Saturday, January 21, 2006

The Challenge of China

A recent post at Fresh Inc., the blogging community of Inc. Magazine, got more than it bargained for when it addressed China’s Entrepreneurial Revival.

The writer, Carole Matthews, noted that China today has nearly 24 million small independent companies, and a recent BusinessWeek article says small/medium companies create 75% of new jobs. She says the country’s government has developed high-tech zones, science parks, and business incubators to promote business ownership, and has streamlined its business registration processes.

With China actively wooing overseas Chinese entrepreneurs to come home, Matthews ends her post by wondering whether, in the face of this unexpected entrepreneurial challenge, the U.S. is doing enough to promote entrepreneurship at home.

But her assumptions are questioned by a reader named “Tim,” whose comments should interest anyone considering doing business in China:

“All this roses and wine stuff about China is Cool, but having lived there and in Southeast Asia it isn't like people want you to believe.

“Yes, the government has opened up zones, but less than 20% of them are used. Why? Because of red tape, false funding, graft, and sucky, very old infrastructures that surround them. Most are in name only with no physical or government process improvement.

“China is and always has been made up of small entrepreneur-style businesses. It is built on the family business…

“The business failure rate in China is over 99% after 2 years. For every western or Asian [business] from outside China that starts and succeeds, there are roughly 1200 failures…

“Yes, China is a huge collection of small businesses and a big market but it is inconsistent and regulatory graft smothers it. … Don’t forget there are no contract laws and commerce laws to protect businesses like we have here.”

Dodge City wasn’t the safest place either. Yet America’s lawless frontier provided the foundation for many of its greatest business fortunes, from mining to newspapers to security and railroads. Clearly, this is all part of the ongoing global entrepreneurial revolution – and revolutions are never seen clearly until they are over.

Read the original posts here.

Click here for a short piece on China I wrote last year for PROFIT Magazine.

1 comment:

Rick said...

Interesting update based on last night's CBC show, China Rising. They symbolized the political/economic changes in China by visting Beijing University and zooming in on the central bulletins boards, which used to be covered by political notices.

Now the boards all promoting the latest must-have courses. Nope, not the didactic and the prolaterian revolution. In fact, English-speaking readers didn't even need a translation.

All of the posters were overprinted with the unmistakable acronym "MBA."

It seems overthinking business is now a universal language.