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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 – Laina Raveendran Greene, Co-Founder at Angels of Impact



(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.)

Here is our interview with Laina Raveendran Greene, Founder of GETIT Inc. and Co-Founder of Angels of Impact, an impact network focused on women social entrepreneurs helping to alleviate poverty. She is an entrepreneur and social impact investor, whose passion is female empowerment, and enabling women to be key agents to help alleviate poverty in Asia.

What makes you do what you do?
As a minority female Singaporean from relatively humble beginnings, I have never taken anything for granted. I learnt early on that I have to work doubly hard to overcome the “glass ceilings” but if I persevere, I can succeed. That is why I chose to focus on helping women-led social enterprises as I know how hard things are for them and I hope to make things a little easier for them.

How did you rise in the industry you are in? 
I rose by being courageous enough to push against the “glass ceiling” and seizing opportunities open to me no matter where they were. Early on, I realized I would have better opportunities overseas, so I worked in many countries, including Switzerland, USA, and Indonesia and used these opportunities to learn and open new avenues for myself. I now come back to Singapore with many more networks and skill sets.

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)?
Yes, as a minority Singaporean, it may appear that I am not the usual leadership demography in Singapore. In my own way, however, I think I have amassed my own international accolades and work experience such as serving as the first Secretary General for the Asia Pacific Internet Association, CEO of one of the first few tech startups in Singapore in the early 90s, being on the International Steering Committee of the Global Telecommunication Women Network, and most recently selected as one of the 2nd cohort of Edmond Hillary Fellows in New Zealand.

I am now moving to the next phase of using these networks and skills to help other women to social enterprises, which seem to be exactly what I want to do in my next phase of life (after more than 25 years of global work experience).

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? 
It was harder in my younger days, as one of the few women in tech to find mentors but today I do.  Men were reluctant to mentor me for fear of rumors.

How did you make a match if you did, and how did you end up being mentored by him? 
I found my mentor when I was taking an executive program at Stanford. He was one of the keynote speakers and I went to talk to him. Intrigued by my background, when I asked if he would mentor me, he said yes. I meet with him at regular intervals and I always ensure I have put his ideas to test before reporting back to him. I feel that I value his time if I do actually listen and act on his advice.

Now as a leader how do you spot, develop, keep, grow and support your talent? 
The key qualities I look for is an eagerness to learn and humility to be open to new ideas. Also, when asked to be a mentor, I usually give homework and see how proactive they are. Only the ones who do their homework, take the advice and act on it, are the ones I actively mentor.

Do you consciously or unconsciously support diversity and why?
I consciously and unconsciously support diversity, as I see the importance of diversity on true innovation. You never get anything new, talking to like-minded people. It is always good to have different perspectives to create new ideas. I am also an active supporter having faced racial and gender discrimination in my life and want to ensure that others are given a better chance.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb? 
A great leader to me is one who has empathy and humility, and a genuine spirit of service. Today’s challenges such as climate change and social injustice, requires many players to apply their knowledge and skills to solve and have a sense of ownership in solving these issues

Advice for others?
The only advice I can think of is do what you are strongly passionate about. You need to persevere to succeed so it helps if you truly care about the endeavor you are working on.

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

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Callum Connects

Denise Morris Kipnis, Founder & Principal of ChangeFlow Consulting



Denise Mossis Kipnis’ curiosity in people and the world, lead her to set up ChangeFlow Consulting.

What’s your story?
I’m driven by curiosity. Having been the only one in a room who looks like me for most of my life, I developed a curiosity about who stays, who leaves and who thrives in minority/majority situations including when and how connection and collaboration happen. I was a systems thinker long before I knew what that was, always asking why and so what; and seeing the pieces, the whole, and the places in between. So helping people and organisations move through the complexity of transformation feels natural to me.

What excites you most about your industry?
I see change and inclusion as two sides of the same thing; I don’t practice one without the other. Some people see change as death, as loss, as exhausting. And it can be. But I see in the work I do as an opportunity for something new or hidden to emerge. When an organisation understands that it is first a group of people, who themselves represent and belong to groups of people, and it begins to tackle what it would mean to understand and learn from all that talent, all that diversity, to have them all working for and not against the organisation, to truly unleash all that their people have to offer; that’s magic.

What’s your connection to Asia?
Change and inclusion are personal values as well as professional strengths. For me, living and working outside of the States was a bold experiment to see whether any of the stuff I’d learned about change and inclusion would work outside of the US. My husband and I targeted Asia specifically: it would be the greatest contrast, culturally speaking, for me; and a unique career springboard for him.

Favourite city in Asia for business and why?
Although I’ve practiced in other cities, I am biased towards Singapore. In some ways it’s what Los Angeles is to the rest of the United States, a microcosm of sorts. The regional/global nature of it means that so many different nationalities and cultures are represented. As a result of this mix, you never know what you might get. In some situations, cultural dynamics are obvious, sometimes subdued. The variability is compelling.

What’s the best piece of advice you ever received?
“Never ask anyone to do anything you wouldn’t do yourself.” Michael Rouan.

Who inspires you?
Often it’s a “what” not a “who.” I can get inspiration from a passage in a book or a situation in a movie, as well as a turn of a phrase or watching people interact. I often make the biggest connections between the various threads I’m working on when I’m sitting in someone else’s event.

What have you just learnt recently that blew you away?
I’m honestly not blown away by much. Instead, I’m struck how circular things can be: ideas often come back around with a slightly different twist and I watch the way it shakes things loose for people. I recently sat through a workshop on Self as Instrument, and despite being thoroughly versed already, I learned something. In preparing for a panel on design thinking, I unearthed a new language to describe things.

If you had your time again, what would you do differently?
You’ve caught me at a good time. I’m sitting in appreciation and gratitude for all my experiences, because I wouldn’t be who I was today if all that has happened, didn’t. And yet one thing comes to mind: It wasn’t until I redesigned my website two years ago (shout out to Brew Creative!) that I realised I hadn’t made explicit agreements with my past clients as to what I could share publicly about our engagement, or whether I could use their logos in my promotional materials. In my business, confidentiality is so important, and yet I need to be able to talk about the work as reputation and experience leads to the next success, and so on. It turned out a lot of the contacts I had known had left the organisations where the work was done, so they couldn’t help at that point. So the practice I’m carrying forward is to get those agreements up front, and to make sure my relationships in client systems are broad as well as deep.

How do you unwind?
Science fiction, puzzles, wine.

Favourite Asian destination for relaxation? Why?
Home. I don’t travel to relax, I travel to learn and explore.

Everyone in business should read this book:
Built to Change, by Ed Lawler and Chris Worley. To my knowledge, it’s the first pivot from advising organisations away from stability and toward dynamism, from strategic planning to strategizing as an action verb; to blow up the traditions and rigidity that impede organisations from developing change capability.

Shameless plug for your business:
We’re taught that there are two kinds of people: those who see forests, and those who see trees. There is a third type, my type, and we see the ecosystem. Worms, climate, birds, the spaces in between. This is the perspective organisations need to be successful in solving complex problems and thriving in change.
ChangeFlow uniquely blends four disciplines (two of which are multi-disciplinary in themselves): organisation development, culture and inclusion, change management and project management.

How can people connect with you?
LinkedIn Company page:
Email: [email protected]

Twitter handle?

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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