Source: Media Outreach
HONG KONG SAR – Media OutReach – 1 August 2023 – The unprecedented socio-economic changes brought on by the COVID-19 pandemic has changed the business landscape around the world and in China. At the same time, pandemic-related challenges spurred the emergence of new technologies. Entrepreneurs actively responded to the rapid economic changes by coming up with innovative solutions and adaptations. For instance, robots delivering food to students’ dorms have been commercialized, and the check-out process is run by Artificial intelligence (A.I.). Additionally, A.I. can also be used to write stories and even computer programmes. These innovations facilitated contactless transactions and logistics, making life easier during and after the lockdowns.
The tremendous amount of socio-economic changes in the world since COVID-19 has created formidable challenges for entrepreneurs.
< >It was also during 2022 when Generation Z, better known as “Post-’00s” in China, came of age and was ready to enter the workforce. Despite the record number of unemployment among the youth due to the economic turbulence, the Gen-Z also showed an unprecedented level of interest in starting their own business from scratch.
On Bilibili, a video platform popular among Gen-Z Chinese, entrepreneurship-related content racked up 830 million views in 2021, up 77% over the previous year. The majority of the viewers expressed enthusiasm for pursuing non-traditional careers or seeking alternatives to full-time employment.
In addition, continuous rural migrations to China’s urban centres over the years further fueled the rise of the startup culture where risk-takers contributed to the rapid development of innovations in the marketplace.
With such drastic transformations in society, work and business landscape, the driving forces behind entrepreneurship have taken on a much different nature than those shaping entrepreneurship in the previous generations.
In this CUHK Business School Research White Paper, we will examine some of the questions surrounding the rise of a new brand of entrepreneurial culture in China. First of all, in light of the propensity of the Gen-Z to found startups without any prior experience working and while holding full time jobs, what can they do to increase the chances of keeping their startups afloat and ensuring long-term success?
Leveraging Multi-faceted Experience for Entrepreneurial Success
Our study examines various factors that contribute to entrepreneurial success, to examine how crucial it is that entrepreneurs have a wealth of experience under their belt as opposed to excelling only in product design and innovation.
Compared with novices, experienced entrepreneurs turned out to have the ability of shifting between the role of an inventor and that of a businessperson strategically, so they can see the big picture–or the proverbial forest–rather than the trees.
Our findings suggest the benefit of leveraging the holistic capability of experienced entrepreneurs at the start of a new business venture, such as hiring them as mentors. They can guide the less experienced entrepreneurs in seeing the big picture and thus avoid the inherent blind spots in starting a business from scratch.
The lack of previous work experience can be a liability for young entrepreneurs.
< >Once a startup company is established, what should entrepreneurs focus on to get it off the ground and expand its market reach and profitability? In view of the shifting political landscape and institutional changes in China over the years, entrepreneurs may need to adjust their strategies according to the current stage of institutional changes.
When China was in the early stage of the transition from a planned economy to a market economy, entrepreneurs who adopt relationship-based strategies can promote company growth, while innovation-based approaches are more successful in the late stage. But how about the intermediate stage of marketisation? We found that being a part of a university research or science park, or collaborating with local government institutions would be helpful.
One of the most drastic transformations in Chinese society as a result of institutional change is the migration of the rural population to the country’s sprawling cities. Along with the migration came the rise of entrepreneurism in urban centres. A fascinating phenomenon emerged: Those who came from rural areas turned out to be among the most successful entrepreneurs in China’s history. What are the factors contributing to this? How can we leverage those factors to continue nurturing successful entrepreneurs?
Urban Migration Boosts Entrepreneurship in China
We found that rural migrants who studied in big urban universities are more willing to take risks than their urban counterparts. Among the non-entrepreneurs of the alumni we surveyed, only 36.1 percent of rural migrants considered entrepreneurship too risky, whereas 45.8 percent of urban dwellers thought it too risky. Among the entrepreneurs, the percentage is 7.4 percent for rural migrants and 19 percent for urban dwellers.
The stronger risk-taking attitude among rural migrants can be explained by the sense of “anonymity” and the resulting freedom they experienced after moving to the big cities.
As our research shows, rural migrants with a university education exhibit a positive risk-taking attitude in their entrepreneurial approach. It can be advantageous for companies to recruit them and leverage their valuable qualities of an entrepreneurial mindset in order to innovate and build successful and sustainable companies in the long run.
Lastly, for the younger generation who grew up in business families found by first-generation entrepreneurs, what impact does the changing socio-economic landscape have on their career choices?
Compared to their parents, the younger generations of enterprising families face more complex choices as the idea of a “lifelong career” has been shaken. In another study, we applied the “boundaryless career” concept to understand family entrepreneurship. We found that young people today can switch roles, rather than only choose “staying home” or “breaking free.” For example, they can work outside the family to avoid politics and pressure, but remain opportunistic and may join the family business for brief windows.
As the younger generations tend to forge their own paths, family businesses can no longer expect the heirs to continue their legacy with certainty and must nurture them differently.
In 2023, changes in the socio-political realm will continue to sweep through both China and the world. As we have seen, institutional and environmental changes are intrinsically connected to how companies can maximise their marketisation efforts and their profitability. Entrepreneurs will benefit from being acutely aware of these ongoing changes and adapting their business strategies to them.
Learn more: https://cbk.bschool.cuhk.edu.hk/research-whitepapers/a-handbook-for-the-modern-entrepreneur/< >
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