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How to Foster Entrepreneurship in China? March 26, 2013

Posted by keithsawyer in Education.
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A recent study* found that U.S. graduates are much more likely than Chinese graduates to found a startup or join one. This survey of engineering students at three top Chinese universities and Stanford University found that 22 percent of Stanford grads planned to start or join a startup; 52 percent of top Chinese graduates plan to join the government. One 25-year-old graduate in international business explained it this way: “If you work for private-sector Chinese firms, your family will lose face. Those aren’t famous firms.” She went on to say that entrepreneurial jobs are too risky. In Wenzhou, a city whose recent success has been driven by entrepreneurship, “entrepreneurs were viewed suspiciously by many residents.” Li Hongbin, a Tsinghua University economist who worked on the study, says

The current education system does not produce people who are innovative. That makes it harder for the country to reach its long-term goal of building an innovative society.

The government in Beijing knows that entrepreneurship has driven the Chinese economy, and they now have policies in place–for example, to bring back Chinese professionals who attended university in other countries and stayed there. One policy offers a bonus of as much as $160,000 for those who return; and yet, since 2008, only 3,300 professionals have taken up the offer.

Some of China’s top universities are beginning to offer entrepreneurship education programs, of the sort that are now common in the U.S. thanks in part to the funding of the Kauffman Foundation, which has famously sponsored many “Kauffman campuses” where students can major in entrepreneurship and participant in business plan competitions, under the guidance of experienced local mentors. (My employer, Washington University, is a Kauffman campus.) Three of China’s most elite universities, Tsinghua and Peking Universities in Beijing, and Fudan University in Shanghai, have created incubator programs to help entrepreneurs develop commercial applications.

So what’s the solution for entrepreneurship in China? Schools and universities are an important part of the solution; many Chinese perceive their own schools and colleges to be focused on rote learning and not receptive to creativity and critical thinking.  One international business student chose to attend an English language university, run by Britain’s Nottingham University, specifically to acquire the “critical thinking” that her uncle says is lacking in Chinese graduates.

But colleges can’t solve the problem alone. Cultural attitudes need to change to value entrepreneurs. Venture capital is an essential component, and a business climate of open and fair market competition. Many would-be entrepreneurs give up after they realize the bribes they’re expected to pay, and the unfair advantages given to large state-owned enterprises (SOEs). The path to greater Chinese innovation is complex, but education is one of the core components of greater creativity and entrepreneurship.

*Bob Davis, 2013. “Chinese college graduates play it safe and lose out.” WSJ, Page A1, A10.

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