杂志汇中国与非洲

But after the initial boom, new Chinese entrepreneurs have to grapple with tough challenges

We see a lot of students who are jumping out of school to start a business. It’s like a trend to do startups; it’s a cool thing to the young kids. They don’t see the hardships in creating a startup, so a lot of them will fail.

Sino Shi, A venture capitalist with China Growth Capital 

Researchers at the Guangzhou Medical

University in south China’s Guangdong Province made headlines in April when they conducted an experiment to modify genes in human embryos - that would not have grown into human babies - to make them HIVresistant.

It was the second time human embryo genes had been subjected to “germline editing” - genetic modification of human cells. An earlier team of Chinese scientists from Sun Yat-sen University, also in Guangdong,had made the world’s first claim of human embryo DNA editing last year. They had modified a gene linked to thalassemia, a blood disease that reduces the production of hemoglobinin red blood cells.

Part of this rapid growth in Chinese scientific development can be attributed to government initiatives to develop scientific research and attract top Chinese scientists back from abroad. The Thousand Talents Plan was launched in 2008 to attract those with Chinese heritage or citizenship to come to the mainland for study and work. Scientists who apply for the program are eligible for a 1-million-yuan ($154,000) subsidy and can apply for a research fund worth 3 million yuan to 5millionyuan ($462,000$770,000).

This is a measure to stem “brain drain” - the massive outflow of students and professionals going abroad and not returning. A 2007 study by the Chinese Academy of Social Sciences found that seven out of 10 students who enrolled in overseas universities between 1978 and 2006 didn’t return. Of the 1.06 million Chinese who studied abroad, only 275,000 came back.

But the trend appears to be reversingwith many Chinese students returning upon graduation. About 460,000 Chinese students went overseas in 2014, a 30-percent year-on-year increase, according to figures from the Ministry of Education. Nearly 365,000 returned, a 3.2-percent increase over 2013.

A cultural shift

DNA research is one of the innovations happening in China. Another is the startup trendthat took off in 2014 when Premier Li Keqiang encouraged students and others to launch their own companies. The government reformed business registration rules and lowered the minimum amount of registered capital required to promote entrepreneurship.

The number of startups boomed, rising 46 percent from 2.5 million in 2013 to 3.65 million newly created companies in 2014, according to State Administration for Industry and Commerce data.

Encouraging university students to innovate and create their own companies is partially designed to help alleviate lack of employment opportunities for students with higher education, Mark Williams, chief Asia economist at Capital Economics, an economic intelligence organization, told the Beijing Review weekly.

Graduates appear to be heeding the call. More than 6 percent of new graduates planned to start their own business in 2015, according to a survey by Zhaopin.com, a Chinese human resources website. Another 21 percent said they would like to start a business.

But only 2.4 percent of first-time startups succeed, according to a 2014 Xinhua News Agency report. “We see a lot of students who are jumping out of school to start a business. It’s like a trend to do startups; it’s a cool thing to the young kids. They don’t see the hardships in creating a startup, so a lot of them will fail,” Sino Shi, a venture capitalist with China Growth Capital, told Beijing Review.

The rise in college graduates launching their own companies has coincided with a shift in Chinese culture. A few years ago, it would be unthinkable for them to announce they were forgoing a career at one of the state-owned companies or larger private firms to branch out on their own.

“There is a culture that no longer stigmatizes failure. Starting a company is becoming a legitimate thing to do,” Kaiser Kuo, Director of international communications at Baidu, China’s leading search engine and one of the country’s three major technology giants, said at the innovation discussion.

Caution, bumps ahead

Another reason to boost entrepreneurship is the hope that creating an innovative economy will help cushion the economic growth slowdown as China shifts from trade and manufacturingto consumer and servicedriven sectors.

Some analysts and economists warn about the drawbacks.

“Incremental technological gains could have a big impact on how labor is deployed generally,” Charles Freeman, a nonresident fellow at the John L. Thornton China Center, a think tank, told Beijing Review. “China still has tons of overemployment and overcapacity. If [it moves] into innovative new things, that doesn’t really employ a lot of people.”

But the government has kept that in mind. The crackdown on overcapacity in the coal and steel industries is expected to see the retrenchment of 1.8 million workers. So the government has set aside 100 billion yuan ($15.4 billion) to relocate laid-off workers

With the turbulence in the domestic stock market and an excess in real estate inventory, many looking to invest their money have turned to startups. There has been a surge in the number of venture capital firms, both private and government-funded, investing in new companies.

Government-backed venture capital firms raised about 1.5 trillion yuan ($231 billion) in 2015, according to data from Zero2IPO Group, a consulting firm. Other venture capital investments more than doubled last year, reaching $32.2 billion, according to CB Insights, another research firm. About $4.7 billion worth of investment went into domestic startups in the first quarter of 2016 alone.

But once the initial euphoria wears off, there is need for a cautious approach. Some venture capitalists (VCs) have pointed out that the massive amount of money flowing into the startup market has created overvalued companies, particularly following the influx of newly registered companies in 2014.

“There’s too much money in the market but not as many good teams. If you look at the supply and demand, there is some natural inflation. But it has been cooling down a little bit,” Zhao Chen, a regional manager with technological incubator Plug & Play, said.

Liu Bo, a VC with TusPark Holdings, echoed Zhao. “Most of [the investors] don’t have the knowledge of how to judge an early project, and they don’t have the resources to help the startup, so it’s really a disturbing voice in this market,” Liu said. CA