Professor's Research Examines Entrepreneurship in China

Xiaohong He, professor of international business, is interested in what makes successful businesses tick. Her research focuses on entrepreneurial ventures in emerging economies, including China and India.

China is the world's second largest economy with a gross domestic product of $1.33 trillion. "Chinese people have always been entrepreneurial," said He. "There is a social structure, history and entrepreneurial culture in China that I don't think any country can replicate."

But other countries can learn from its ascent to prosperity that began three decades ago. As a Galpin International Exchange Fellow, He traveled East, from December 2008 to the end of March 2009, and again in summer 2010, to study the entrepreneurial elements of Chinese society that have contributed to its success. She spent time in non-government owned companies in the Zhejiang and Jiangsu provinces near the city of Beijing.

"With the second largest economy in the world, I think it's important for people to understand China," He said. The country has a long history of entrepreneurship from the trading posts along the Yangtze River to the Silk Routes that laid the foundation for an international trade network. In the past, China's communist government prevented entrepreneurs from entering the marketplace.

After the Cultural Revolution in the '60s and '70s, the country started to dismantle some government-run industries. "In the early '80s, those small entrepreneurs had a hard time getting started," He said. "Once they started, they were booming and became a key driver for rapid economic development in China."

Modern China uses the communist organizational structure to support business development. Business decisions are made locally, He explained. In China, the economic transition changed many incentives for local governments. During the decentralization process, local governments received less budgetary funds from the central government. At the same time, they were allowed to keep more of the money they made. As a result, the local government benefited from economic growth and supported local entrepreneurs, He said.

The country's half century of history as a socialist government also had engrained the idea of working together for the prosperity of the entire village, which He calls "village entrepreneurship."

And neighboring companies in the same industry can co-exist. "When markets grow, several companies can do the same thing and they can survive," He said.
Fall 2010

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