If You Want to See Entrepreneurs, Go to China

It's not the institutional environment, taxes, or ease of hiring. To explain the country's astronomical entrepreneurship rates, Scott Shane digs into the data.

As MIT political scientist and China expert Ed Steinfeld says, "China [is] one of the most entrepreneurial places on earth." Perhaps this observation doesn't surprise you, given what's been happening to the Chinese economy in recent years. But you might not recognize how widespread entrepreneurship is in China, or why the country is so full of entrepreneurs.
What the Data Show
The latest numbers from the Organization for Economic Cooperation & Development (OECD) show that China's rate of self-employment far exceeds that in the U.S.—51.2% versus 7.2%—a gap that hasn't changed much since 2001.
Lest you think that self-employment represents something other than entrepreneurship, consider some other statistics. According to the 2009 GEM report, China exceeds the U.S. in its rate of nascent entrepreneurship, rate of ownership of new businesses, and rate of ownership of more established businesses.
China Has More Growth-Oriented Entrepreneurs
China doesn't just have more small business owners than the US; it also has more growth-oriented business founders. China had the highest rate of high-expectation entrepreneurship of any country covered by the study. More than 4% of the Chinese working-age population is engaging in high-growth-expectation entrepreneurship.
Furthermore, China scores higher than the U.S. (and many other nations) on realized rates of new business growth. So it's not just how much people expect to grow, but also what they accomplish in creating jobs that marks China's entrepreneurial activity. In China, the number of people plan to become entrepreneurs is 23%.
China Has Vibrant Financing Markets for Entrepreneurs
The 2009 GEM report also shows that the informal capital market is extremely vibrant in China. Approximately 6% of Chinese people between ages 18 and 64 made an informal investment in the past three years, compared with less than 4% in the U.S. One place where the U.S. remains ahead of China is in venture capital.
Why Is China So Entrepreneurial?
It isn't because of the size of the country's private sector. It also isn't the ease of business formation, favorable institutional environment, tax system or hiring employees.
Getting Rich Is Good
Keming Yang, a sociologist at Durham University, and author of the book Entrepreneurship in China, thinks the high rate of entrepreneurship in China results from a national focus on getting rich. "The Chinese people have a very strong desire, perhaps the strongest among all nations in the world, to lead an enviable material life," he explains. "It is a life-long struggle as they constantly compare their standard of material life with that of others around them."
The 2007 GEM Report supports the notion that Chinese entrepreneurs are motivated by the desire to make money. The GEM data reveal that fewer than 40% of Chinese entrepreneurs start businesses to have more independence, and more than 60% start businesses to increase their income.
Plus according to Steinfeld: "Chinese entrepreneurs, whether because of cultural or other factors, have consistently proven willing to establish businesses … in a number of high-risk, deeply unstable environments."
Maybe it shouldn't surprise anyone that China is so full of entrepreneurs. But the evidence that China is a go-to place to see entrepreneurs suggests we might learn something from studying Chinese attitudes toward starting businesses.

Click on the title link to read full story.

Asia's Top Business Schools

Staying in Asia for an MBA

As B-schools in China, India, Singapore, Hong Kong, South Korea, and other parts of Asia make their programs more global and establish partnerships with schools overseas, more Asian students are staying home to get their MBAs

For years, Asians interested in entering the best business schools had little choice but to head to the West. Now, though, business schools throughout Asia are trying to become more competitive with the top schools in the U.S. and Europe. B-schools in China, Hong Kong, South Korea, and other parts of Asia have been making their curricula more global and recruiting more professors from abroad. At the same time, Asian business schools increasingly are partnering with one another or with schools from the West to offer more options to their students.With the global economy in the doldrums, the competition to enter business schools is growing far more intense as students look to escape the dire job market and improve their chances of getting a well-paying position when the world recovers. So even though Asian schools are still no match yet for the Whartons and Kelloggs of the world, more and more Asian students are now looking to them as alternative places to get their MBAs.

For more on the best business schools in Asia, click on the title link.

The key to marketing any product

By Marilyn J. Holt, CEO of Holt Capital

Whether you are marketing an existing or introducing a new product, you need to present the "whole product," not just the primary offering. Marketing the whole product is not just about creating a new gadget or service, but also about presenting everything to buyers that is necessary to define, support, and drive them to take action.
You are well on your way to delivering the whole product to customers if you can answer the basics to some of these questions:
• Who is your primary buyer and why?
• What are the top three "Why to buy?" messages that you want to deliver to the market?
• What are the top three to five features you want to emphasize and why?
• What is the differentiation positioning of your offering?
• How does your product compete and compare against other offerings in the marketplace?
• How is your company going to support the product?
• What is your company's discount structure for multiple purchases?
• What is your return or cancellation policy?
• Is the offering itself or the services around the offering more important?
• Finally, if you were to buy this offering from a competitor, what questions would you want to have answered before you paid good money for it?

Sparking Creativity in the Workplace

Can every employee be creative?

The paper shatters the myths surrounding creativity; for example, that it depends on personality, intelligence, character, age or experience, or that it belongs to people who live dangerously. The truth is that very often, the best ideas come from conservative people. Studies have shown that unusually intelligent people with a high IQ are no more creative than those with an average IQ.

How, then, can companies foster creative talent?

Creativity results from having the right aptitudes and attitudes: the ability and the will. Employees need freedom to work, since the best ideas often come when people are having fun, laughing and enjoying their work. Here are ideas for sparking creativity in ourselves and in our subordinates.

Improving Our Own Creative Talent

A creative attitude is a permanent willingness to approach problems and situations in new ways. It is based on three basic attitudes: tenacity, confidence and enthusiasm. Besides the attitude or will, we also need the aptitude or ability. In business, originality is not enough. Ideas must be useful and practical. To enhance our ability to produce new ideas we should learn to make better use of the "old elements."

Fostering Subordinates' Creative Talent

A creative attitude is an inner willingness, and so, will depend essentially on our subordinates' motivation. The first measure is to reward initiative and encourage experimentation. Second, align the right person with the right task.

There are basically four ways to encourage subordinates' creative aptitude: foster diversity; invite subordinates to explore and use sources of innovation; ask them SCAMPER questions (substitute, combine, adapt, modify, put for other purposes, eliminate, rearrange or reverse); and encourage them to use team creativity techniques.

As employees search for innovation opportunities, they should draw on the seven sources of innovation identified by management leader Peter. F. Drucker: surprises, incongruities, bottlenecks, changes in the industry, changes in perception, demographic changes and changes in knowledge.

To promote lateral thinking, teams should turn to creativity techniques such as provocation, broken logic, brainstorming or the six thinking hats, in which each team member must look at a subject or situation from a different "color" or angle.

Thus, to establish a creative culture, companies should concentrate on inspiring people with clear missions and goals, and they should promote information exchange and collaboration.

The World's Biggest Companies

One world; one gigantic marketplace. This year, 60 countries have global 2000 entries vs. 51 in our inaugural list in 2004. The Forbes global 2000 are public companies with the top composite scores based on their rankings for sales, profits, assets and market value. Our justification for using a composite ranking is simple: One metric alone can give a false impression about corporate size.

In total, the global 2000 companies now account for $30 trillion in revenues, $2.4 trillion in profits, $119 trillion in assets and $39 trillion in market value. Around the world, 72 million people work for these companies.

The U.S. still dominates this list of global giants, but with 61 fewer entries than last year and 153 fewer than in 2004, as many U.S. companies failed to keep pace with global competitors. In contrast, China, India and Brazil are rapidly adding companies to the list. India, for example, has 48 companies this year vs. 27 in 2004.

Measured by number of companies, 315, the banking industry has the biggest presence on the global 2000. Banking also dominates in assets, with total assets of $58.3 trillion, and profits, $398 billion. The 123 companies in oil and gas operations lead all industries in aggregate revenues, of $3.76 trillion, and take second place in total profits, of $386 billion.

The complete list of Global 2000: http://www.forbes.com/lists/2008/18/biz_2000global08_The-Global-2000_Rank.html

How to Handle a Crisis

Crisis: A crucial or decisive point or situation; a turning point. (American Heritage Dictionary)

How to handle a crisis?

The best thing is to have a plan of action prepared in advance. That way, you can react swiftly and smartly when a crisis hits. Crises by nature are messy, often unfolding at a pace that makes careful and considered response difficult. Sometimes, they stem from unforeseen events, and in retrospect some could have been predicted, but always they present a test of leadership skill and preparation.

Communication Is Key

Crises represent turning points for business health and reputation, often leaving both in tatters. If handled well, though, a crisis response can actually enhance reputation and spur some needed dialogue and change. Considering an airline achieved its tremendous growth largely because of its customer-friendly reputation, its failure to anticipate such cancellations and plan accordingly became the focus of the debate over what went wrong.

Playing Ostrich Won't Work

At minimum, clear and immediate communication is an antidote. If stakeholders know you're aware that there's a problem, that may be enough in the short run to maintain goodwill until the problem is fixed or at least dealt with. Yet it's far easier to find examples of poor-crisis communications response than it is to find examples of those who learn from others' high-profile mistakes. A lack of information fuels anxiety rather than defuses it.

7 steps in responding to a crisis: http://www.businessweek.com/playbook/07/0904_1.htm

Asia faces 'unique and complex' terror threat

Business Times, 22 Feb 2008

THE terrorist threat facing businesses operating in South-east Asia is 'unique, complex and specific to the region', according to Lloyd's, the world's leading specialist insurance market, which also provides insurance cover against terrorism.

A new report from Lloyd's and the London-based International Institute for Strategic Studies (IISS), released yesterday in Singapore, warns that traditional forms of terrorism in Asia are being superseded by area-specific threats, such as criminal gangs with political agendas.

The report, entitled 'Terrorism in Asia: What does it mean for business?', outlines five practical steps businesses can take to minimise the threat from a terrorist attack:

1. gather high-quality information from the right sources - both government and academic

2. guide strategy and operations;
3. choose locations wisely
4. adopt security as business facilitator, not a burden;
5. protect supply chains; and
6. engage with local communities and understand local customs and traditions.

The report found that the main threat to businesses operating in South-east Asia are proximity to Western targets, such as embassies and hotels; kidnapping of employees; and threats to transport routes and supply chains.

Speaking at the launch of the report, Lloyd's chief executive officer Richard Ward said:

'There is no such thing as a uniform global threat, and in South-east Asia, businesses face some complex and specific regional issues. While there are fewer occurrences of Islamist terrorism in the area, criminal gangs with agendas are on the rise, with kidnappings and other forms of violent crime increasingly prevalent in some parts of the region.'

'Businesses need to be better at information gathering from the right source in order to focus on what they are actually threatened with, not reading the media headlines that usually focus on radicalism, and making decisions based on that,' he said.

Why business ignores the business schools

By Michael Skapinker, FT.com sitePublished: Jan 07, 2008

The three Democratic front-runners in the US presidential primary campaigns are lawyers. Even the spouses of Barack Obama, Hillary Clinton and John Edwards are lawyers. Mike Huckabee and John McCain are not lawyers, but Rudy Giuliani and Fred Thompson are.
Business schools have a thing about lawyers. First, they seem to run the US. Of America's 43 presidents, 25 have been lawyers. Only one has been an MBA (Bush).
Law schools seem to have an impact on their own profession that business schools cannot match. When law schools publish journals, lawyers read them. When law schools put on conferences, lawyers turn up. Chief executives, on the other hand, pay little attention to what business schools do or say.
In article after article in the Academy's Journal, the business school professors lament their inability to research and write about their work in a way that real-life business people understand.
The reason that real-life lawyers, doctors and engineers have no problem with their research is not because they are smarter than business people, but because the research assists them in what they do. In contrast, the way people behave in the office is far more mysterious. What works in one company may not work in another.
Managers tend to be practical rather than theoretical, proceeding by trial and error: this works, that doesn't. Rather than building on competitors' achievements, the best often seek to do something different.Business schools can describe what innovative companies have done: Harvard's case study method does just that. But this is, by definition, backward-looking. Business school professors will struggle to tell us what innovators will do next. If they knew, they would surely do it themselves.

I agree with most of the arguments in this article. Businessmen tend to learn more from their practices rather than B schools. Many great businessmen and millionaires are not business graduates; they are entrepreneurs. They don't even follow business books most of the time. Business graduates, in average, MAY score better in doing business. The dynamics of business world, however, have been changing rapidly due to globalization, sophistication in doing business and cut-throat competition: B education will be more useful eventually.

Faber Sees a Holiday in Cambodia for Investors

Extracted from Commentary by William Pesek

Bullish

"Cambodia offers an enormous potential for future capital gains,'' says Faber, the Hong Kong-based investor and publisher of the Gloom, Boom & Doom report. "It may take some time, as was the case for Vietnam and India, where stocks languished for a number of years before huge upward trends in asset prices developed. But patience was amply rewarded.''

Contrarian Bet

Cambodia is a contrarian investment with a capital "C.'' For every positive trend cited in this column, one can find a reason, or two, to avoid the place. While Cambodia has great promise, says Simon Ogus, chief executive of DSG Asia, it has a long, long way to go before many investors are willing even to consider putting money there. For one thing, he says, "the monetary system is 95 percent dollarized'' and the country lacks a bond market.

P0verty and Potential

Cambodia's challenges run deeper. Crushing poverty means all too many aren't being educated to compete globally. Good roads, bridges, and power systems are in short supply. The export-dependent economy is vulnerable to a U.S. slowdown and rising fuel costs.
Corruption means double-digit growth doesn't get very far anyway. In Transparency International's 2007 Corruption Perceptions Index, Cambodia ranked 162nd -- behind Bangladesh, Zimbabwe and Tajikistan.
Cambodia also is sitting on a discovery that will either attract investors or have them aggressively avoiding the country: oil. While deposits are still being estimated, the potential of Cambodia's petroleum industry is attracting interest from BHP and Chevron.

Yet investors are searching for the next generation of developing-market stars now that the "BRIC'' economies- Brazil, Russia, India and China- and Vietnam have been discovered. Watching neighboring Vietnam thrive also may inspire Cambodia's government.
If oil profits are used to improve education, reduce poverty and upgrade infrastructure, investors who took a chance on Cambodia will be, in Faber's words, amply rewarded.

Bringing Commerce to Cambodia

Brash, ambitious, some say ruthless, Kith Meng is building an empire in the newest tiger economy. "He's not an entrepreneur in the traditional sense of creating new businesses," notes one close friend. "What he does is go out and get the business that Cambodia needs. He brought in mobile phones, television, banking, insurance. He's the right guy at the right time."

ANZ may know banking, but Kith has the Midas touch in Cambodia. And he clearly stands apart from both the old money--made mainly in mining, logging and smuggling in the 1980s and 1990s--and the new entrepreneurs starting restaurants and tourism businesses. The older tycoons tend to be reclusive and tied by blood or marriage to the political leaders. In contrast the brash Kith is only 39, unmarried and linked to nothing but the pursuit of profit. Many call him the new face of Cambodian capitalism.

Many say his personal history explains his "go-for-the-throat" business style. "He is ruthless," concedes one close friend, "but Cambodia is a ruthless place. He doesn't mince around." Kith, for his part, says that what sets him apart from others in Cambodia's new economy is his work ethic. He describes workdays that start at dawn, ending long after dark. Only recently have friends persuaded him to devote time to short workouts. Unlike the established elite here, who tap family members, Kith recruits Western talent. "And he treats them well," says one competitor. "Kith is raw and unpolished, but I think he's genuine," adds a longtime business consultant. "He doesn't read books or magazines, but he reads people."

Lessons from Toyota's long drive

As Toyota becomes the world’s biggest automaker, the company finds its much-heralded ways of managing for the long term to be more important than ever before.

Toyota’s way is to measure everything—even the noise that car doors make when they open and close as workers perform their final inspections on newly manufactured automobiles. By any measure, whether esoteric or mundane, Toyota Motor Corporation has become one of the most successful companies in the world today.

Toyota’s ascension is best captured by the Japanese word jojo: “slowly, gradually, and steadily.” The company is proud of the fact that its management principles are different from those taught in B-schools. Senior executives take great pleasure in explaining that other companies find it difficult to emulate Toyota because its management tools matter less than its mind-set.

A series of interviews with Katsuaki Watanabe, Toyota’s 65-year-old president, and several executive vice presidents revealed that Toyota’s future will depend on its ability to strike the right balance—between the short term and the long term; between being a Japanese company and being a global company; between the manufacturing culture of Toyota City and the design culture of Los Angeles, where some of Toyota’s cars take shape; between the cautiousness of Toyota’s veterans, who are worried about growing too fast, and the confidence of its youngsters, who have seen only success. Toyota must also balance incremental improvements with radical reform.

Cambodian Bourse Planned for 2009

Financial Times, January 22 2008

South Korea's stock exchange and the Cambodian government have agreed to set up a stock exchange in Phnom Penh in 2009, the latest signal of the optimism sweeping the fast growing but deeply impoverished country.

Cambodia’s economy is booming, having grown an average of 9 per cent a year for the past decade, propelled by surging foreign tourist arrivals, garment exports, construction and improvements in agriculture, and Phnom Penh is today keen for all the trappings of a modern economy.

Most of the capital financing Cambodia’s rapid growth has come from external sources, including foreign aid and growing foreign direct investment. A senior World Bank official in Phnom Penh said Cambodia would increasingly need to rely on domestic savings. Local bank lending is surging. Credit to the private sector rose 60 per cent in 2007.

In spite of the rapid expansion, it is far from clear that Cambodia’s private sector, dominated by closely held family businesses, is ready to take the leap to go public. “The key issue will be to raise corporate governance standards,” the World Bank official said.

The Ethics of Talking Politics at Work

The hot-button issues of politics can lead to inflamed tempers that can impede your productivity—and possibly, your progress.

Along with sex, money, and religion, politics is one of the most controversial topics of conversation that exists. Money, more than sex, is the most personal aspect of our lives, and it is the one that opens us up to the greatest potential for embarrassment. Sex, too, is still an off-limits topic for discussion at work and not merely for the legal reasons relating to sexual harassment. Neither your salary nor your sex life is anyone's business at the office. Nor, for most professional settings, are your religious beliefs.

In considering whether it is appropriate to have political discussions on the job, five fundamental ethical principles are at stake: Do No Harm ; Make Things Better; Respect Others; Be Fair; Be Loving.

Simply put, we shouldn't discuss politics in the workplace because, with very few exceptions, these discussions have nothing to do with our job and can only interfere with it. Bottom line: the very real and important need for lively, informed, and vigorous debate is best met before and after one goes to work. Everyone in the body politic will be better off if this rule is treated with the respect it deserves.

A Guide to Goal Setting

Ray Silverstein

Do you make resolutions at the beginning of every year? Resolutions can be powerful tools. In fact, they can help you take your business to the next level. The catch is, once you make a resolution, you have to work to make it come true.
If you want action, you need an action plan. Goal setting is the best way I know to transform lofty resolutions into bottom-line results. Research shows that when entrepreneurs set measurable goals for themselves, they're more like to achieve them.
When you engage in true goal setting, you define your objectives in pragmatic, measurable terms. You also need to identify the resources, time and funds you'll need to invest to attain them. That's how you develop action plans. Once you know where you want to go, the next step is to figure out how you'll get there and how much you're willing to spend on the trip.

Use the SMART SystemWhen it comes to goal setting. Each goal must be defined so that it meets the following criteria: S: Specific, M: Measurable, A: Achievable, R: Realistic, T: Timely

6 Secrets Millionaires Know That You Don't

Ever wonder what it takes to build a million-dollar business? Get the scoop on how successful entrepreneurs do it, and you may soon be one of them.

Many new business owners look at successful entrepreneurs and envy their million-dollar lifestyles and accomplishments. “If only I knew their secrets,” they think. “Why isn’t my business as profitable or growing as fast?” The secret is simple: It’s not hard work or long hours; it’s acting like a CEO, no matter what the size of your enterprise.

CEOs expect a payoff for every venture. Millionaire entrepreneurs focus on the business practices that create the biggest results. When you choose how to invest your time, money and resources, you should ask “What’s the payoff?” Once you make that investment, if the return is insufficient, find a way to make that project profitable, or ditch it. Millionaire entrepreneurs use these six secrets to guarantee an enviable payoff. Read more...

Third world way

The UN Global Compact may be the best way to draw corporations into the development process. Is its optimism justified?

A CERTAIN zeal pervades meetings of the United Nations Global Compact. Not surprising, as its cause is lofty: to harness the power of business to make the world a richer, fairer and cleaner place.

Its modus operandi is deceptively simple: companies agree to adopt ten core principles regarding human rights, labour, environmental and anti-corruption standards, and to report annually on their own progress towards meeting them.

Meanwhile, managers recognise the long-term benefits of paying attention to environmental, human-rights and governance issues—benefits that go beyond defensive public relations. With imagination, and help from NGOs, many firms think they can deliver gains for society beyond their products and services.

Advocates of CSR try making the case on behalf of its extrinsic benefits—arguing that it attracts better recruits, bolsters share price, eases market entry, helps to win licenses and more.

Partnerships between firms and NGOs are springing up. Oxfam, an anti-poverty group, works closely with multinationals such as Unilever.

Who is afraid of Mideast money?

With their huge windfall, the Arab is buying the world. The men who manage the region's sovereign wealth funds are using the billions from Persian Gulf oil revenues to change the face of global finance.

Six Gulf states—Abu Dhabi, Dubai, Kuwait, Oman, Qatar, and Saudi Arabia—account for nearly half of the world's sovereign wealth fund assets. They control some $1.7 trillion, as much as all of the hedge funds in the world and more than the $1 trillion private equity industry—and Morgan Stanley predicts the total will grow by about $400 billion annually over the next several years. There's even talk that Saudi Arabia may soon unleash a new $500 billion-plus fund. Bankers estimate that Gulf funds earned about $180 billion from their sovereign wealth fund investments in 2007—more than half of the $315 billion they collected in oil and gas revenues.

It wouldn't be so worrisome but for the fact that these massive funds are situated in a handful of tiny, oil-rich city-states in one of the world's most volatile regions. The tiny Gulf emirates rely on the U.S. military for protection from the likes of Iran and Iraq—and they rely on guest workers for much of their labor. It's a precarious situation, to say the least.

The World Is Watching Vietnam's Big IPO

Hopes are riding high, but lackluster interest in Vietcombank's privatization means there could be trouble ahead. To date, few Vietnamese companies have had enough heft for foreign investment funds to consider. More than $9 billion has been raised globally for investment in Vietnam but some $2 billion of this still hasn't been deployed, for lack of investment opportunities. Foreigners are restricted from holding more than half of listed companies, and they can own just 30% of banks such as Vietcombank.

Despite the worries over Vietcombank, the longer term prospects for Vietnam's stock market look strong. GDP growth has averaged more than 8% for the past few years. Multinational heavyweights such as Intel (INTC), Canon, and Compal have poured billions into manufacturing to take advantage of Vietnam's industrious workforce. And in January, Vietnam was admitted to the WTO. Although growing inflation could be a concern, Vietnam's population of 84 million, half under the age of 30, could still make it Asia's next economic tiger.

The challengers

A new breed of multinationals from emerging economies is posting a new challenge to established giants from developed nations.

A study by Boston Consulting Group (BCG) found 100 companies from emerging markets with total assets in 2006 of $520 billion, more than the world's top 20 car companies. By 2004 UNCTAD even noted that five companies from emerging Asia had made it into the list of the world's 100 biggest multinationals measured by overseas assets; ten more emerging-economy firms made it into the top 200.

According to BCG, they are fanning out around the world using a selection of five strategies :

1. The first is taking brands from local to global.
2. A second strategy is to turn local engineering excellence into innovation on a global scale.
3. The third path to international success is going for global leadership in a narrow product category.
4. Taking advantage of natural resources at home, and boosting them with first-class marketing and distribution.
5. The fifth strategy is to have a new or better business model to roll out to many different markets.

Richard Branson: Life at 30,000 feet

When he was at school, his headmaster predicted he would wind up either a millionaire or in jail. Since then, he's done both. Here he talks to TED's Chris Anderson about the ups and the downs of his career, from his multibillionaire success to his multiple near-death experiences, from Virgin's line of spacecraft to the failure of the Virgin condom. He also reveals some of his (very surprising) motivations.

Branson is one of the most enterpreneurial persons the world ever known. It's interesting and helpful to learn from his experience to know what the characteristics and drives of a successful enterpreneur are. Being risk-taking and resourceful is perhaps the most important traits an enterpreneur should possess. Start and deal flexibly.