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Grads in China not taking the plunge
Publication Date : 14-10-2013
He jumped through hoops to land a cushy job at a state-owned enterprise, but Li Dong, 26, gave it up in 2010 to pursue his dream of becoming his own boss.
With capital of 60,000 yuan (US$9,802) - half from his savings and the other half borrowed from friends - the Inner Mongolia native started a business providing services and support to coal mining operations in the northern region after a year at a government-linked insurance firm that paid him 60,000 to 70,000 yuan ($11,436) yearly.
"It's competitive in government jobs too. If I put that hard work into my own firm, I can achieve more. It's a gamble, tougher, but hopefully I'll get more out of it," he told The Straits Times.
His entrepreneurial spirit is, however, increasingly rare among China's university graduates these days.
While they were once gutsy risk-takers who plunged into the business world as China's economy boomed over the past 30 years, many of China's young today are flocking to jobs in the public sector, lured by a higher social status, stable income and better welfare benefits.
Education research firm MyCos found in a June survey that only 2 per cent of Chinese university graduates had plans to start a business. The high failure rate - 70 per cent of those who took the plunge saw their business fold within three years - might be part of the cause.
The problem of declining entrepreneurial spirit among graduates has captured the attention of even China's Premier Li Keqiang and its richest man, Wang Jianlin.
During a visit to the Lanzhou University in Gansu province in August, Li urged graduating students, who are facing an "unprecedented challenge" in finding jobs due to the record seven million graduates this year, to start their own businesses as he pledged government help.
Wang of the Dalian Wanda conglomerate lamented in a recent interview how a fund set up by him and other businessmen to support young entrepreneurs has struggled to disburse its money due to a lack of candidates.
"China's biggest problem is that there is much more emphasis on government officials rather than entrepreneurs," he said.
Experts cite various reasons stifling graduates' desire to "dive into the sea", or xiahai, a Chinese expression referring to starting one's own business, which many of their parents did, powering China's growth in the 1990s.
First, health care, pensions and the occasional housing benefits public employees get are prized in a society with a poor social safety net. The "iron rice bowl" nature of such jobs is also a draw.
As a result of these perks and a surge in the number of university students entering an intensely competitive job market, more graduates are signing up for the national civil service exam. Last year, more than 1.2 million took the exam for the 12,901 job vacancies, both figures setting record highs. Millions more took the provincial exams with similarly little chance of being hired.
A survey last year by employment firm ChinaHR.com also showed that government and public institution jobs were the most popular, edging out financial sector jobs for the first time since the survey began in 2008.
The lack of capital and resources are also obstacles, experts added. Other factors include the inflexible education system that stifles creativity and the poor private business environment.
Agreeing, Li Dong revealed how he had to work 20-hour days when he first started and broke even only in August this year.
Beijing-based University of International Business and Economics professor Chen Shengjun said restrictions and monopolies in sectors such as the financial and energy industries make it hard for budding entrepreneurs.
"People make rational decisions so the problem lies partly with an environment that doesn't give them incentives to take risks," he added.
Such obstacles have killed the entrepreneurial dreams for some like Joy Li, 25, who flirted briefly with the idea of starting a floral business after graduation from university.
But the hefty capital and bureaucratic hassle proved too great and she decided to be a civil servant instead, working for the Hebei government's environmental arm.
"My parents said I should just work with the government first anyway to gain some experience and to make contacts," she said.
Some experts say this trend could hurt China's plan to use innovation to drive its next phase of economic growth.
Moreover, the risk is that China's best and brightest are either leaving the country in search of greener, more business-friendly pastures or being underutilised at government jobs, they add.
Dr Wang Huiyao, director-general of Beijing think-tank Centre for China and Globalisation, said: "If many graduates don't create new enterprises, it will be difficult for China to create new job opportunities as well. Without entrepreneurs, it is also hard to foster innovation."
Beijing, cognisant of this risk, has taken steps to rekindle entrepreneurship. Measures have been rolled out with new graduate entrepreneurs receiving a two-year tax waiver. The government has also promised assistance such as training subsidies and small loans.
China's elite universities, such as Tsinghua, have also set up "incubator programmes" to help entrepreneurs develop commercial applications for research conducted at the universities, the Wall Street Journal reported.
Still, Wang urged that more be done for budding entrepreneurs such as expanding pro-business policies, mentorship programmes, or partnering young graduates with successful businessmen.
Chen thinks the key lies in making failure more acceptable in China. "The current mindset is that if you fail, you are doomed," he added. "We need to change that and build a society that does not judge failure harshly."