Together with three of his friends, Fang Jing set up a small vegetable mart in Hangzhou in 2009. They received a 50,000-yuan fund from the government and expanded their business into a fresh-food market. The Zhejiang government established a 35-million-yuan fund to support new start-ups by fresh graduates in the province. Provided to China Daily

Zhejiang province builds on entrepreneurial tradition to help ward off unemployment

The Zhejiang provincial government's efforts to help young people set up their own businesses are producing results.

The coastal province in eastern China already enjoys a tradition for entrepreneurship.

"Striking out on their own is in the blood of our people," says Zhou Dewen, head of the Wenzhou Small- and Medium-sized Enterprises Promotion Association.

The success in nurturing a new generation of entrepreneurs is being closely watched in other regions of China and in other countries hit by rising numbers of young unemployed people. In Britain, the unemployment rate has soared to an 18-year high and many young people, including university graduates, are finding it increasingly difficult to find work. Other European countries, such as Italy and France, are facing a similar situation.

To help plug the problem, Zhejiang authorities have established a 35-million-yuan (3.9 million euros) fund to support new start-ups by fresh graduates in the province. The government provides the seed money and the Bank of Hangzhou as well as Hangzhou United Bank provide the remainder in the form of subsidized loans.

The initiative to nurture young entrepreneurs already helped establish the Hangzhou College Student Entrepreneur Association on Dec 18, 2009. It now has 2,180 members taking regular lessons on entrepreneurship from experienced instructors.

Many people have always considered Zhejiang "an entrepreneur's paradise". Private companies have long been shouldering more than 50 percent of the province's GDP growth. In 2010, Top 500 Chinese Private Companies List recently released by the All-China Federation of Industry and Commerce, 180 private companies in Zhejiang got into the list - the most in any province.

An increasing number of fresh graduates in Zhejiang are now starting up their own businesses to deal with the growing difficulty of finding work.

Wang Ziyue is still in her junior year at university, but she has already made her first pot of gold from her patented paper cuttings using a magnetic adhesive.

A native of Shanxi province in western China, the 21-year-old is a senior student at Hangzhou Normal University majoring in marketing. She says she has made more than 1 million yuan from her invention.

She got her idea back in 2005 when she was a high-school student helping her parents paste traditional Chinese paper cuttings to decorate the walls of her home. Putting glue on the back of thin pieces of paper before carefully pasting them on the walls and other surfaces was a "tedious and messy task".

"I thought it would be convenient if I could just put magnetic strips on the back of those cuttings and stick them onto our refrigerator or a metal surface," she says.

She started selling the strips to friends and neighbors. Shanxi's culture authorities featured her items in an exhibition held at Beijing's Olympic Park. The exhibition included large paper cuttings of celebrity athletes such as diving queen Guo Jingjing and swimming champion Michael Phelps, all of which used her magnetic tape.

The success of her product in Beijing gave her the confidence to establish a business based on it. She had it patented after moving to Hangzhou and formed her own company, Yiwu Nianhong Magnetic Paper-cut Co, which has a 40-square-meter office in her university's Hangzhou College Student Pioneer Park.

"The registered capital (of my company) is only 30,000 yuan, which includes the money I made during the exhibition in Beijing and money borrowed from my family," Wang says.

Winning first prize at a student entrepreneurial competition at her college also helped promote her business. The Hangzhou Daily Young Entrepreneur Club and Binjiang College Student Pioneer Park sponsored the competition. In addition to the 5,000 yuan prize money, she received 10,000 yuan in extra funding from the organizers.

Wang is just one of many young people who have been inspired to start their own businesses through the efforts of the central and local governments to promote entrepreneurship among college students.

A 100 million-yuan science and technology innovation fund from Zhejiang authorities in late 2009 for college students has already helped 5,000 students start 1,192 projects.

Hangzhou's Xihu district also started a special fund for student entrepreneurs early in 2010 by providing them start-up funds of up to 200,000 yuan. In neighboring Ningbo, the municipal government provides start-up funds ranging from 200,000 yuan to 1 million yuan.

But the success rate of boosting entrepreneurship remains relatively low. According to a survey by the Ministry of Education, only 1 percent of university students in Guangdong province succeeded in establishing sustainable business ventures. The corresponding number for Zhejiang, which has a thriving private sector economy, was 4 percent.

More than 6 million students are expected to graduate from Chinese universities this year. To provide them with a better business environment, the Zhejiang provincial government continues to introduce measures to help them start their own businesses.

University graduates operating their own businesses are now exempted from registration, license and administration fees for three years starting from the date when they registered their business.

College students who are short of money can also apply for two-year loans ranging from 20,000 yuan to 50,000 yuan. If they are able to repay the money on time, local authorities will give them a 50 percent subsidy on interests.

"The Hangzhou College Student Entrepreneur Association has helped many students start their own businesses in the past few years," says Cai Qi, director of the Zhejiang Organization Department.

According to Kai-Fu Lee, former head of Google Inc's China operations, what Hangzhou lacks is venture capital to buttress its growing talent pool.

"The government should shoulder more responsibility and provide more opportunities for these students to give them greater confidence," Cai says.

In the recently ended sessions of the Zhejiang People's Congress and the Zhejiang People's Political Consultant Conference, Lu Zushan, governor of Zhejiang province, urged the government to provide more favorable policies to attract overseas university graduates to start their own businesses in Zhejiang.

"There are more than 400,000 college students, and those who have started their own businesses are the best," Cai says.

By Shi Jing (China Daily European Weekly)