The Characteristics and Attributes Of New Chinese Entrepreneurs and Their Emerging Enterprises.

Through an empirical investigation of mainland Chinese entrepreneurs, this study explores the characteristics and attributes of new entrepreneurs and their enterprises in the Wuhan area of the Hubei province. The study explores the relationships between entrepreneurial motives, demographic attributes and the type of businesses being established. The study also documents family and enterprise relationships relating to investment and employment. The findings suggest that entrepreneurs are motivated by the need for independent-based achievement and continuous learning around a family focus. The majority of enterprises were found to be closely held small businesses focused on the retail and technology sectors. The majority of these newly emerging enterprises relied on family for financial investment and daily operations.

Entrepreneurship involves the pursuit of opportunity beyond the resources one actually controls. Entrepreneurship and the development of small- and medium-sized enterprises (SMEs) continue to be at the forefront of economic development in virtually all economies today. Entrepreneurial-led SMEs provide social stability and serve as the engine of economic growth.

Entrepreneurship requires a vision; commitment and heart felt passion to lead others toward that vision. Scholars long ago recognized the entrepreneur as an individual who speculated and employed a network of individuals and groups in the pursuit of business profits.' One researcher as serted that entrepreneurship is a human act that builds something of value from almost nothing. (2) Other advanced the idea that there are three different types of entrepreneurial activity: (1) developing new revolutionary products and services, (2) improving existing products and services, and (3) taking an existing concept and simply developing a similar type of business. (3)

Governments and policy makers have become keenly aware of both the social and economic benefits associated with entrepreneurial led SME development. In the U.S. where it is relatively easy to form a new business, SMEs flourish. It is claimed that small U.S. companies created four times as many jobs as large companies. (4) One documentation on the magnitude of entrepreneurship reported that five million Americans formed 3.6 million new business in 1997 alone. (5)

The European economy has also been dominated by entrepreneurial-led SMEs. They represented approximately 95 percent of all European businesses and provided 60 percent of all jobs. (6) In Germany the "Mittelstand," small-and medium-sized family-owned businesses, has been described as the entrepreneurial engine driving the economy. (7)

Entrepreneurial spirit has also been found to be a primary force in Asian economies as well. Researcher L. Dana brought to light the key role of entrepreneurial led SMEs in the Japanese economy. Dana pointed out that the Japanese economy was centered on six million SMEs, which comprised 99 percent of all firms in the country that employed 75 percent of the working population. (8) Taiwan serves as another example where SMEs constituted approximately 96 percent of the 935,000 business establishments which employed 78 percent of the total work force. (9) In South Korea more than 70 percent of all employees worked in firms employing fewer than 100 workers. (10)

Entrepreneurship as a Socio-Economic Agent

Developing and transforming countries are also adopting entrepreneurship as a growing, visible and vibrant economic activity. (11) For example, in post-Communist Romania the entrepreneurial drive shown in recent years, including the expansion of thousands of small, private businesses has been the steadying economic force. In the former German Democratic Republic small-scale enterprises have been similarly discovered to be the most promising and successful segment of the new East German economy. (12)

In Vietnam the creation and growth of small and medium-sized private enterprises has been embraced as an effective method of job creation and local economic development. There is also a special joint Vietnamese-Dutch program that established a Centre for the Promotion of Micro and Small-Scale Enterprises. (13) In Indonesia small enterprises have played a critical role in creating employment and generating income, especially in the manufacturing sector and in rural areas. (14)

Entrepreneurship and SMEs in China

Entrepreneurship and small private enterprise development has also been used by the Communist leadership of the People's Republic of China (PRC). In fact, the Communist Party of China has allowed market forces and subsequently independent small business owners to become one of the major economic factors. (15)

China has adopted a different approach toward entrepreneurship and private optioning for the development of a mixed "socialist market economy." As far back as 1978 China began to realize some of the advantages of mixing state and private enterprise. In an effort to stimulate economic growth and development Chinese leaders encouraged the formation of rural enterprises and private businesses, liberalized foreign trade and investment, relaxed state control over some prices, and invested in industrial production and the education of its work force. (16)

During the 1980s an entrepreneurial led private sector developed rapidly in China. Researchers have contended that the private sector was the fastest growing part of the Chinese economy. (17) By the end of 1990s it was estimated that more than 12 million private enterprises were operating in China. (18) Many of these newly emerging SMEs were clustered along China's eastern seaboard in the Guangdong, Fujian and Zhejiang provinces. Although one researcher reported that a large number of new private enterprises were located in rural areas.

Many of the newly emerging entrepreneurial led private sector businesses are micro-enterprises. Most Chinese SMEs employ, on average, fewer than 15 workers and hold less than $40,000 in registered capital. (20) At the same time there appears to be an emergent class of "Entrepreneurial Titans" who are developing large private empires. For example, the Nan De Group Cooperation led by Mr. Mou Quizhong with an estimated market value of $12 million has more than 300 factories and companies in China, Eastern Europe and Russia. (21)

By the 15th Communist Party Congress in 1997 Chinese political leaders including Prime Minister Zhu Rongji realized that if China was to continue to foster sustained economic growth the state sector must be further reduced. This marked the start of a new phase in which tens of thousands of small- and medium-sized state enterprises would be privatized. (22)

Further indication of the central government's commitment to entrepreneurship and SME development became evident early in 2000. On January 5, 2000 The China Daily reported that Zhou Yuanqing, vice-minister of education publicly called for China to produce more scientists, academics and entrepreneurs in order to compete internationally.

The Communist Party of China has indicated that future economic policy will concentrate on blending agriculture and industrialization in an attempt to slow the mass migration into major urban areas. Township and local village private enterprise development has been considered a vital supplement to state agriculture. For example the "Spark Program" designed to stimulate agriculture and light industrial development in rural areas created 20,000 projects between 1986 and 1999. (23)

Entrepreneurship and the continued development of private enterprise will be central to China's economic prosperity and stability for decades to come. The government's policy of using entrepreneurial led SMEs as a supplement to state enterprise in combination with China's ongoing "Consumer Revolution" is creating a new emergent class of tertiary industries. Observers have cited examples such as financial services, real estate, subcontracting, restaurants and the entertainment sectors where entrepreneurial activity has begun to flourish. (24)

Research Question and Direction

The People's Republic of China provides a unique living laboratory in which to explore entrepreneurship and small business development. Although there has been an emerging body of knowledge about entrepreneurship and private enterprise development few in-depth empirical investigations have be made to date. The opening of the Chinese economy provides an opportunity for extended research into Mainland China where small firms are beginning to play an increasing and important role in the development of the economy. (25) Consequently, researchers have a unique opportunity to identify, probe, and analyze the characteristics of both Chinese entrepreneurs and the enterprises they are developing.

Thus, the general research question is as follows: "What are the characteristics and attributes of new Mainland Chinese entrepreneurs and their emerging enterprises.?" This study explores three dimensions shaping entrepreneurial characteristics and orientations: the psychographic motives and demographic attributes of the entrepreneur; the types of businesses being started, their ownership structure and method of establishment; and family and enterprise relationships related to employment and investment.

Setting of the Study