PRIVATE ENTREPRENEURS IN CHINA: AN EXPLORATORY STUDY

Abstract

Tan (1987) and Dandridge and Flynn (1988) argue that both internal and external environments favour entrepreneurship development in China. Nevertheless, research studies about Chinese entrepreneurs only select Geteihu —one-man businesses (Tuan et al. 1986), private merchants (Wank, 1990), Xiangzhen Qiye—rural enterprises (Nolan and Dong, 1989), and corporate entrepreneurs (Siu, 1992) as sampling units. Siying Qiyejia, private entrepreneurs or owner-managers, especially those in manufacturing industries and services sectors are neglected. According to the classification of the Chinese government, private enterprises are businesses owned by individuals with 8 or more employees (Young, 1991). (For those below 8, they are classified as one-man business.) They mainly participate in the manufacturing and services sectors (Guo, 1992). This paper attempts to address the imbalance and also adds new insights to the body of knowledge by investigating private entrepreneurs in China. 70 owner-managers in Guangzhou, the business centre in South China, were selected for sampling. In-depth personal interviews with 14 private entrepreneurs were successfully arranged. The problems encountered by private entrepreneurs in China in ranking order are taxation, credit, human resource and growth. They indicate that the major cause for those problems lies in the Chinese government changing policies and regulations in relation to private enterprises too frequently. Most private entrepreneurs use the ‘let-it-be’ approach to handle those problems. However, a small portion of them get around them by establishing joint ventures with overseas investors. Under the joint venture umbrella, they no longer suffer from stringent controls imposed by government officials, but rather, be able to enjoy better investment incentives.