Mainland Businessmen win New Honor for All Chinese Businessmen
Wu Jinglian
Senior Research Fellow of Development and Research Center of the State Council
Nanjing, China - 17 September 2001
1. The emergence of overseas Chinese businessmen on the world stage in the post-war years has attracted worldwide attention for their contribution to the economic growth of the countries they live in and the whole world as well. They have therefore won the reputation of "born-entrepreneurs". Unfortunately, for several decades in the second half of the 20th century, the business circles on the mainland had displayed little vigor and vitality, with economic progress there exclusively ascribed to the government behavior. Thus arose the paradox alleging that "Chinese are born entrepreneurs except those living on the mainland". Logically, all Chinese under heaven should have inherited the same historical traditions and life styles. As early as the first half of the 20th century, there emerged on the mainland a great number of national industrialists and businessmen, who had created the commercial prosperity of Shanghai and to some extent helped the rise of Hong Kong, turning the two into shining pearls in the global economy. Then, why could there be so great differences between the Chinese living on the mainland?
2. The lack of vitality of the mainland businessmen could be traced to the changes in their economic environment in the mid-195s. The centrally planned economic system established between 1955 and 1956 practically ruled out the existence of individual proprietorship and the possibility of independent activities of entrepreneurs. Even the State-owned commercial and industrial units as the sole survivals of such a system were treated merely as appendages to administrative organizations from the very outset and no longer possessed the nature of enterprises. Absence of enterprises in the real sense of the word resulted in the disappearance of the footing of the entrepreneurs, together with the soil for the survival of enterprising spirit. Thus in the twently odd years from the mid-1950s to the late 1970s, there were actually no enterprises worthy of the name on the mainland.
3. But things have changed in the course of another twenty-odd years of reform and opening-up. I would like to familiarize you with the fact that the group of entrepreneurs on the mainland has been flourishing vigourously with their enterprising spirit once again radiating brilliance.
The group of entrepreneurs on the mainland originated in the countryside. The rural contract and responsibility reform turned peasants into masters of their own family farm. It is on this basis that surged village and township industrial and commercial enterprises with a multitude of farmer-entrepreneurs coming to the fore.
In the early 1980s, individual enterprises in cities and towns hiring no more than two assistants and five apprentices became legalized. Thus appeared some township handicraft households and retailers engaged in retail business and long-distance transport of goods for sale.
In the mid-1980s, though constraints still existed in many fields like market access, private owners hiring over 8 employees were no longer illegal. This opened up more room for the expansion of private businesses
The emergence of professional executives and genuine entrepreneurs in the large-sized enterprises was still late due to the relatively low speed of reform in the state-owned enterprises (SOEs).
From then on until the mid-1990s, some entrepreneurs began to appear, yet the environment for their development was still not so desirable, which made the growth of entrepreneurs on the mainland quite slow. Entensive administrative intervention in economic activities led some entrepreneurs to playing the trick of money for power in following the old traditional commercial culture of colluding with official embezzlers. By the end of the 1990s, along with the gradual standardization of market and the intensification of anti-corruption drive, such upstart "entrepreneurs" began to decline one after another.
4. Approached from the perspective of policy, major breakthroughs took place in 1997.
At the 15th National Congress of the Communist Party of China the same year, the basic economic system of the country was defined as the one of "common development of multiple ownerships with the public ownership as the mainstay". Meanwhile, the new definition of "non-public ownership sector being an important component of the socialist market economy" replaced the old notion of "private sector being a supplement to the socialist public-owned economy". This symbolized that China's private sector being a supplement to the socialist public-owned economy". This symbolized that China's private sector of economy had entered a new stage of development.
The nationwide drive of "loosing control over and invigorating smalle and medium-sized SOEs" after 1997 transformed several hundred thousand of state-owned "enterprises" and commercial or industrial units under the jurisdiction of the local governments at the village, township and county level into genuine enterprises through reorganization or selling out.
Since 198, for the purpose of resisting the unfavorable impact of the Asian financial crisis and creating enough new job opportunities for hundreds of thousands of workers laid off from SOEs every year, the Chinese government has taken a series of measures to improve the operation environment for the private businesses, to kick-start private investment and to enliven the non-state sector.
Large-scaled SOEs, have accelerated the reform of realizing multiple stock ownership and erecting modern corporation system since 1999, thus creating favorable conditions for the modern entrepreneurs to come into prominence from the industrial and commercial corporations restructured from SOEs.
All this has resulted in the emergence of a large number of modern entrepreneurs.
5. What merits special attention is that in large tracts of areas, such as Zhejiang, Jiangsu and Guangdong, a pattern has taken shape in recent years for the common development of multiple ownerships of the economy and hosts of industrial and commercial businessmen have appeared. GDP of these areas has registered a double digital growth rate, social investment has witnessed a strong rebound, international trade has shown unprecedented briskness and massive job opportunities have been created. Indeed, these places have not only taken the lead in bringing about economic turnaround, but also served as the mainstay in sustaining the unique performance of mainland economy in outshining others amid the recent global economic slowdown.
In Zhejiang, the proportions of the private sector in industry and commerce had reached 45.1% and 56.1% respectively in 1999. In 2000, the provincial GDP grew 11%, fixed assets investment, 18.5%, and export volume, 51.1% over the previous year. In the first half of the 2001 year, the momentum of rapid growth had been well kept with GDP, fixed assets investment and export volume, respectively up 10.5%, 22.5% and 21.8% over the same period last year. Meanwhile, Zhejiang province realized a foreign trade surplus of US$6.016 billion in the first half of this year, accounting for 74% of the US$8.14 billion national total.
Jiangsu province has regained its vitality after the reorganization of the ownership system of enterprises run by villages and townships, with its production rebound and the investment being brisk. In 2000, it's GDP, fixed assets investment and export volume grew 10.6%, 9.2% and 40.7% respectively over the previous year. The corresponding growth figures for the first half of 2001 were 10.4%, 15.7% and 18.4% respectively.
The current export value of Guangdong province, the earliest starter in opening up to the outside world, is about one third of the national total. In 2000, its GDP, fixed assets investment and export volume respectively grew by 10.5%, 7.9% and 18.3% over the previous year. The corresponding growth figures for the first half of 2001 were 10%, 13.6% and 0.6% respectively over the same period of 2000.
6. Business men in the advanced areas have been striving to improve their personal quality and the core competitiveness of their enterprises. Apart from successfully running their existing businesses, they are seeking to develop their business in depth.
Going to the world arena with the strong support from domestic industry and commerce. The merchants in Zhejiang have already "transplanted" to every corner of the world their small and medium-sized enterprises spreading across rural and urban areas. They have taken roots in foreign lands, expanding their businesses. They are now working hard to scale new heights in becoming bigger and stronger and in creating world-class brand names. In the mean time, prestigious domestic enterprises like the Hai'er group in Shandong province are also energetically expanding overseas businesses, successfully wining a place in the markets abroad.
Distinguishing themselves in developing new and high-tech industries. Whether the Zhonghuancun village in Beijing, the "Paradise Silicon Valley" in Hangzhou, or the IT industries in Shenzhen, are all developing new and high-tech industries, with enterprises being the mainstay after the status of the government and enterprises has been clearly defined. These places have taken on a new look after the implementation of this latest policy.
Taking an active part in the grand development of the western region. Some entrepreneurs in the coastal areas are going to the western region to make investments and set up enterprises, bringing their demonstration role to this region and spurring the emergence and growth of the local group of entrepreneurs.
Investing in and restructuring agriculture. Urban businessmen in some places, with the capital and skills they have accumulated in their commercial and industrial activities, are making investments and building their own farms in the countryside, or manufacturing agricultural products with high added value. They may succeed in exploring a path leading to the industrialization and modernization of agriculture in China.
7. Despite their remarkable progress over the two past decades, mainland entrepreneurs are, after all, still late starters among ranks of the Chinese businessmen throughout the world. In comparison with their compatriot forerunners, they are still young and inexperienced, and their strength is quite limited. Furthermore, vast regional differences still exist in the growth of enterprises and entrepreneurs on the mainland, with those in the interior regions small in number and poor in quality. Even in economically advanced areas, world-class entrepreneurs are seldom to be seen. So efforts are still needed to improve the administration, management and core competitiveness of enterprises and so on. Nevertheless, mainland entrepreneurs are determined to rouse and develop themselves, following the example of their overseas counterparts in playing a dominant role in the business world. They will be trying their best to win honor for all the Chinese businessmen. We hope that the Chinese entrepreneurs across the world will join their hands together and make new contributions to the global economic prosperity.
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