Mukta Naik

As cities become the main engines of economic growth in Asian nations, the dependence of rural areas on cities has increased tremendously. Moreover, the urban-rural dichotomy is changing to an urban-rural continuum. The primate Asian city is now understood as an urban agglomeration that is closely networked with peri-urban areas, which make the transition from rural to urban over time. In this way, urbanisation is usually understood to spread outwards of historically established city centres.

In-situ urbanisation of crafts villages in peri-urban Hanoi

In the districts surrounding the city of Hanoi in Vietnam’s Red River Delta, however, something quite different is happening. Here, over a 1000 clusters of densely populated crafts villages flourish, producing items of daily use as well as unique and exotic items like silk, incense sticks, carved furniture and pottery, which they trade in a highly competitive domestic and international market even as they still cling on to their rural identity. With population densities well over 1000 people per square kilometre, these villages are nearly as dense as Hanoi city and many of them have been in existence since the 11th century. Says French human geographer Sylvie Fanchette who has worked in this area for a long time, “While these clusters are officially classified as rural, there is a process of in-situ urbanisation that has taken place here.” Interestingly, besides density of population, Sylvie looks at social differences and the diversification of urban population as important variables to understand these village clusters as urban.

At her recent presentation in New Delhi, India, Sylvie illustrated the unique agglomeration mechanism of craft clusters using the example of the village of Dong Ky. Located in the province of Bac Ninh about 180 kilometres from Hanoi, Dong Ky is ‘mother village’ to a cluster that produces fine wooden furniture that is supplied to domestic and international markets.

A deliberate act of entrepreneurship and business innovation

The people of Dong Ky, like in other crafts villages in this rice cultivating belt, initially adopted crafts as a means of additional livelihood. However, the village was propelled into large-scale production in the late ‘80s, when economic liberalisation in Vietnam (Doi Moi) eased restrictions on the trade of wood and resulted in rising middle class consumption. In 1965, only eight families were experts at making furniture in Dong Ky. However, post revolution the impressive spirit of entrepreneurship made Dong Ky’s traders scour the Delta for antique Vietnamese, Chinese and French furniture that the cluster’s craftspeople then copied and reinvented. Not just relying on local knowledge, these entrepreneurs sought specialised skills from outside and trained apprentices from the cluster.

Today, the Dong Ky cluster is one of three main wood product clusters in Vietnam, the other two—Quy Nhon and Binh Duong—being modern and industrialised rather than traditional. Together they are formidable and have put Vietnam on the world map as the 4th largest exporter of wood products globally, with customers in 120 countries across USA, Europe and East Asia.

The entrepreneur remains firmly in charge in Dong Ky, taking it upon himself to ensure quality production as well as bag lucrative orders. In a fascinating case study T. Song Hanh, who is now a Lecturer at Sheffield Hallam University, records the growth of Dong Ky-based micro-firm Hung Long Pham from a small workshop to a production unit 25 times its original size. Hung Long, Hanh observes, “is a typical success case for a micro firm in Dong Ky village that often uses personal relationships (kinship or friendship or acquaintanceship) to get orders.”

Sub-contracting and specialisation make Dong Ky competitive

Dong Ky comprises a cluster of three contiguous communes that collectively employ 26,000 people. However, only 40% of those employed in the cluster live in Dong Ky’s crowded homes and workshops. A third of the workers come in from the surrounding villages and many more are involved through sub-contracted home-based work.

Dong Ky’s production chain is informal and highly specialised, comprising eight stages including woodcutting, treatment, carving, inlaying, varnishing and assembling, and is a key element in keeping the cluster competitive. The simpler work like sanding and varnishing is usually done by families new to the trade, while specialised work like carving is sub-contracted to skilled craftspeople. In fact, over 500 mother-of-pearl inlay artists from other villages in Vietnam live and work in Dong Ky’s workshops. In addition to this, small units may focus on one type of furniture component, for instance a particular workshop may produce only chair legs!

This system of sub-contracting and specialisation probably originated in the 17th century when these crafts clusters were organized into guilds and linked to the Quarter of 36 Streets in Hanoi, which was a regional trade hub. Even though these linkages are weak today, the system still exists, allowing for flexible system of production that is able to withstand fluctuations of economy and policy over time.

Classified rural, Dong Ky needs help to deal with its urban problems

Success on the global stage has transformed Dong Ky from a sleepy village to something resembling a bustling small town. “With the rise of new activities like lodging homes, restaurants and numerous shops to meet demands for goods and services, Dong Ky looks more like a small town, but has no urban status,” elucidates Sylvie.

With this move to urban has come the familiar deterioration of quality of life. Congestion and lack of space is a real issue. In addition to sub-contracting activities out to neighbouring villages where land is cheaper, Dong Ky’s residents are abandoning their traditional courtyard-style homes to build multi-story homes so as to free up space on their plots for work. Ponds and low-lying areas have been filled to create workspace. Trash and waste is seen lying around the village. A 2013 environmental survey of the Bac Ninh Department of Natural Resources and Environment showed that water and air in the province’s craft villages was seriously polluted. Particularly, the survey reported unsustainable high levels of dust, exhaust fumes, noise and high temperatures in Dong Ky’s workshops. Business owners are not incentivised to address issues of pollution and even villages where sanitation teams exist are severely constrained by lack of funding.

To address the pollution problem, the Vietnam Association of Craft Villages is considering moving production away from residential areas. In Dong Ky, however, such a move will be counter productive, breaking down the very informal sub-contracting system that gives the cluster its competitive position.

Vietnam’s authorities probably need to square up to the unique informal and urban nature of these crafts clusters. Specific community-based solutions to improve sanitation and infrastructure in these clusters as well as support for business issues like falling wages, violation of intellectual property and rising costs would probably be welcome.


Pham T.Song Hanh (2009), An Explorative Study on Functional Upgrading and Exprt Development of Vietnam Wood Furniture Producers, DEPOCEN Working Paper Series No. 2009/07, Sheffield Business School, Sheffield Hallam University, UK

Fanchette Sylvie (2012), Craft villages in the Red River Delta (Vietnam): Periodization, Spatialization, Specializations, in Local agri-food systems in a global world. Market, social and environmental challenges, éd. par Filippo Arfini, Maria Cecilia Mancini, et Michele Donati, Newcastle upon Tyne : Cambridge Scholars Publishing, p. 259-278

Fanchette Sylvie & Stedman Nicholas (2009), Discovering Craft Villages in Vietnam: Ten itineraries around Hà Nội, IRD, Research Institute for Development: The Gioi Publishing House

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Photo 1 by Mstyslav Chernov

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Photo 3 by Haithanh




Categories: Entrepreneurship, Informality, Livelihoods, Waste and Recycling