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China's Business Students Become Founders As Nation Warms To Start-Ups

China is leading the shift to entrepreneurship in Asia among business school graduates. National policy to stimulate economic growth is benefiting the nation's start-ups.

Tue May 26 2015

China is leading the shift to entrepreneurship in Asia as business school graduates increasingly shun corporate careers and become start-up founders.

Alumni successes like Jack Ma, the founder of e-commerce group Alibaba which completed the world’s largest stock market listing, and who studied at CKGSB in Beijing, are producing an aspirational affect.

“A significant portion of our MBA students launch their own companies,” says Temujin Louie, MBA program manager at Guanghua School of Management, also in Beijing.

The figure is rising and as the school tries to recruit more entrepreneurs, 50% of 2016’s graduating MBA class say they already own a business, or are planning to start one.

The globalization of higher education has propelled the trend. There are a vast number of Chinese citizens who study at overseas universities returning to China — 350,000 in 2013, according to the Chinese Ministry of Education.

A western appreciation of entrepreneurs is being found in the east. Rama Velamuri, chair of the Strategy and Entrepreneurship Department at Shanghai’s China Europe International Business School, says: “Those that have studied abroad may bring to China business models that have been successful in the west.”

He says the number of MBAs wanting to launch companies increases with time. Of those who graduated from CEIBS more than a decade ago, between 35% and 40% own businesses.  

The rising middle class in China and the nation’s swelling enthusiasm for brands has given rise to opportunities in the consumer industries.

Sachin Tipnis, executive director of the MBA at Hong Kong University’s business school, says the decline in manufacturing in China is pushing students from industrial backgrounds to launch start-up ventures. About 15% of HKU’s MBA class are doing so.

Many business students were once be expected to join family businesses. “But for many this is changing, as their family business goes through [a] transition which very typical in Asia, for the moment,” says Sachin.

The advent of technology has accelerated take-up of entrepreneurial activities. “Something as simple as Dropbox and web conference tools are vital,” says Christine Chow, start-up investor and professor at the finance department of HKUST Business School in Hong Kong.

Online project management software and apps allow virtual teams to work together and at different speeds, she says, while peer-to-peer lending platforms provide access to much needed start-up capital.

Financing and other tools to aid start-up creation may become a government focus in China. The country’s premier Li Keqiang told the World Economic Forum in Davos earlier this year 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, according to Martin Zhu, director of the MBA program at CKGSB.

CKGSB has seen a noticeable increase in student start-ups since the onset of the global financial crisis in 2008. Approximately one-fifth of the current MBA class is pursuing entrepreneurship or considering doing so, says Martin. “Many of our EMBA students are entrepreneurs and this has influenced our MBA students’ career development process,” he adds.

One such CKGSB venture is Vipshop, an online retailer formed by a group of graduates. Launched seven years ago, the company is now listed on the Nasdaq stock exchange with a market capitalization of around $14.7 billion.

“Successful alumni always act as beacons, signalling to prospective students the legitimacy of an educational institution,” says Temujin at Guanghua School.

Helen Jihan Zhon is one such alumnus. She launched Nature Gift, a start-up that provides child care services to companies and universities.

By setting up childcare centres in offices and on campuses, Nature Gift helps institutions that want to provide more flexible working for their employees. Its first client was the Shanghai University of Finance and Economics.

“In shanghai there’s a lot of multinational companies in each industry so it’s easy for us to reach our customers,” Helen says.

The master of finance graduate of Shanghai Advanced Institute of Finance received about $80,000 in funding from the leading Chinese business school.

She says she benefited from SAIF’s courses on entrepreneurship and from the mentors it provided.

But it was the credibility that a world-renowned institution added to her start-up that has been most beneficial. “When I approach our clients and when I hand out my business card they say: ‘Wow, you have gone to SAIF?” Helen laughs. “They trust my ability.”