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

Located on both the Yangtz and Hanshui rivers Wuhan serves as a major transpiration hub in central China. With two international harbors, two airports and a major railway hub Wuhan represents an important economic zone. Wuhan serves as the largest financial and commercial center in central China. (27) Metallurgy, automobiles, machinery and high-technology are key economic sectors of the region. The Wuhan region has established a number of major joint ventures with foreign multinationals including Citroen (France), Budweiser and Coca-Cola (U.S.), NEC (Japan) and Philips (Holland).

Wuhan and the Hubei province provide a rich pool of entrepreneurialled private SMEs to draw from. This study represents one of the first focused empirical investigations of private enterprise development in central China. A survey-based interviewing process was created to capture the characteristics and attributes of Mainland Chinese entrepreneurs.

Survey Composition

The Entrepreneurial Profile Questionnaire (EPQ) was utilized as a data collection instrument. The EPQ was designed to survey the effect of individual, societal and environmental factors on entrepreneurship by collecting a combination of demographic information and extensive details related to characteristics and orientations. A five-point Likert scale ranging from strongly agree (5) to strongly disagree (1) was provided next to statements which complemented the general background information.

The EPQ was successfully piloted and validated through a series of studies in Romania, Turkey, Russia, Poland, the Czech Republic, Hungary, Lithuania, Estonia, Germany, Venezuela as well as South Africa, Mexico and the United States. The EPQ was professionally translated and edited into Mandarin, pre-tested and then retranslated to clear up ambiguities or idiosyncratic terminology.

Utilizing information from the local chamber of commerce in combination with the Management College at China University of Geosciences in Wuhan an extended series of in-depth survey interviews were administered during 2000. Other than the sources of the participants the sample was randomly selected. Fifty-six entrepreneurs completed EPQs. The sample, which represents part of an ongoing data collection program, includes 41 males (72 percent) and 15 females (28 percent).

The results are used in three ways: To answer the general research question "What are the characteristics and attributes of new Mainland Chinese entrepreneurs and their emerging enterprises?" to develop some fundamental insights into the role of entrepreneurial led SMEs in an urban context; and to utilize the results of this study to provide direction for further study and analysis related to entrepreneurship and private enterprise development in China.

Chinese Entrepreneurial Motives

The "mixed socialist economy" which strives to blend state and private enterprise seems to be encouraging entrepreneurial thinking in China. The data suggests that Chinese entrepreneurs are motivated by the need for personal achievement and the desire to make a direct contribution to the success of an enterprise. To have fun was the primary motive. Table One shows that family security also appeared as a central motivating force behind entrepreneurial activity.

Chinese entrepreneurs indicated an eagerness to make better use of their training and skills, and to continue learning. There is a strong drive to achieve a personal sense of accomplishment, to foster family well-being, and to develop new skills. These findings appear to identify important components of the Chinese value system. Confucianism, the major doctrine in China, which encourages continuous self-improvement, hard work and diligence, seems to have a substantial impact on entrepreneurial reasons and motives.

These findings support the work of M. Weber who linked work ethics to small business development, (28) and D. McClelland, who connected the need for achievement to entrepreneurial development. (29) The data further validates the work of others who set forth the theory that Chinese cultural orientations rooted in Confucianism were fundamental in shaping entrepreneurial orientation. (30)

Although this analysis is descriptive in nature these basic findings provide an empirical foundation from which to develop further analysis. These findings suggest (see Table One) that Chinese entrepreneurs from the Wuhan region appeared to be motivated by the need for independent-based achievement and continuous personal development around a family focus.

Gender, Age, Education and Experience

Table Two illustrates the average age of Chinese entrepreneurs was approximately 37. Male entrepreneurs tended to be both older than the average, and around three years older than females. Survey results suggest that entrepreneurship is not exclusively a male-based activity in central China. Almost one-third, 27 percent of the entrepreneurs surveyed, were women. Under Communism, women have been encouraged to participate in work activities and are fairly well integrated into the economic system. State-owned enterprises actually maintain special "Women's Commissions" which share offices and activities with enterprise unions. (31)

The findings suggest that entrepreneurial development is taking place across gender lines. The fact that female entrepreneurs tended to be plentiful and considerably younger may indicate the emergence of a new enterprising class of young Chinese women.

The findings are parallel to those of a 1997 study that documented similar patterns among new Romania entrepreneurial led firms. In a study of 410 Romanian enterprises 29 percent were found to be women who are slightly younger with less education. (32)

With an average of 12.9 years of education, it does not appear that Wuhanian entrepreneurs have much formal training beyond high school. Female entrepreneurs were found to have an even lower level of education with an average of 12.4 years. The average number of years of business experience was 8.3, which suggests that these entrepreneurs were successfully self-employed over an extended period of time. Men were found to have slightly more (see Table Two) business experience than women, and to have considerable more work experience-a difference of almost 4 years.

These findings indicate that women are playing a leading role in the development of entrepreneurial SMEs in the Wuhan region. Although they tended to be younger, have less experience and education, they appear to represent a new emerging class of entrepreneurs. Further empirical research centered on the role of women entrepreneurs in China is thus called for to better understand this important phenomenon.

Entrepreneurship and Enterprise Formation

The late 1980s represented a period during which the seeds of entrepreneurial spirit began to take root in central China (see Table Three). Although the 1982 constitution established the private sector as a legitimate economic complement to the socialist economy the results of the survey from the Wuhan region suggests that only from 1988 onward did entrepreneurship begin to be viewed as a favorable occupation.

The decade of the 1990s with the consumer revolution and advent of the Internet seemed to foster the ideas of starting a new private enterprise. This seems to concur with research that reported the rapid commercialization of consumption during the 1990s broke the monopolies that had previously cast urban consumers in the role of supplicants to the state. (33) Entrepreneurs began to identify profitable niches where they could earn more income. Inland urban regions like Wuhan began to rely on private enterprise development to improve living standards. The decrease toward the end of the 1990s could be the result of the Asian economic crisis and anti-Western sentiments related to the Yugoslavian crisis.

There appears to be a lag time between the idea of starting a business and the actual creation of a functioning enterprise. Between 1988-1990, 25 percent of the respondents indicated they aspired to start their own business, but only 5.4 percent actually did (see Table Three). Business start-ups seemed to really pick up during the mid- to late-1990s when 69.6 percent of those entrepreneurs surveyed indeed started new entrepreneurial SMEs. These findings seem to correlate to the average of 8.3 years of business experience documented in the previous section.

Business Type

Two types of business activity-retail (35.7%) and computer hardware/software (17.9%)-were found to dominate the sample. These two indices represented 53.6 percent of new entrepreneurial led start-ups in the Wuhan area. Table Four provides a ranking and percentage breakdown of the various enterprise types.

There are many examples of private restauranteurs or subcontractors (chengbao) which have replaced state canteens, as well as the development of leisure and entertainment Businesses. (34) The domination of retail activity found in the Wuhan area seems to be further evidence of the hustling entrepreneurial-led private enterprise sector that is focused on consumer markets.

The advent of the Internet, mobile telephones and personal computers has created a flurry of entrepreneurial activity around computer hardware and software markets. Chinese officials opened the Internet to the public in 1996 (a time period, which had the largest number of new business startups: see Table Three). The China Network Information Center (CNNIC) estimated 16.9 million Internet users by June 2000, up from a mere 600,000 in 1997. (35)

Because many Chinese actually build their computers at home, private entrepreneurs are most likely providing the technical components such as parts and supplies. Another example of entrepreneurial-based activity related to the Internet can be found in Internet connections. By late 1999 520 private companies held licenses as Internet service providers.(36) Consequently part of the sample data may encapsulate this type of activity.

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