Quankang is working with Xiaomi to design and make smart home appliances such as space heaters and electric fans. Mr. Shao and Ms. Yu plan to build three fully automated assembly lines. The first is expected to be running by March.

And for the first time, Quankang is accepting direct government support. Mr. Shao’s modernization campaign will happen on more than 30 acres far away from Dongguan, in neighboring Hunan Province. The local government there is giving Quankang the land almost free of charge. The local government of Yanling County is more interested in tax revenue and job creation than revenue from land sales, Mr. Shao said. So far, he has spent nearly $12 million on the Hunan plant.

China’s boom started when the Communist Party unleashed the country’s entrepreneurs and largely left them alone. This next stage of growth may not be so easy. To help it along, the central government is spending vast amounts to upgrade manufacturing. Local officials in less developed provinces are trying to lure companies to replicate southern China’s economic miracle.

It proves appealing to entrepreneurs like Mr. Shao and Ms. Yu, who are desperate to find a new niche to survive and thrive.

“The business of our factories isn’t as good as before,” Ms. Yu said. “But since we’ve been doing this, we’ll keep charging ahead because behind us it’s a precipice. We’ll fall if we step back.”