A tide of optimism caused by the success of entrepreneurs is sweeping its way across Asia and is forcing future business leaders to question traditional values.
Inspired by rags-to-riches tales, from record-breaking Chinese e-commerce group Alibaba founder Jack Ma to Sachin Bansal and Binny Bansal, the Indian Institute of Technology alumni who founded online retailer Flipkart, budding upstarts are emerging across the region.
“India is a huge market that is on the cusp of opening up to innovation,” says Shouvik Dhar, co-founder of Creatist, a patented, cloud-based tool to create and measure interactive content.
He launched the venture in 2013 with minimal investment, four years after riding out the financial crisis at the Indian School of Business. An MBA gave him the gravitas to start-up. “Faculty and peers gave me the arsenal to start planning,” he says. But it was networking that proved most valuable. “The alumni network has been a gold mine of industry connects.”
Shouvik is not alone. Unshackled from a tradition of family enterprise, graduates across Asia are modelling themselves on western entrepreneurs like Facebook founder Mark Zuckerberg and Amazon chief Jeff Bezos.
Technological advancements have opened the floodgates. “The fast-paced development of web technologies, rapid prototyping and 3D printing has definitely made it easier for entrepreneurs to validate, refine and start-up,” says Aruna Reddy, head of ISB’s Cell for Entrepreneurship.
Aruna says more than 400 ISB alumni have launched entrepreneurial ventures, with the figure rising year-on-year.
Most entrepreneurs are destined to flop but business schools like ISB encourage students to see failure as a learning curve — despite the cultural challenges, according to Nitin Pangarkar, academic director of the MBA at NUS Business School in Singapore.
“Countries like the US have a culture that tolerates failure and also the safety nets in case somebody fails. Asian cultures may be a less tolerant of failure,” he warns.
Many business graduates would once join family businesses in Asia. But there are signs that a western appreciation of entrepreneurs has travelled east. “For many, this is changing,” says Sachin Tipnis, executive director of the MBA at HKU’s business school in Hong Kong.
He points to the decline of manufacturing in China as one factor driving the shift, as the nation evolves to a services and consumer-led economy. “Students coming from such backgrounds tend to start new ventures post-MBA,” Sachin says.
The rapid increase in internet penetration in particular has had the effect of encouraging entrepreneurship, according to Temujin Louie, MBA program manager at Guanghua School of Management in Beijing.
“The internet offers a platform wherein budding entrepreneurs can easily seek advice from people with similar experiences,” he says.
One trend contributing to the entrepreneurial revolution is the vast number of Chinese citizens who study at overseas universities returning to China to find jobs or create their own. In 2013 the figure was 350,000, according to the Chinese Ministry of Education.
The uncertain economic prospects of the US and Europe have made China’s fast-developing, though slowing economy attractive to nascent entrepreneurs who have flown the nest.
“Those that have studied abroad may bring to China business models that have been successful in the west,” says Professor Rama Velamuri, chair of the Strategy and Entrepreneurship Department at Shanghai’s China Europe International Business School.
The rising middle class and growing thirst for consumer brands in China present opportunities, he says, particularly in travel and leisure, and food and e-commerce. “We have seen a whole host of businesses around branded products.”
One example is Tnta, a creative tea shop in Beijing that models itself on Starbucks, which was founded by Cheung Kong Graduate School of Business MBA Shawn Liu.
He says the business school’s network provided alumni connections which have helped him in launching the start-up.
He developed the business plan for two years before opening his first store in July last year in the Chinese capital. The consumer demand is there. “We are definitely looking to open more,” he says.
Up-and-coming entrepreneurs in Asia face challenges, however, such as access to seed and venture capital.
“While the key hubs in [the] US and other western countries have [established] systems, Asian systems are still evolving. It is a slight disadvantage,” says NUS Business School’s Nitin.
But experts are adamant that this should not hold entrepreneurs back. Christine Chow, an angel investor and professor at the finance department of HKUST Business School, says: “As desperate as they might be, finding the right type of capital, not any capital, is most important.”
The weaker legal institutions in many Asian countries mean entrepreneurs and investors have a greater degree of risk to consider.
Strong family ties may also weigh on Asian entrepreneurs’ minds. It is often a bigger deal to say no to one’s parents in Asian countries than in the west.
Youngsters often feel compelled to join a family business but once they do, their energy to make changes is quashed, according to Rama at CEIBS. “They often come up against elders who are risk-averse and do not let them make big-ticket changes. This can cause frustration in the youngsters and can be a source of conflict,” he says.
There are signs that things are changing, however. More schools are offering to educate entrepreneurs, with courses such as the entrepreneurship, innovation and operations management program within HKU’s MBA, and the Stanford GSB Ignite program, which the Silicon Valley business school ran in Beijing for the first time last year.
“Interest in entrepreneurship as a path has been embraced in a way like never before, not just in Silicon Valley but over the world,” says Bethany Coates, assistant dean at Stanford.
Funds are also ballooning in Beijing and beyond. HKU recently launched a 24-month incubator program to accelerate students’ start-ups, with HK$530,000 in funding given to selected companies. “The start-up culture is now shaping up really well,” says Sachin.
Such initiatives may be championed at a national level too. China’s premier Li Keqiang this year told the World Economic Forum in Davos that “mass entrepreneurship and innovation” would ensure that China’s economy would sustain growth.
The government is working to facilitate a pro-entrepreneurship environment through deregulation, says Martin Zhu, director of the MBA at CKGSB. “As a result, this current wave of entrepreneurs in China is just the beginning.”
But it is ultimately the success of those like Alibaba’s Jack Ma — who happens to be an alumnus of CKGSB — that motivates Asian entrepreneurs. “Successful alumni always act as beacons,” says Guanghua School’s Temujin.
Martin points to the “BAT” of Baidu, Alibaba and Tencent, the Asian technology giants, and Chinese brands such as Huawei, Lenovo and Xiaomi as spurring young Chinese to think that they can do it on their own.
He singles out Vipshop, the online retailer formed by a group of CKGSB students, which has grown to become listed on the Nasdaq stock exchange with a market capitalization of $14.7 billion in just seven years.
“This has inspired Chinese entrepreneurs to build their own brands, to compete and challenge the status quo,” he enthuses.