|
|
|
|
Web-only Exclusives November 30, 2000 From Our Correspondent: Hirohito and the War A conversation with biographer Herbert Bix From Our Correspondent: A Rough Road Ahead Bad news for the Philippines - and some others From Our Correspondent: Making Enemies Indonesia needs friends. So why is it picking fights? |
OCTOBER 29, 1999 VOL. 25 NO. 43Liu Jing
China's get-rich ethic is changing private enterprise
By KAZUHIKO SHIMIZU Beijing
 Liu Jing found that dealing with China's labyrinthine bureaucracy requires a sense of humor Ricky Wong for Asiaweek |
|
But the reality of getting rich is running somewhat behind the ideal. Although the Chinese government has partly embraced the concept of entrepreneurialism - such as adopting laws that recognize private-sector rights - the commitment on the ground is sometimes lacking. Red tape, distribution inefficiencies, marketing impossibilities, lack of financing and pervasive corruption remain daunting hurdles to anyone who wants to achieve entrepreneurial success in China. Even so, with state-run companies laying off workers by the millions, more and more Chinese have become enamored with the idea of ning wei jitou, bu wei huangwei, which is a piece of Chinese wisdom that advises it is better to be the head of a chicken than the tail of a phoenix.
HALL OF FAME
| |
| |
RELATED STORIES
| |
|
His first challenge was to register his company. "You can't even apply for bank loans until you register," complains Liu. And registration by itself is hardly entrée to the vault. After being burned so regularly by state-owned enterprises over the years - to the point where many Chinese financial institutions are simply insolvent - banks are reluctant lenders. What to do? Liu and his partners scraped together savings and borrowed from parents. They came up with the 100,000 yuan ($12,100) to register the newly created Moli Design Co. and get it up and running. Most private enterprise in China never make it past this initial start-up stage.
With launch money in hand, Moli Design (moli means "magic power") was ready for the next big hurdle, government bureaucracy. Here is an example of how confusing this can be: Companies generally must produce a lease agreement before they can legally register their business and receive their official chop. However, they cannot file the lease without the chop. Which comes first? To help navigate this Catch-22, which is repeated over and over, many private enterprises in China hire officials working in a service company set up by the agency that handles registrations. "You must be very determined to set up a company in China," says Liu.
So much for understatement. Luck also played a part for Liu. Thanks to a powerful landlord, the China Film Co-Production Corp., Moli Desgin avoided the need to pay bribes, a potentially large expense. Liu was able to lease space within the studio compound, which is heavily guarded because of its special status as China's main venue for cooperation with foreign filmmakers. Few businesses have soldiers to keep corrupt officials from walking in and demanding illegal fees, but Moli Design did. "One of the largest single expenses for private businesses is the fee paid to local government officials and policemen," says Wang Chaoyong, CEO of China Equity Inc., a Beijing consulting firm. He's talking about the need to pay for guanxi, or personal connections. "You have to give them cash, treat them to meals, and take them to saunas or karaoke bars." There is normally no getting around such payment. Says one beauty shop owner, if the bribes aren't paid, "they can turn off the electricity or they can do just about anything to stop your business."
Since Moli Design encountered few of these hassles, it could settle into its single 20-square-meter room at the film studio. Except that it needed a couple of necessities - like the equipment it needed to actually operate a graphic design business, such as new computers, scanners, printers, desks, chairs and a fax machine. Next came the task of actually attracting clients. Few Beijing businesses recognize the value of good graphic design. They appreciate even less the need to pay for it. But as the economy has accelerated in the past decade, so have advertising and marketing. Moli Design has managed to create a niche and turn a profit after only a year.
The company now does graphic design for company brochures, posters, books, banners and advertisements. Its clients include Sony, Siemens and the British Council, as well as many local firms. Liu expects revenues to reach $363,000 in 2000. "We have returned most of the money we owed to our parents," Liu says. So far, about $121,000 has been re-invested in the company, which has a staff of six and plans to move into a bigger office soon.
Liu considers himself one of the lucky ones. Many Chinese are forced to strike out into private enterprise without the education that Liu and his team possessed. The most common private businesses are restaurants, retail shops and barbershops - and they come and go quickly. Many people can afford little more than to wheel around a push cart or put down a stool on the street to repair bicycles. Still, the glorious pursuit of riches is a powerful motivator for change.
 |
Quick Scroll: More stories and related stories
Asiaweek Newsmap: Get the week's leading news stories, by region, from Newsmap
