Yiwu is one of the six major logistics centers of Yangtze River Delta manufacturing base. There are hundreds of thousands factories around Yiwu. It's a huge manufacture base of China, the competition is very fierce, if the factories want to survive, they must provide cheaper product with better quality. As you may know, most of the stalls in the Yiwu International Trade Market are the showrooms of the factory, so, when you go to the market, you're facing hundreds of thousands of factories. What you can get is real factory price; normally there are hundreds of factories behind one product, there are enough space for you to choose the right product and negotiate the price.
When hundreds of thousands factories get together, you can not ignore the scale effect. Materials cost, logistics cost, workforce cost are much lower then any other places in China.
B support by government policy
In order to keep the prosperous of Yiwu market, and make it more developed, the central government gives Yiwu city the biggest administration right of all the county-level city in China. As a county-level city, Yiwu has its own Customs. It was the first one and only one in China's county-level city. Yiwu Small Commodity Market is the largest light industrial products distribution center in China, thousands of containers sent to foreign countries every day. With customs, import and export inspection and quarantine, foreign exchange management and other agencies, can greatly speed efficiency. Besides, Yiwu has an airport which was also the first one in China's county-level city.
The way of Yiwu businessman making money
The local Yiwu businessman is proud of "chicken feather change sugar" story. This story is like their bible. In the 1970s, the native Yiwu was the pioneer of small business. They use sugar as the exchange materials to collect chicken feather, and then they made chicken feather into other products to make a little money. That's the way how they make money. As time goes by, this story has become history. But it still inspired the Yiwu people. They know a tiny stuff can still make big money. Based on this theory, Yiwu people make Yiwu market the cheapest wholesale market of the world.