From the Great Leap Forward (GLF) of 1958–1960 onwards, China's urban neighbourhood workshops and services mostly hired women. The GLF marked the beginning of a large-scale and irreversible trend towards near universal employment of women in China's cities. By the end of the Mao era, about 42 per cent of women working in industry were employed in “collectives” that were largely developed from urban neighbourhood industry. This article takes Shanghai as a case study to examine this type of employment for women in China. It documents the origin and development of the institution, explores the nuances of state–labour interactions at its site, and argues that as far as the enduring effects of women's participation in the workforce are concerned, the disastrous GLF was indeed the initiator and in this respect may well be seen as a blessing in disguise.