Shanghai’s China Europe International Business School (CEIBS) is no exception, according to entrepreneurship professor Rama Velamuri, also chair of the Strategy and Entrepreneurship Department.
Advances in technology have made it easier for budding Chinese entrepreneurs to launch and scale their start-up ventures.
Many are also capitalizing on China’s rising middle class — which has opened up opportunities in the travel, food, and retail sectors.
While many young Chinese would traditionally join family businesses, which are considered the backbone of China’s economy, millennials are keen to explore their own paths. The trend for Chinese students to study abroad — there are more than 250,000 students from China in US colleges — has contributed to this shift.
The government in Beijing is also pushing entrepreneurship. It launched a $6.5 billion venture capital fund for emerging industry start-ups earlier this year.
Are more CEIBS students becoming entrepreneurs?
If you look at patterns across the top business schools, the percentage of students launching their own companies immediately after graduating from the MBA program is small, around 5% or so.
However, the percentage steadily increases after graduation and about 15 years later, between 35% and 40% of the class is running their own companies.
There are many explanations for this:
i) They get exposure to opportunities when they work in paid employment. Most entrepreneurs leave paid employment and set up companies in the same industries;
ii) They accumulate savings;
iii) They get married, and if their spouse is working, they feel more confident to launch a venture as there is one steady income [stream] to support them;
iv) They get tired of corporate politics.
Many people in Asia would traditionally join family businesses. Are there signs more people would prefer to become entrepreneurs?
Within business families, entrepreneurship is a good way to avoid inter-generational conflict.
The younger generations of business families are highly educated. When they complete an MBA or other higher education degree, they sometimes go back directly to the family business but more often spend a few years working for other organizations to gain experience.
When they join the family business, these youngsters are full of enthusiasm and energy to make changes and apply what they have learnt. However, they often come up against elders who are risk-averse and [who] do not let them make big-ticket changes. This can cause frustration in the youngsters and can be a source of conflict.
We recommend to business families that the youngsters be given the responsibility to launch or nurture new businesses, where the stakes are not that high. They can have a freer hand to apply what they have learnt and can also learn from their mistakes.
Has the growing number of Chinese students studying abroad contributed to this mentality?
We have noticed that several youngsters whose families are in traditional businesses are setting up Internet-related businesses. This is independent of whether they have studied abroad or not.
China has, in some ways, the most dynamic technology entrepreneurship landscape in the world, and they get sufficient exposure at home without having studied abroad. Those that have studied abroad may bring to China business models that have been successful in the west.
Have advancements in technology made it easier for people to start-up?
Definitely, in two ways: First, most technology companies do not need much capital to start up, although they do need significant capital to scale. An entrepreneur or entrepreneurial team can start a technology business and achieve the first milestones by bootstrapping their initial capital requirements from their own savings and from their friends and family.
Once they have the proof of concept there is abundant availability of capital from angel investors and early stage VC [venture capital] funds for further development and scaling up.
Second, business connections are less important in technology businesses relative to traditional businesses. The technology sectors rely much more on knowledge and the capacity for hard work than they do on capital or social networks.
There is also a rising middle class in China and a thirst for consumer brands. Are students seeing the entrepreneurial opportunities this brings?
Definitely. We have seen a whole host of businesses around branded products. For example, flash sales companies that dispose of the excess stock of the leading brands through online channels have been very popular in many countries and have been started by MBAs.
The rising middle class has also opened up opportunities in travel and leisure, the food sector, and e-commerce.
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