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Private Businesses Need Help from Government

Money, the old saying goes, can't buy happiness.

Not even in eastern Zhejiang Province, where many people are rich because they were among the first in China to get involved in private business.

But according to a recent report by Beijing-based China Newsweek magazine, 80 percent of the entrepreneurs in the province don't want their children to take over their businesses, because according to them, doing business is the most stressful thing of all, and they want their children to avoid it.

Zhejiang has 1.6 million small businesses and 500,000 private enterprises. That translates into at least 3 million bosses or shareholders. Many of them seized the opportunities in the early 1980s, generating a great amount of wealth.

But now in their 40s and 50s, they still envy the iron-rice-bowl jobs at government departments and want their children to have the stable lives such jobs offer. Some even say that they only want those who can't make it to college to take over their businesses.

This offers a glimpse into how shallow the roots of Chinese entrepreneurship are. If more than 20 years of accomplishment isn't enough to cultivate a strong sense of pride among these entrepreneurs, we'd better reflect on what is wrong with this kind of entrepreneurship and take corrective action.

Let's start with the 1980s, when the country had just started to reform. The exhausting administrative approval processes and disrespect for contracts were just some of the factors wearing out businessmen.

The following years saw the influx of foreign enterprises. This, together with unequal treatment in terms of market access, land use, bank loans, taxation and foreign trade, has made it hard for private entrepreneurs to do business.

There is another explanation for their woes.

Chinese people are said to value "face" more than anything else. No matter how successful, a businessman has to lose face when dealing with the government because he's always beseeching the government to grant favours, be it his business' registration or a lawsuit. The respect and privilege they enjoy before their employees or peers crumble in front of officials. This feeling is reinforced by the disrespect certain government officials show them. Thus when choosing between money and face, many prefer the latter.

Such an explanation makes some sense. But business people are not beseechers, and the government is there to serve, not to grant favours. The government has been working hard to do a better job, but there is still a long way to go.

During this protracted process, the government should take the brave (and painful) action of shedding its privileges, and serve and guide. It should see to it that laws and regulations are not tampered with, and should work on improving the business environment and helping businessmen solve their problems. Only by doing so can the government win trust from business people.

A more mature form of entrepreneurship that emphasizes creating value - for employees, shareholders, clients and society as a whole - will be more longstanding. Therefore, understanding the needs and concerns of these first-generation entrepreneurs will be instrumental in the growth of value-oriented entrepreneurship in China.

The question of to whom the Zhejiang business people should hand their relay batons is attracting the attention of researchers. The inability to find heirs is reportedly hurting the performance of some firms. Some researchers believe those owners will sell their businesses.

Fortunately many business owners have put in unremitting efforts to ensure high-quality education for their children. With that and the funds they will get from their parents, the younger generation is expected to inherit the entrepreneurial spirit, and bring about something of their own to help China's humble locally-born enterprises to a better future.

(China Daily August 9, 2005)

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