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Entrepreneurialism is Driving China’s Growth

By Winslow Bud Johnson

Entrepreneurialism is Driving China’s Growth

The world has never seen a large market emerge as quickly as we have seen in China. One of the reasons for this, Winslow Bud Johnson, author of the book Business Success Today, believes is the emergence of the Chinese entrepreneur. Today China is a hotbed for entrepreneurial activity. In traveling throughout China, Johnson interviewed individuals in 18 different Chinese cities who had become entrepreneurs. From the largest cities of Shanghai and Beijing to smaller cities like Ningbo and Nantong these people had started their own business to seek a better life.

In traveling to China 23 years ago Johnson found a China that was far different than it is today. The China Johnson discovered 23 years ago was largely driven by enterprises owned by the government. There is a much different situation in China today. In looking at the thousands of small businesses that have been started in China over the past few years, Johnson observes how these firms are forming a dynamic and innovative private sector.

The Shanghai La Vie Hotel is a good example of how quickly growth can occur in China. In less than two years, the Shanghai La Vie Hotel has been able to build a very successful business. This hotel is part of a larger business, started by the entrepreneur, that includes four office buildings, the hotel and a series of restaurants. The hotel itself has 76 rooms and the overall business employs a total of 142 people. This type of growth is happening with thousands of businesses all over China.

Similarities among Entrepreneurs
Research conducted for the book Business Success Today was based on interviews with entrepreneurs in China, Taiwan, Europe and in the United States. It was found that the entrepreneurs in each of these regions shared a number of common traits with one another. The entrepreneurs in every region seemed to be more tolerant of risk than the average employee in a large company. They all seemed to be more willing to try or invent new things and seek opportunities for profit.

Another common trait among entrepreneurs in all regions was finding the right niche. The XuGuang Fruits and Vegetables Professional Cooperative is a good example of a Chinese entrepreneur finding the right niche. Three years ago Mr. and Mrs. Liu purchased a small farm in a Shanghai suburb to start a strawberry business. Rather than sell their strawberries to the traditional wholesalers, they decided to concentrate on selling to bakeries. In only three years this farm has become a major supplier of strawberries to the major bakeries supplying the numerous Starbucks coffee shops popping up all over Shanghai.

Chinese versus Western Entrepreneurs
Despite the similarities between the entrepreneurs around the world, there are a number of things that make Chinese entrepreneurs unique. A number of the entrepreneurs interviewed in China indicated that until fairly recently, China’s socialist economy was not one in which it was easy for an entrepreneur to survive. They described a situation only ten years ago where the economy was mostly in state hands and where laws did not give equal treatment to private companies. This has now changed. Because of this, it was felt that more private companies have been started in China in the last ten years than in any other time in China’s history.

Most of the entrepreneurs interviewed in China started their businesses with far less resources than the entrepreneurs interviewed in Europe and in the United States. Most of these people built their companies with almost no capital and no access to bank credit. Most were not university graduates with training in the fundamentals of business. In many cases these businesses were started where the entrepreneur had no experience in dealing with government officials, suppliers, customers and employees. The businesses were built based on pure entrepreneurial energy.

Starting a business in China can be extremely difficult unless the entrepreneur has been able to establish the appropriate relationships. All of the entrepreneurs interviewed in China by Johnson had spent a considerable amount of time cultivating their network of contacts. They all felt that the establishment of relationships with the appropriate people was a critical step in the formation of their successful businesses in China. They indicated that the decision to do, or continue doing business, with you is often based on the other party’s personal view of you.

Lessons to be Learned from Chinese Entrepreneurs
The book Business Success Today compares the strategies that helped small business in China succeed compared to those in Europe and in America. While the secrets of success were similar in all geographic regions, the emphasis was sometimes different in China. The most obvious differences were in the emphasis placed on patience, hard work and owner involvement.

Patience – Chinese entrepreneurs have demonstrated that patience can be a virtue.
These entrepreneurs generally did not expect to jump into a quick business deal just to turn a fast profit. They all realized that it takes time to build business relationships in China. It is much different than in the U.S. or in Europe regarding the amount of time that has to be spent developing the business relationship before the actual deal is consummated.

Work Hard – All of the people running the businesses included in the book Business Success Today had a strong work ethic. They all worked hard. Most indicated that it was critical to stay on top of the business every day and never slack off. Johnson noticed, however, that hard work took on a new dimension in China. The entrepreneurs interviewed in China were working seven days a week from the early morning hours until late into the evening. Many of the interviews conducted in China were on weekends or late at night. It was not unusual for a meeting to be started at 11:30 PM.

Owner Involvement – Many of the entrepreneurs interviewed around the world felt that personal involvement by the owner of the business was critical. These people generally felt that just hiring employees to run the operation would result in a far less successful business. The business owners in China, however, tended to carry this a step further. Even in the largest businesses the Chinese entrepreneur remained totally involved, often without a professional management team. A lot of decision making seemed to be done based on the entrepreneur’s personal experience.

Conclusion
Many people believe that China is the biggest growth story in the world. There are obviously many reasons for this growth, ranging from a low-cost labor pool to the rising disposable income of the Chinese consumer. It is clear, after observing and interviewing Chinese business people, however, that entrepreneurialism is a key factor in driving China’s growth.

About the author
Winslow “Bud” Johnson is the author of the book Business Success Today (www.businesssuccesstoday.net). This book outlines how 20 businesses from China, Taiwan, Europe and the United States are achieving outstanding success even in difficult times. He is also president of the Stamford Marketing Group, a global consulting firm providing market intelligence to clients around the world. See www.winslowbudjohnson.com.

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