Cooperation key to spurring entrepreneurship

Source:Global Times Published: 2015-3-25 18:08:02

Govt ought to look to private agencies for expertise in nurturing start-ups


Illustration: Lu Ting/GT


On Friday, Chinese Premier Li Keqiang visited China's State Administration for Industry & Commerce, where he emphasized that the Chinese government has to promote entrepreneurship to keep the economy growing at a brisk pace.
Li also stressed that government departments should simplify the approval process for start-ups, ease market access and prompt the creation of droves of new small businesses. "Those methods would not only better stimulate public creativity and boost employment, but would help improve China's social coordination level and strengthen the status of large enterprises," Li said.

This is not the first time this year that Li has championed entrepreneurship to the public. On March 15, Li told the press that China will seek to boost entrepreneurship and innovation, to help more people get rich and "realize the value of their lives." Prior to that, the State Council had issued guidelines for developing Group Innovation Spaces to promote public innovation and entrepreneurship. As a result, many believe that now is the time to start their own businesses.

In fact, many people have dived in. In 2014, the number of newly registered companies jumped 45.9 percent from the previous year, according to TMTpost.com. Many entrepreneur service agencies, such as company incubators, have also sprung up. Currently, China has more than 1,700 tech company incubators, about 1,500 university science parks and more than 80,000 incubated companies.

Recently I visited Innoway Street in Zhongguancun in Beijing, a start-up hub for entrepreneurs. Not only were there many entrepreneur service agencies like The Garage Café, the restaurants in the area were innovative start-ups with strong Internet marketing strategies. It seems to me there is a dense entrepreneurship atmosphere in China nowadays.

This tide of entrepreneurship is essential for China in several ways. First, it helps create jobs. But more importantly, China is at a stage where its economy is undergoing a transformation. Economic growth is slowing. Certain sectors, especially manufacturing, are under pressure. But the emergence and popularity of a number of public service websites have helped open up new possibilities for the orientation of China's economic development.

For example, the emergence of ctrip.com has activated the development of the online tourism services market; eeju.com has expanded the real estate market by allowing people to make transactions online; the Didi taxi app has energized an otherwise stagnant taxi market; not to mention websites like taobao.com, which have not only created enormous economic value, but have fundamentally transformed consuming habits. They have largely contributed to the rapid development of China's services sector in recent years.

However, this is just a start. If this tide persists, the Chinese government and market institutions should join forces to create a stable and convenient environment for entrepreneurs. China's local governments could employ different ways to participate in entrepreneurship programs.

In the past, there were a number of entrepreneurship service agencies managed by local governments, but some of them failed to live up to expectations. One possible reason is that local governments don't have a rigorous and comprehensive appraisal system, which makes it hard for them to track a company's market performance and make relevant amendments to their investments.

I've known entrepreneurs who have turned to government incubators in different cities to apply for funds. Many of them were focusing their efforts on amassing capital instead of cultivating a sound business idea. Their chances of taking advantage of government-led entrepreneurship service agencies are much greater.

Individual entrepreneurship service agencies, most of which are led by experienced investors, better understand how the game should be played. For example, they will decide whether to invest based on a company's performance. It would be better for local governments to support entrepreneurs by creating a good entrepreneurial environment and lowering start-up costs, rather than taking on everything. If they must act as incubators, they could recruit commercial company service agencies to handle some of the responsibilities, like company appraisal, to make the incubation process more efficient and transparent.

For the entrepreneurship service agencies that have mushroomed around China recently, we need to look at why they are set up. Some of those agencies get set up just to respond to the government call. That's not enough. An entrepreneurship service agency should consider itself a social enterprise that aims to provide professional services to small and micro businesses.

On the other hand, though, many of these agencies are also start-ups that belong to a relatively new market. They also need a loose entrepreneurial environment, which the Chinese government could help create. The fact that there are so many new entrepreneurship service agencies shows a devolution of power on the part of the Chinese government in helping entrepreneurs. And that, in my point of view, is helpful to both start-ups and the entrepreneurship service market as a whole.

The article is compiled by Xie Jun, a reporter with the Global Times, based on an interview with Gu Bing, CEO of ichuangye.com. bizopinion@globaltimes.com.cn

 

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