HONG KONG SAR – Media OutReach – August 1, 2023 – The unprecedented socio-economic changes brought about by the COVID-19 pandemic have altered the business landscape globally and in China. At the same time, pandemic-related challenges have spurred the emergence of new technologies. Entrepreneurs have actively responded to rapid economic changes by offering innovative solutions and adaptations. For example, robots delivering food to student dormitories have been marketed and the payment process is handled by artificial intelligence (AI). Moreover, AI can also be used to write stories and even computer programs. These innovations have facilitated contactless transactions and logistics, making life easier during and after lockdown.
The enormous amount of socio-economic change in the world since COVID-19 has created formidable challenges for entrepreneurs.
It was also in 2022 that Generation Z, better known as “Post-’00s” in China, came of age and was ready to enter the workforce. Despite the record number of youth unemployed due to economic turmoil, Gen Z has also shown an unprecedented level of interest in starting their own business from scratch.
On Bilibili, a video platform popular among Chinese Gen Zers, content related to entrepreneurship recorded 830 million views in 2021,
up 77% compared to the previous year. The majority of viewers said they were enthusiastic about pursuing non-traditional careers or looking for alternatives to a full-time job.
Additionally, continuous rural migration to Chinese urban centers over the years has further fueled the rise of startup culture where risk takers have contributed to the rapid development of innovations in the market.
With such radical transformations in society, work and the business landscape, the driving forces of entrepreneurship have taken on a very different nature from those that shaped the entrepreneurship of previous generations.
In this research white paper from CUHK Business School, we will examine some of the issues surrounding the rise of a new brand of entrepreneurial culture in China. First, given Gen Z’s propensity for founding startups without any prior work experience and while working full-time jobs, what can they do to increase the odds of keeping their startups afloat and to ensure 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 for entrepreneurs to have a wealth of experience under their belt rather than only excelling in product design and innovation.
Compared to novices, experienced entrepreneurs have proven able to switch strategically between the role of inventor and businessman, so they can see the big picture – or the proverbial forest – rather than the trees. .
Our results suggest the benefit of leveraging the holistic capacity of experienced entrepreneurs at the start of a new venture, for example by hiring them as mentors. They can guide less experienced entrepreneurs in their big picture and thus avoid the blind spots inherent in starting a business from scratch.
Lack of previous work experience can be a handicap for young entrepreneurs.
Once a startup is established, what should entrepreneurs focus on to get it off the ground and expand its market reach and profitability? Considering the changing 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 at the beginning of the transition from a planned economy to a market economy, entrepreneurs who adopt relationship-based strategies can foster business growth, while innovation-based approaches succeed better at an advanced stage. But what about the intermediate stage of commodification? We have found that it would be helpful to be part of a university research or science park, or to collaborate with local government institutions.
One of the most radical transformations of Chinese society as a result of institutional change is the migration of the rural population to the country’s sprawling cities. Migration has been accompanied by the rise of entrepreneurship in urban centers. A fascinating phenomenon emerged: those who came from rural areas turned out to be among the most successful entrepreneurs in Chinese history. What are the contributing factors? How can we leverage these factors to continue nurturing successful entrepreneurs?
Urban migration boosts entrepreneurship in China
We found that rural migrants who studied in large urban universities are more willing to take risks than their urban counterparts. Among the former non-entrepreneurs we surveyed, only 36.1% of rural migrants considered entrepreneurship too risky, while 45.8% of urban dwellers considered it too risky. Among entrepreneurs, the percentage is 7.4% for rural migrants and 19% for city dwellers.
The stronger risk-taking attitude among rural migrants can be explained by the feeling of “anonymity” and the resulting freedom for them after moving to big cities.
As our research shows, university-educated rural migrants display a positive attitude of risk-taking in their entrepreneurial approach. Companies can benefit from recruiting them and leveraging their valuable entrepreneurial skills to innovate and build successful, long-term sustainable businesses.
Finally, for the younger generation who grew up in entrepreneurial families founded by first-generation entrepreneurs, what impact does the changing socio-economic landscape have on their career choices?
Compared to their parents, 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 concept of “career without borders” to understand family entrepreneurship. We’ve seen that today’s youth can change roles, rather than just choosing to ‘stay home’ or ‘break free’. For example, they may work outside the family to avoid politics and pressure, but remain opportunistic and may join the family business for short periods.
As younger generations tend to chart their own paths, family businesses can no longer expect 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 China and the world. As we have seen, institutional and environmental changes are intrinsically linked to how companies can maximize their marketing efforts and profitability. Entrepreneurs will benefit from being fully 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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