place to place vending their goods. The latter kind of street vendors commonly did not vend continually in the ZL street market. Unable to claim their own urban territory, these vendors’ survival strategy was to scavenge the inferior locations left in the ZL street market. Therefore, they were less likely to be able to accumulate a loyal customer base and invest the capital needed to secure new stalls in the market building.
Because the market concession contract did not regulate how many booths one vendor could rent, the HSVU leaders divided the market tenants into three categories: (1) the anchor tenants, (2) the ancillary tenants, and (3) the informal subtenants. Before signing a concession contract with the city government, HSVU first attempted to secure long-term lease commitments from prospective anchor tenants (that is, the street vendors who were willing to rent three or more market booths in the ZL public market at one time and share the corresponding amount of market improvement cost). In return for their entrepreneurship, these anchor tenants had their pick of prime locations in the ZL public market.
Cityscape 55Weng and Kim
Anchor tenants were usually the patriarchs of street-vending families who had participated in the original open-air ZL public market (that is, families who had managed several market booths on the street for a long time and whose syndicates had also cultivated a loyal customer base). Securing the commitment of anchor tenants was an important step in laying the foundation for the future growth of the ZL public market. The seniority and name recognition of anchor tenants attracted customers and also other ancillary tenants to come into the market.