A recent survey, commissioned by China Central Television (CCTV) and Tsinghua University, has shed light on latest trends in wealth creation in China. The survey polled 3,200 people in 31 provinces, municipalities and autonomous regions, to create a bird's eye view of people's experience, wealth and outlook on life.

Seizing the right market opportunity

According to the survey, finding the right market opportunity lies at the heart of success in this area, along with market investigation and support from families and friends. This chronicles changes from back in 2005 when a similar survey listed the most important factors as being team work, capital management and risk control capacity.

Capital transfer and fierce market competition vied for the top position in leading to failure in venture capital operations but were tailed by poor business management. However, it seems that prospective businesspeople are wising up, with the number of people reporting financial losses from this factor accounted for less than 25 percent of those surveyed, down from 2005.

Those surveyed who were also successful in business attributed this good fortune to the following: familiarity with industrial operations (32.28 percent), mastering vital technologies (20.03 percent), and good knowledge of sales channels (19.92 percent); with adequate funding falling to a lowly 4.62 percent.

Gao Jian, a Tsinghua University professor, explained that most pioneers face a cash-flow problem in the early days of their ventures, but that a combination of knowledge and resources will help them overcome this problem and become better able to seize entrepreneurial opportunities.

Satisfaction index of wealth creation and index of wealth creation level

Southwest China's Chongqing Municipality topped the indexes for wealth creation across the scale with Shanghai finishing second for the level of wealth creation but dropped into eighth for satisfaction thereof. Rural provinces were unsurprisingly the hardest-hit with Ningxia Hui Autonomous Region, Gansu, Guangdong and Jiangxi provinces bringing up the rear. Surprisingly, Guangdong scored low in wealth creation satisfaction terms despite being one of the richest provinces in the country.

Gao attributed this factor to unreasonable expectations among the people whilst Chongqing, Sichuan and Yunnan with more realistic models on the ground scored high in satisfaction terms despite having only average enterprise environments.

Traditional processing industries

The survey also outlined five industries considered representative in pioneering, namely retail, industrial processing, agricultural processing, catering, and information service industries. Comprehensively, agricultural and industrial processing industries enjoyed the highest index for wealth creation level while the wholesale and retail industry lagged behind the rest.

This can be interpreted from an operational viewpoint since the agricultural and industrial processing industries rank high in terms of sales, profit margin, investment environment and government support, while the catering industry ranks lowest in terms of sales and service.

Public image also shines favorably on the agricultural and industrial processing industries which are seen as being law-abiding as opposed to the information service industry.

Prof. Gao pointed out they are also favored in terms of government policy and financial expenditure since the impact of traditional industries still dominates banking and governmental influence.

Entrepreneurs: young and starting from small business

People aged between 26 and 35 are the main body of the pioneering force, accounting for 50 percent of those surveyed, followed by those aged between 36 and 45 (24.28 percent), and then those aged between 18 and 25 (20.55 percent), each starting out with an initial fund of under 50,000 yuan (US$6,557).

The top three main factors in promoting business creation included: to fulfill life goals, profit and then survival, the survey said. The top five virtues sought by entrepreneurs were: honesty and faith, seizing opportunities, creation and innovation, having communication skills and being a risk-taker.

However, failures are lurking for every industry. Beyond the issues of funds and market supplies, the agricultural and industrial processing industries face a lack of up-to-date technology, the wholesale and retail industry consistently struggle with correct locations whilst the information services and garment processing industries wrestle with a dearth of technology and qualified personnel.

(China.org.cn by Li Jingrong, June 15, 2007)