ergy. Vivek Wadhwa has pointed out that “top-down industry cluster is a modern-day snake oil”. As he explained:
“Governments can build infrastructure and pump money into education and R&D. But they cannot manufacture innovation. Innovation comes from creative people who challenge authority and take risks–who exchange ideas and experiment at the fringe.”
There are also some trends outside of government that might give hope for China’s entrepreneurs. For example, overseas-educated entrepreneurs returning to China are adding to the local mass of entrepreneurs you can see, for example, at the Entrepreneurship Foundation for Graduates (EFG). The returning graduates are injecting cultural capital and demand for entrepreneurial vehicles and support infrastructure such as startup incubators for their patents. EY reported that China is building 150 startup incubators specifically for graduates returning from overseas.
In addition, the rising tide for technology companies raises many other boats. As TechCrunch reported, beyond a statement about the value of the entrepreneurial path, these success stories are building investor confidence. Moreover, the successful ventures will know how to work with startups as they seek innovation opportunities. More importantly, these rising large companies challenge the mindset of the lifetime employment at state-owned enterprises (known as the ‘iron rice bowl’).
Looking ahead, as in other economies, sustainable growth will depend on meaningful reforms to make the economy less hostile to new entrepreneurs by unshackling this giant nation’s entrepreneurial limb. From my meetings in China with government officials, I doubt Beijing will kill this enthusiasm. The shear size of the economy and strong government will make it hard for China to create a healthier environment where established and young upstart companies can coexist, but despite inherent contradictions within the political and economic infrastructure, the dominant flow will continue toward removing roadblocks that hinder the development of an organic entrepreneurship ecosystem.
They understand the importance of empowering ecosystems where for example, startups have the breathing space to produce agtech solutions that fuel China’s giant food production sector, which the government currently subsidizes to ensure its productivity and competitiveness.
When party leaders sit down and map the future of the economy, I suspect they are already figuring out how to tear down walls in front of China’s younger problem-solvers who are going overseas and tapping into other local, national and global exchanges of innovative ideas. Even in China, the power of the global startup community is incentivizing change for the better at home.
Photo credit: Tech Yizu