Focus

Young entrepreneurs find starting up a hard sell

By Duan Yan and He Dan (China Daily)
Updated: 2010-09-15 07:51

A group of students majoring in e-commerce at Yiwu Industrial and Commercial College in Zhejiang province load goods they sold online as part of an online business project. Several students decided to spend their summer vacation running a shop on taobao.com, a popular Chinese shopping website. Zhang Jiancheng / for China Daily

License to sell

Ask Zhao why he wanted to open a restaurant and he will readily admit a big factor was the prospect of taking vacations whenever he liked.

However, after enduring a tough first year in business, largely due to his partners' lack of knowledge about the industry, going on holiday is now the last thing on his mind.

After failing to get a business license from the local authorities before the National Day holiday, Yunhaiyao did not open until late October, thereby missing the annual tourist peak.

The long, harsh winter that followed also proved disastrous, despite many promotions to lure in customers.

"We were losing up to 6,000 yuan a day," said Zhao. "All we could do was read the weather forecasts and hope a rise in temperature would bring more customers."

Officials in cities such as Guangzhou, capital of Guangdong province, and Changsha, capital of Hunan province, have vowed to simplify the application process for business licenses, while in Beijing some fees are waived for recent graduates.

"It saved us a few hundred yuan, which is nothing compared to what we paid out originally," said Zhao, who complained that his biggest concern is the bureaucracy.

"The health bureau, the fire bureau, the labor bureau," he said as he counted on his fingers how many departments he has to deal with. "There are at least seven or eight."

Due to the difficulty in getting business licenses, college graduates who sell goods online or on the street often go without cutting down on the paperwork.

Li Qintao, a fashion design major who graduated from Shenzhen University in July last year, began hawking clothes to migrant workers outside factories in the Bao'an district of Shenzhen. All he has to pay is the occasional 10 or 15 yuan to set up his stall.

"Sometimes they're villagers who come for the money, sometimes they're street gangsters. They just turn up and collect the fee," he said.

With only 3,000 yuan in seed money, Li earned 500 yuan in his first month, which covered his apartment rent and bills.

"My parents want me to find a more stable job, to be a teacher or work for the government," he said. "I want to prove them wrong and be successful."

Starting early

Although money and licenses are hurdles that can be jumped, experience is a vital quality in business - and can prove to be the difference between survival and failure.

Before opening Yunhaiyao, the only experience its co-owners could draw from was when one of them worked for a month at Haidilao, a chain of hotpot restaurants across Beijing.

"We would have meetings but none of us would remember to write anything down for future reference," said Zhao, who manages a staff of 28. "There have been many lessons along the way."

Business has now picked up enough for the four friends to consider opening a second restaurant in Zhongguancun, an area known for IT companies and cheap electronics.

Youth may mean inexperience but 70 percent of the graduates involved in the Soochow University study agreed age is the biggest advantage in starting a business straight from college.

"Many graduates want to give it a shot while they're young," said Wu Yijia, a senior studying financial management who was part of the research team. "It feels cool to be your own boss and, if you fail, there's plenty of time to find a new career."

After a decade of giving advice to budding entrepreneurs, however, Zhu at Youth Business China disagreed.

"Owning a business requires multiple skills, such as in marketing, communication and leadership," he said. "Young people can often come up with novel thoughts but they should pay more attention to analyzing carefully whether those ideas are viable or not."

As well as offering startup loans, Youth Business China also helps young adults network with experienced business leaders to learn the tricks of the trade.

"I always tell (student clients) that the most important rule of business is to make money. It's not about how good an idea is," added Zhu.

Wannabe industry moguls can now hone their skills by signing up for the entrepreneurial education classes offered at universities across China, while many schools now run projects that encourage students to find creative business models.

"The help we offer used to be focused on seniors looking for jobs but now training starts as early as the first or second year," said Yu at the China Higher Education Student Information and Career Center.

And with so many graduates entering the job market every year, experts say the pressure on careers advisors is more intense than ever.

Universities are required by the Ministry of Education to allocate 1 percent of tuition fees to fund career services for students. However, many are failing to do so because of heavy debts.

In Hunan province, where high-level officials publicly advocated greater cooperation between education and labor ministries, colleges have built up a combined debt of 14 billion yuan, said Ouyang Zengtong, director of the provincial career center.

Most of the money was spent on construction projects to cope with increased enrollment, he said.

According to Ministry of Education statistics, college enrollment in China was about 3 percent in the mid-1980s, rising to 5 percent by the early 1990s. However, since 1999, when the central government introduced an enrollment expansion policy, numbers nationwide has increased steadily, reaching 24 percent in 2009.

"There are many problems ... and (the) education (system) is failing to keep up with the changing job market," said research director Yu. "But one obvious issue is that the supply of labor is much greater than demand."