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Will Entrepreneurship Be China’s Next Growth Engine?



Should China want to remain an international economic superpower, it will need to substitute its current growth model – one largely based on abundant, cheap labor – with a different comparative advantage that can lay the foundation for a new, more sustainable growth strategy.

Chinese policymakers are hoping now that an emerging entrepreneurship may fit that bill, with start-ups and family-run enterprises potentially becoming a major driver of sustainable growth and thus replacing the country’s current economic model. In 2014, international conferences on private entrepreneurship and innovation were organized all across China: The China Council for the Promotion of International Trade organized its first annual Global Innovation Economic Congress, while numerous innovation-related conferences were held at well-known Chinese universities such as Tsinghua University, Jilin University andWuhan University.

New Growth Model Needed

Although China still ranks among the fastest growing economies in the world, the country’s growth rates have decreased notably over the past few years. From the 1990s until the 2008 financial crisis, China’s GDP growth was consistently in the double digits with only a brief interruption following the Asian financial crisis of 1997. Despite a relatively quick recovery after the global financial crisis, declining export rates resulting from the economic distress of China’s main trading partners have left their mark on the Chinese economy. Today’s GDP growth of 7.8 percent is just half level recorded immediately before the 2008 crisis, according to the latest data provided by the World Bank.

This recent slowdown in China’s economic growth has naturally been a source of concern for the government. A continuation of the country’s phenomenal economic growth is needed to maintain both social stability and the Communist Party’s legitimacy. Sustainable economic growth has thus been identified as one of China’s key challenges for the coming decade.

That challenge is complicated by demographic trends, which are set to have a strongly negative impact on the Chinese economy within the next decade. Researchers anticipate that as a consequence of the country’s one-child policy, introduced in 1977, China will soon experience a sharp decline of its working-age population, leading to a substantial labor force bottleneck. A labor shortage is likely to mean climbing wages, threatening China’s cheap labor edge. The challenge is well described in a recent article published by the International Monetary Fund.

Replacing the Cheap Labor Strategy

Entrepreneurship is widely recognized as an important engine for economic growth: It contributes positively to economic development by fuelling job markets through the creation of new employment opportunities, by stimulating technological change through increased levels of innovation, and by enhancing the market environment through an intensification of market competition. Entrepreneurship and innovation have the potential to halt the contraction in China’ economic growth and to replace the country’s unsustainable comparative advantage of cheap labor over the long term. As former Chinese President Hu Jintao stressed in 2006, if China can transform its current growth strategy into one based on innovation and entrepreneurship, it could sustain its growth rates and secure a key role in the international world order.

Indeed, increasing levels of entrepreneurship in the Chinese private sector are likely to lead to technological innovation and productivity increases. This could prove particularly useful in offsetting the workforce bottleneck created by demographic trends. Greater innovation would also make China more competitive and less dependent on the knowledge and technology of traditional Western trading partners such as the EU and the U.S.


In fact, China has long been preparing the ground for entrepreneurial revolution. When Deng Xiaoping became chairman of the CPPCC National Committee in 1978, he ended China’s era of economic isolation. The country de-collectivized its agriculture, opened up its economy to foreign investors, and liberalized its markets. Investment spilled over from Hong Kong and Macau and pushed the Chinese economy into the international system. The establishment of China’s special economic zones (Shenzhen, Zhuhai, Shantou and Xianan) in 1980 attracted foreign direct investment and encourage private business. There was no shortage of Chinese entrepreneurs willing to take advantage of the new opportunities. According to the CEO of a copper refinery in Zhejiang Province, “the Chinese people really exceeded the government’s expectations.”

Starting in the 1980s, the Chinese government actively encouraged entrepreneurship across the country, by introducing the first patent law, allowing state-owned enterprises (SOEs) to go bankrupt, and creating a more investor-friendly environment for private entrepreneurs. Contrary to the popular belief that China’s miraculous economic growth over the past three decades has been exclusively driven by its SOEs, the emerging private sector has played a major role. Examples of China’s most successful entrepreneurs include Jack Ma (Alibaba), Ma Huateng (Tencent), Robin Li (Baidu), and Lei Jun (Xiaomi smartphones).

Although historically subject to the dictates of the central government, China’s entrepreneurs have been grantedincreasing self-determination and independence in recent years. The government has officially recognized the rising importance of entrepreneurship to China’s future economic success. Chinese Premier Li Keqiang, for instance, recently pleaded for entrepreneurship to be encouraged and for start-up businesses to be given support. More specifically, he called for support to be given to entrepreneurial students, a measure which could play a role in fighting youth unemployment in China. In recent years, China has also given higher priority to the development of the R&D and high-tech sector, investing a larger portion of its budget in R&D, increasing its high-tech output, and encouraging Chinese students to pursue engineering degrees.


Still, despite these recent steps, the Financial Times writes that “entrepreneurial education remains a relatively new concept and practice, particularly in China’s university sector.” More “entrepreneurship education is needed” and “the country’s business schools should adopt western tactics and have start-up labs.” The incompatibility of classical Confucian values which laid the foundation of the Chinese culture such as “obedience,” “respect for authority” and “emotional control” with the entrepreneurial spirit constitutes one of the key challenges in entrepreneurial education.

Moreover, there are still a number of obstacles for entrepreneurs that make private investments in China riskier than it is in most Western, high-income countries. Because of the “heavily state-based, government-run legal system” and the relatively high corruption levels in the Chinese court system, private entrepreneurs who lack Communist Party connection are still disadvantaged in many aspects compared to SOEs and politically well-connected private investors. For example, a survey of court proceedings in China reveals that small, private enterprises usually lose against large state firms. Also, starting a business is still relatively bureaucratic and time-consuming. It takes 38 days to complete all the required procedures in China, compared to an average of 5.7 days in OECD countries.

Another major challenge is the funding shortage in the private entrepreneurial sector. While the government has sought to give budding entrepreneurs access to funding in order to support Chinese start-up businesses, financing remains a key bottleneck. As the Beijing correspondent of Time magazine pointed out in a report released in 2009, credit standards are often too high to be met by small business. Moreover, state-owned banks often give preference to SOEs and partially state-backed companies when it comes to issuing commercial loans. There is, however, reason for optimism, with recent promises made by both former premier Wen Jiabao and current president Xi Jinping to facilitate access to credit for private entrepreneurs and to create a more investor-friendly lending environment.

In early 2006, Hu Jintao said that “China will be built into an innovative nation in about fifteen years.” Today, about 8.5 years later, China still has a long way to go before it could be called an innovative nation; its dependence on cheap labor remains critical to its economic success. Given the recent economic slowdown and expected demographic changes, the Chinese government is under pressure to accelerate the country’s transition to an entrepreneurial and innovation powerhouse. With both social stability and the Party’s political legitimacy are at stake, this could prove to be one of the government’s most pressing challenges over the next few years.

by Julia Ebner, a postgraduate student at Peking University and London School of Economics. Julia has previously written for The Diplomat.


Women on Top in Tech – Daphne Ng, CEO of JEDTrade



(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Daphne Ng is the CEO of JEDTrade, a blockchain technology company focused on trade, supply chain, and financial inclusion projects in ASEAN. She is also the Scretary-General at ACCESS and Exco. of Singapore Fintech Association

What makes you do what you do?
I was introduced to blockchain technology in 2016 after I left my corporate banking career after 10 years. It was my mentor who first got me interested in this technology, which I then went on to delve further into, on its potential applications in the lending and trade finance space – domains where I came from.

How did you rise in the industry you are in?
Being in the space for 2 years and actively involved in the ecosystem, I was able to bring on the projects, network and a good degree of thought leadership in this vertical. Early on in the startup journey, our team faced many challenges. And to me, the key to rising above failures are two essential factors – resilience and support. While resilience is innate, I received a lot of help be it in terms of connections or advice. ‘Nobody succeeds without help’ rings very true for me.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
From the start, I focused on my domain expertise in trade finance and the application construct of how blockchain and DLT can be applied to these use cases. Also, my strategy from the start was to build a technology company made up of 80% tech and engineers, which is also our key competitive advantage today. At the end of the day, deliverables are about strategy and execution, which includes building and leading an ‘A’ team.

Do you have a mentor that you look up to in your industries or did you look for one or how did that work?
I have many mentors, which includes our company advisors (all of whom are well-known in this industry) and mostly informal mentors I meet via my connections, and on various occasions and circumstances. Creating opportunities also means putting myself in the right place, at the right time. And in my case, these were mostly organic and genuine friendships formed from the initial connection.

How did you make a match if you and how did you end up being mentored by him?
To me, a match in values is very important. It also takes humility to ask for help and be willing to listen to advice, which is important in order for mentorships to be successful – be it formal or informal.

Now as a leader how do you spot, develop, keep, grow and support your talent?
I love this question! I am passionate about building strong teams and helping my people grow. I abide by the 3Rs when identifying talents: resourcefulness, resilience and right values. And then I invest in the ‘potential’ and this means giving them room to lead, make decisions and take risks.

Do you consciously or unconsciously support diversity and why?
My support of diverse talents, skillsets and characters can be seen in the make-up of our core team – all helming specific roles and each bringing their own value to the table. We need the sum of all parts to build a great company.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb?
Great leaders emerge in times of failures and challenges, never abandoning the team, and always putting the team’s interests before her own. And I consciously live by these mottos every day.

Advice for others?
My advice to other entrepreneurs: be resolute and dare to be different. If you are going to follow others, then you will end up on the same path as them. No right or wrong; but I would rather chart my own path. This June, we are officially launching our blockchain project, Jupiter Chain (, which have garnered much interest in the industry, even before we made it public. We believe this project is the epitome of marrying innovation with practical implementation, and we want to be the first to truly operationalize blockchain for our ecosystem projects in this region.

If you’d like to get in touch with Daphne Ng, please feel free to reach out to her on LinkedIn:

To learn more about JEDTrade, please click here.

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Callum Connects

Jace Koh, Founder of U Ventures



Jace Koh believes cash flow is the lifeblood of your business. Understanding it will enhance your ability to run and manage your business.

What’s your story?
My name is Jace Koh and I am the Founder of U Ventures. I’ve always been inclined towards investment and entrepreneurship. I’ve played a hand in starting businesses across these industries – professional services, cloud integration, software and music. I believe that succeeding in business is tough, but that’s what makes the rewards even sweeter.

What excites you most about your industry?
Everything excites me. These are my beliefs:

  • Why is accounting important?
    The accounting department is the heart. Cash flow is like blood stream, it pumps blood to various parts of the body like cash flow is pumped to various departments and/or functions in a business. It is vital to the life and death of the business.
  • Is accounting boring?
    Accountants are artists too. They paint the numbers the way they want them to be.
  • What makes a good accountant?
    A good accountant can tell you a story about the business by looking at the numbers.
  • Why is budgeting and projection important?
    Accountants are like fortune tellers, they can predict the numbers and if you wish to understand your business and make informed decisions, feel free to speak to our friendly consultants to secure a meeting.

What’s your connection to Asia?
I was born and raised in Singapore, and here’s where I want to be.

Favourite city in Asia for business and why?
Singapore is my favourite city. We have great legal systems in place, good security and people with integrity. Most importantly, we have a government that fosters a good environment for doing business. I recently went for a cultural exchange programme in Hong Kong to learn more about their startups. I found out that the Hong Kong government generally only supports local business owners in terms of grants. They’ve recently been more lenient and changed the eligibility to include all businesses that have at least 50% local shareholding. But comparing that to Singapore, the government only requires a 30% local shareholding to obtain government support. In the early days of starting a business, all the support you can get is precious. It’s great that we have a government that understands that.

What’s the best piece of advice you ever received?
The best time ever to plant a tree was 10 years ago as the tree would have grown so big to provide you with shelter and all. When is the next best time to plant a tree? It is today. Because in 10 years time, the tree would have grown big enough to provide you shelter and all.

Who inspires you?
Jack Ma. His journey to success is one of the most inspiring as it proves that with determination and great foresight, even the poorest can turn their lives around. I personally relate to his story a lot, and this is my favourite quote from him, “If you don’t give up, you still have a chance. Giving up is the greatest failure.”

What have you just learnt recently that blew you away?
I’ve faced multiple rejections throughout my business journey, and recently came across a fact on Jack Ma about how he was once rejected for 32 different jobs. It resonated very deeply and taught me the importance of tenacity, especially during tough times.

If you had your time again, what would you do differently?
Nothing. I live a life with no regrets. Everything I do, regardless of whether it is right or wrong, happy or sad, and regardless of outcome, it’s a lesson with something to take away.

How do you unwind?
I love to pamper myself through retail therapy and going for spas. I also make a conscious effort to take time off work to have a break outside to unwind as well as to uncloud my mind. This moment of reflection from time to time helps me see more clearly on how I can improve myself.

Favourite Asian destination for relaxation? Why?
Taiwan! Good food with no language barriers and the people are great!

Everyone in business should read this book:
I don’t really read books. Mostly, I learn from my daily life and interactions with hundreds of other business owners. To me, people tell the most interesting stories.

Shameless plug for your business:
We’re not just corporate secretaries, we’re “business doctors.”
U Ventures is a Xero certified advisory firm that goes beyond traditional accounting services to provide solutions for your business. You can reach us on our website:

How can people connect with you?
Converse to connect. You can reach me via email at [email protected] or alternatively, on LinkedIn here:

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:
Download free copies of his books here:

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