口ByJordynDahl
Butaftertheinitialboom,newChineseentrepreneurshavetograpplewithtoughchallenges
Weseealotofstudentswhoarejumpingoutofschooltostartabusiness.It’slikeatrendtodostartups;it’sacoolthingtotheyoungkids.Theydon’tseethehardshipsincreatingastartup,soalotofthemwillfail.
SinoShi,AventurecapitalistwithChinaGrowthCapital
ResearchersattheGuangzhouMedical
UniversityinsouthChina’sGuangdongProvincemadeheadlinesinAprilwhentheyconductedanexperimenttomodifygenesinhumanembryos-thatwouldnothavegrownintohumanbabies-tomakethemHIVresistant.
Itwasthesecondtimehumanembryogeneshadbeensubjectedto“germlineediting”-geneticmodificationofhumancells.AnearlierteamofChinesescientistsfromSunYat-senUniversity,alsoinGuangdong,hadmadetheworld’sfirstclaimofhumanembryoDNAeditinglastyear.Theyhadmodifiedagenelinkedtothalassemia,ablooddiseasethatreducestheproductionofhemoglobininredbloodcells.
PartofthisrapidgrowthinChinesescientificdevelopmentcanbeattributedtogovernmentinitiativestodevelopscientificresearchandattracttopChinesescientistsbackfromabroad.TheThousandTalentsPlanwaslaunchedin2008toattractthosewithChineseheritageorcitizenshiptocometothemainlandforstudyandwork.Scientistswhoapplyfortheprogramareeligiblefora1-million-yuan($154,000)subsidyandcanapplyforaresearchfundworth3millionyuanto5millionyuan($462,000$770,000).
Thisisameasuretostem“braindrain”-themassiveoutflowofstudentsandprofessionalsgoingabroadandnotreturning.A2007studybytheChineseAcademyofSocialSciencesfoundthatsevenoutof10studentswhoenrolledinoverseasuniversitiesbetween1978and2006didn’treturn.Ofthe1.06millionChinesewhostudiedabroad,only275,000cameback.
ButthetrendappearstobereversingwithmanyChinesestudentsreturningupongraduation.About460,000Chinesestudentswentoverseasin2014,a30-percentyear-on-yearincrease,accordingtofiguresfromtheMinistryofEducation.Nearly365,000returned,a3.2-percentincreaseover2013.
Aculturalshift
DNAresearchisoneoftheinnovationshappeninginChina.Anotheristhestartuptrendthattookoffin2014whenPremierLiKeqiangencouragedstudentsandotherstolaunchtheirowncompanies.Thegovernmentreformedbusinessregistrationrulesandloweredtheminimumamountofregisteredcapitalrequiredtopromoteentrepreneurship.
Thenumberofstartupsboomed,rising46percentfrom2.5millionin2013to3.65millionnewlycreatedcompaniesin2014,accordingtoStateAdministrationforIndustryandCommercedata.
Encouraginguniversitystudentstoinnovateandcreatetheirowncompaniesispartiallydesignedtohelpalleviatelackofemploymentopportunitiesforstudentswithhighereducation,MarkWilliams,chiefAsiaeconomistatCapitalEconomics,aneconomicintelligenceorganization,toldtheBeijingReviewweekly.
Graduatesappeartobeheedingthecall.Morethan6percentofnewgraduatesplannedtostarttheirownbusinessin2015,accordingtoasurveybyZhaopin,aChinesehumanresourceswebsite.Another21percentsaidtheywouldliketostartabusiness.
Butonly2.4percentoffirst-timestartupssucceed,accordingtoa2014XinhuaNewsAgencyreport.“Weseealotofstudentswhoarejumpingoutofschooltostartabusiness.It’slikeatrendtodostartups;it’sacoolthingtotheyoungkids.Theydon’tseethehardshipsincreatingastartup,soalotofthemwillfail,”SinoShi,aventurecapitalistwithChinaGrowthCapital,toldBeijingReview.
TheriseincollegegraduateslaunchingtheirowncompanieshascoincidedwithashiftinChineseculture.Afewyearsago,itwouldbeunthinkableforthemtoannouncetheywereforgoingacareeratoneofthestate-ownedcompaniesorlargerprivatefirmstobranchoutontheirown.
“Thereisaculturethatnolongerstigmatizesfailure.Startingacompanyisbecomingalegitimatethingtodo,”KaiserKuo,DirectorofinternationalcommunicationsatBaidu,China’sleadingsearchengineandoneofthecountry’sthreemajortechnologygiants,saidattheinnovationdiscussion.
Caution,bumpsahead
AnotherreasontoboostentrepreneurshipisthehopethatcreatinganinnovativeeconomywillhelpcushiontheeconomicgrowthslowdownasChinashiftsfromtradeandmanufacturingtoconsumerandservicedrivensectors.
Someanalystsandeconomistswarnaboutthedrawbacks.
“Incrementaltechnologicalgainscouldhaveabigimpactonhowlaborisdeployedgenerally,”CharlesFreeman,anonresidentfellowattheJohnL.ThorntonChinaCenter,athinktank,toldBeijingReview.“Chinastillhastonsofoveremploymentandovercapacity.If[itmoves]intoinnovativenewthings,thatdoesn’treallyemployalotofpeople.”
Butthegovernmenthaskeptthatinmind.Thecrackdownonovercapacityinthecoalandsteelindustriesisexpectedtoseetheretrenchmentof1.8millionworkers.Sothegovernmenthassetaside100billionyuan($15.4billion)torelocatelaid-offworkers
Withtheturbulenceinthedomesticstockmarketandanexcessinrealestateinventory,manylookingtoinvesttheirmoneyhaveturnedtostartups.Therehasbeenasurgeinthenumberofventurecapitalfirms,bothprivateandgovernment-funded,investinginnewcompanies.
Government-backedventurecapitalfirmsraisedabout1.5trillionyuan($231billion)in2015,accordingtodatafromZero2IPOGroup,aconsultingfirm.Otherventurecapitalinvestmentsmorethandoubledlastyear,reaching$32.2billion,accordingtoCBInsights,anotherresearchfirm.About$4.7billionworthofinvestmentwentintodomesticstartupsinthefirstquarterof2016alone.
Butoncetheinitialeuphoriawearsoff,thereisneedforacautiousapproach.Someventurecapitalists(VCs)havepointedoutthatthemassiveamountofmoneyflowingintothestartupmarkethascreatedovervaluedcompanies,particularlyfollowingtheinfluxofnewlyregisteredcompaniesin2014.
“There’stoomuchmoneyinthemarketbutnotasmanygoodteams.Ifyoulookatthesupplyanddemand,thereissomenaturalinflation.Butithasbeencoolingdownalittlebit,”ZhaoChen,aregionalmanagerwithtechnologicalincubatorPlug&Play,said.
LiuBo,aVCwithTusParkHoldings,echoedZhao.“Mostof[theinvestors]don’thavetheknowledgeofhowtojudgeanearlyproject,andtheydon’thavetheresourcestohelpthestartup,soit’sreallyadisturbingvoiceinthismarket,”Liusaid.CA