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Why Are Rich Chinese Entrepreneurs Leaving China?

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Chinese entrepreneurs are leaving China. According  a survey, conducted by China Merchants Bank and Bain & Co., 27% of entrepreneurs worth over 100 million RMB have already emigrated and 47% of them are considering moving abroad.

The growing trend is nurturing resentment towards wealthy emigrants among Chinese citizens. And the recent exposure of a prominent businesswoman and member of the CPPCC (China’s political advisory body) Zhang Lan’s immigration further triggered controversy in Chinese society.

Economic insecurity

Chinese Entrepreneur Magazine  analyzed(video below):

Zhang Lan’s emigration triggered controversy in Chinese society. Screen capture from local news-report via Youku.

Chinese entrepreneurs all suffer from a lack of security. Once they emigrate to another economic system, they will be provided with new opportunities independent of the Chinese economy. The diversity lowers their risk compared to doing business only in one country(China) where policies can be unstable. Overall, it helps to enhance their sense of security.

ifeng.com, a prominent Chinese newspaper, shared similar opinion:

Honestly, Chinese society doesn’t provide citizens with a sense of security. Average citizens may think rich people feel safe because they don’t need to worry about social welfare; however, rich people in China feel even less safe. Recently, one of China’s richest men Liang Wengen said his property and life belong to the country and that the Party members’ wives are more beautiful. It seems a stupid thing to say, but it reveals his fear. How can an entrepreneur make such a statement about his property? Any entrepreneur knows clear property rights are essential for doing business.

Rigid Rules for Chinese Enterprises 

Huang Song, Secretary-General of Finance Industry and Development Research Center of Peking University pointed out a neglected reason behind the immigration:

There are many reasons why entrepreneurs choose to emigrate. Public opinion is usually concerned with two reasons: first, they do not have confidence in China’s future; second, they are trying to escape from something illegal they have done. But there’s a very important reason often ignored, that is, the large number of government restrictions and barriers to overseas investment and financing. First, due to the control of foreign exchange under the capital account, overseas investment by Chinese enterprises need to be approved by the Foreign Exchange Management Department. And although the investment polices have become more relaxed than the past, there are still a lot of limitations and financial investment is still strictly managed. Second, overseas investment has to be approved by the Development and Reform Department, which brings a lot of uncertainty to projects.

China’s financial system essentially only supports state-owned enterprises and large enterprises. For private enterprises and small and medium-sized enterprises there exist difficulties in financing: it’s difficult to get loans, and even more difficult to go public or issue bonds.

Yang Yongmin, GM of Offshore Incorporations Group Beijing Office echoed:

I’m not surprised that Zhang Lan emigrated to that Caribbean island. People who have a little knowledge about Chinese private companies know that it has nothing to do with whether Zhang loves the country or not. It’s because it’s easier for the company to go public overseas. There are so many stupid policies in China that inconvenience Chinese themselves and benefit foreign countries.

People’s Daily published a commentary suggesting following the Americans by implementing heavier taxes on rich entrepreneurs to prevent them from emigrating, the piece soon triggered netizens’ disagreement. Famous TV show host Meng Fei criticized:

This thinking is in the wrong direction. How many rich Americans choose to give up their nationality? What we need to consider is why so many officials, celebrities, rich people and famous scholars want to emigrate, not how to prevent them from doing so. If we don’t reflect on this problem, we can never keep them no matter how strict the rules might be.

Zhi Qiangli echoed:

Zhang Lan’s emigration is a slap in the face to the rigid system.

Also, there are a lot of rules and policies that make it difficult for Chinese private companies to go public but foreign enterprises are exempt from these policies. Perhaps chief editor of Workers’ Daily Shi shusi’s words bestsummarized the problems China needs to tackle in the next decade:

The controversy continues, patriotism aside; the result is a black comedy. As the boss of a private company, she couldn’t make her companies go public in China due to strict rules and difficulties with financing [esp. for restaurant chain business]; however, now that she has emigrated, she stands a better chance of taking her company public. Of course, the outcome is not perfect for China, but who’s responsible for this? The huge emigration trend is just a sign of China’s economic problems. Instead of blaming entrepreneurs, why don’t we promote the formation of consensus for reform and call for more respect for personal property rights, the rule of law and establishment of a just market environment in China?

Callum Connects

Agnes Yee, Legal & Compliance Recruiter of Space Executive

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Agnes Yee started Space Executive in Singapore, which is a hub for businesses in some of the world’s fastest growing economies.

What’s your story?
After graduation, I joined a design media company as a Business Development Executive, during the era when ‘reading a magazine online’ was unheard of. I believe that laid the foundation for being unfazed by rejections.

I fell into recruitment pre-GFC and rode the highs and lows in the early years. A decade later, I decided to set up my own recruitment company, partly because I could. I’m acutely aware of the face that being an Asian female in Singapore is sometimes a privilege, and that many women in the world are living a very different existence.
Thereafter, we joined Space Executive as part of a merger. I am currently the Partner of Space Executive, a recruitment company focused specialist disciplines, including Legal, Finance, Digital, Sales and Marketing and Change. We also run Space Ventures, a venture capital business, which invests in seed and pre-series A businesses.

What excites you most about your industry?
On a daily basis, we’re influencing how one spends a third of their day. It is interesting how the Internet has transformed the industry, and I’m excited to see how we can harness technology to bring us to the next phase of this business.

The VC is an extension of applying our skills and experience in reading people. We very much invest in the people as much as the idea. Being a native Singaporean, it’s been exhilarating watching Southeast Asia becoming a hotbed of ideas; and young entrepreneurs simply daring to dream.

What’s your connection to Asia?
I’m a born and bred Singaporean. I love that I speak both English and Mandarin, grew up playing with Indian friends and eating Malay food.

Favourite city in Asia for business and why?
Singapore for the low barriers of entry to set up a business, but has to be China (and Hong Kong) for their hunger and constant innovation.

What’s the best piece of advice you ever received?
青春不要留白 which translates to ‘Don’t waste your youth.’

Who inspires you?
Anyone who has gone against the grain.

What have you just learnt recently that blew you away?
It wasn’t recent but reading the article on https://waitbutwhy.com/2015/12/the-tail-end.html never fails to blow my mind how little time we have left. Charting our lives in weeks, and realising I only have enough time left to enjoy 60 Christmas turkeys, read 300 books (all if I’m lucky); and mostly, I’m left with the last 5% of the time that I spend in-person with my parents.

If you had your time again, what would you do differently?
I’m cognisant that every decision I made in life has brought me to where I am today, and I wouldn’t change one thing. But I’d really like to have had more time to travel.

How do you unwind?
Exercise and wine.

Favourite Asian destination for relaxation? Why?
Trekking any mountain in Asia. It brings us back to the most basic. To overcome elements of nature and our own mind.

Everyone in business should read this book:
Start with Why, Simon Sinek

Shameless plug for your business:
Space Executive started in Singapore, a hub for businesses in some of the world’s fastest growing economies. We assist organisations in accessing a targeted and specialised, and often times transient talent pool.

Out of Singapore, we have recruited across 14 countries; and have embarked on our global expansion plans with offices in Hong Kong and London this year, and US, Japan and Europe in the following years.

Space Ventures provides funding, management and financial guidance to young businesses with original ideas. We have invested in peer to peer lending platforms, credit scoring, social media education, and other start-ups spanning diverse industries. We are always interested in hearing more about new ideas.

How can people connect with you?
https://www.linkedin.com/in/agnesyee/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Callum Connects

Chrystie Dao-Szabo, Founder of iPayMy

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Chrystie Dao-Szabo founded iPaymy for Business – a secure and easy to use
platform enabling SMEs to pay rent, salaries, invoices, and even corporate tax using the credit cards they already have in their wallet today.

What’s your story?
I’m Chrystie Dao-Szabo, and I’ve worked as an international banker for over 22 years. During that time, I travelled through Asia, Australia and Europe, and everywhere I saw how my clients struggled with managing their finances and keeping cash around.

I wanted to use my experience to help them, but I also knew the solution they needed didn’t exist yet. This pushed me to give up on my secure career, and instead look into the innovative world of FinTech for an answer.

This is how I founded iPaymy – at its launch, a platform to help consumers pay their monthly expenses using their credit cards. We’ve grown a lot since, and today, iPaymy for Business is a platform that allows business owners to use their credit cards to pay for rent, salaries, invoices and taxes, freeing up their cash for business-critical operations.

What excites you most about your industry?
What excites me most about FinTech is it’s culture of constant disruption, thanks to cool and innovative products and services coming out every day.

What’s your connection to Asia?
I was born in Vietnam, grew up in Australia and worked in Asia, Europe and Australia. Being raised by traditional Vietnamese parents meant that deep down I was still an Asian at heart, so I have a strong connection with the region.

Favourite city in Asia for business and why?
Singapore of course. It’s easy to do business, English is the main language, and the infrastructures like public transportation are great. Also, the government supports local innovation in multiple ways, like giving grants for SMEs and FinTechs.

What’s the best piece of advice you ever received?
Keep giving, and one day you will receive.

Who inspires you?
My parents. My father had a successful business in Vietnam just before the fall of Saigon in 1975. After the war, my father was sent to a re-education camp for three years, which meant my mum had to bring up two young kids – a 3-year-old, me and my 4-year old brother on her own.

In 1980, we all fled Vietnam on a boat and arrived in Sydney, Australia via refugee camps in Indonesia and Singapore. There, my parents had to start over with nothing to their names and only AUD 50 given to them by the Australian government.
They went on to build several businesses in Australia!

What have you just learnt recently that blew you away?
The number of young and smart people who have carved out successful careers by founding their own startups (or joining really cool ones). When I was starting out my career, doing any of these was not a viable option; it was either working for an accounting firm, an insurance company or a bank.

If you had your time again, what would you do differently?
If I were starting out my career now, I would choose the path of joining a startup as you get to learn so much about running a business and how to assemble a winning team.

How do you unwind?
I like travelling to a beach or a resort destination and just relaxing by the pool or beach. I also like to unwind after work with a glass of champagne or wine, and a bowl of truffle fries.

Favourite Asian destination for relaxation? Why?
Thailand. I love the people and the spicy Thai food.

Everyone in business should read this book:
The E-Myth. It’s a book series that dismantles common myths about entrepreneurship in different industries.

Shameless plug for your business:
With iPaymy for Business, SMEs can pay rent, salaries, invoices, and even corporate tax using the credit cards they already have in their wallet today. SMEs love iPaymy because it works like a credit card, but pays like cash.

iPaymy’s secure and easy to use platform reliably delivers payments to vendors while freeing up cash and providing access to interest free credit. Forget the delays and aggravations that come with traditional SME financing options. Schedule recurring payments, manage invoices, set payment reminders, and monitor payment status all from one dashboard.

It’s never been easier for SMEs to meet monthly payment obligations while keeping cash available to fuel growth, bridge receivable gaps, and make immediate investment in the supplies, services, and expertise needed to drive a growing business forward.

How can people connect with you?
You can find me on LinkedIn or contact me by email.
My LinkedIn: https://www.linkedin.com/in/chrystiedaoszabo/
My email: [email protected]

Twitter handle?
https://twitter.com/ceedeees

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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