Xinhua Insight: Startups shoot up in rural China, challenges remain

Startups are shooting up in China's countryside as the government encourages rural entrepreneurship with a spate of favorable policies.

This week, the Ministry of Human Resources and Social Security publicized employment figures of 500 villages it supervised in 10 provinces. According to the ministry, about 13,000 rural laborers started their own businesses in the first half of 2015, up 3.1 percent year on year.

In some provinces with large numbers of migrant laborers, the number is even higher, according to the ministry, with the southwestern Guizhou Province having recorded some 72,000 laborers who became their own bosses in H1, a year-on-year increase of 58 percent.

More rural workers chose to start their own businesses thanks to government policies supporting entrepreneurship, according to Zhang Ying, deputy head of the ministry's department of employment support.

Wang Qiongshi, the head of a laundry facility in his hometown of Haikou, capital of south China's Hainan Province, was once a migrant worker struggling in neighboring Guangdong Province. Wang said that after starting his own business a few years ago, he now rakes in a monthly revenue of more than 200,000 yuan (32,220 U.S. dollars).

Qin Guohong, who worked in Nanning City of Guangxi Zhuang Autonomous Region a few years ago, has launched a pig-selling business in his hometown of Guangxi's Baise City.

"Registration is easier these days, and the government provides financial support," said the young man, who has opened 15 chain stores in Baise.

The State Council, China's cabinet, announced new policies in June to encourage migrant workers, college graduates and discharged soldiers to return to their hometowns and start their own small businesses.

The government has promised easy business registration and will even allow them to participate in rural infrastructure development and public services that are normally reserved for the state.

Experts say the country's startup encouragement is a result of China's new stage of slower but more resilient growth, which relies on services, consumption and innovation.

RURAL STARTUPS

While countless migrant workers are still struggling to make ends meet in China's cities, many people are returning to their rural hometowns to start their own businesses.

In Guizhou's capital Guiyang, a business incubation park was put into operation in the city's suburbs in April by the Guizhou government.

The "Dream Factory" park, about 1,300 square meters in area, provides free venues, cheap accommodation and startup loans from the provincial government. It has already attracted a dozen entrepreneurs.

Li Shucai, head of a startup team selling agricultural products, was sitting in a cubicle browsing client information when Xinhua reporters visited the park this week. Li said his new company supplies chickens, eggs and other local products to more than 100 companies across the country.

"I have just set up the business, so our budget is tight," Li said. "But because the factory gives us lots of favorable policies, I feel less pressure."

Wu Jingxin, an employee with the factory, said that the facility will provide a platform for innovation and a "startup spirit" in the province.

Similar situations can be found in Guangxi, where the government has recently promised to give up to 100,000 yuan for each entrepreneur who meets its criteria.

The preferential policies have created a flow of migrant workers back to their hometowns.

In the central province of Henan, an area with millions of outbound laborers, the proportion of local rural people working outside the province dropped from 43.6 percent in 2013 to 39 percent last year, whereas the percentage of those working in their home counties and cities rose from 30.3 to 38.1.

By the end of 2014, there were 270 million rural laborers in cities, but it is estimated that some 2 million migrant workers have returned home. More are predicted to return home in the future, according to the Ministry of Human Resources and Social Security.

"Government support has really had a huge role in the returning trend of migrant workers," said Zhang Jianjun, an economist with the Party School of the Gansu Provincial Communist Party Committee. "Meanwhile, favorable policies have brought investment as well as projects to China's rural west."

Other local-level authorities are also implementing a variety of policies in a bid to attract talent to return home and boost the local economy.

Suzhou, a city in east China's Jiangsu Province, has built 26 business incubation parks for returned migrant workers, with 76 companies employing more than 9,000 people.

Besides the lure of government support, many migrant workers have grown fed up with their lives adrift.

"Life in big cities is not all it is cracked up to be: the air was bad, transportation was terrible, and it was hard to lead a good life," said Ma Dawu, who is from Dongxiang County in northwestern Gansu Province.

Many people are motivated to return home by the connections they have there.

"When you are in your hometown, you have acquaintances, and acquaintances mean business," said Gao Mingjun, a migrant worker who returned to Dingxi City in Gansu.

Wu Zhaohui, a business official in Guizhou's Tongren City, said government policies, the Internet and e-commerce in rural China all help to make returning home an attractive idea.

"When you do businesses at home, you have your family members around, which offers a strong support system," Wu said. "This is what migrant workers usually don't have in big cities."

STUMBLING BLOCKS

Despite all the advantages of entrepreneurship in the countryside, the picture is not all rosy. Poor infrastructure, expensive talent and high costs are stumbling blocks that remain in the way.

Tu Wuye, who runs a metalwork company in Guangxi's Lipu County, said it is difficult to send his hardware products to other places in the country because logistics lag behind development.

"There is no expressway in Lipu currently, which hampers the development of our company," Tu said.

Many people also complained of the trouble of hiring talent amid rising labor costs. Some startup companies interviewed by Xinhua in Guangxi even reported a 50-percent labor shortage.

"As a startup, our business is a bit risky in the beginning and our benefits are quite limited," said a migrant worker who has started an agricultural product processing company in Guangxi. "So it is important to think about how to lower the cost and improve benefits."

Dang Guoying, a rural economy expert with the Chinese Academy of Social Sciences, said it is important to improve the rural environment for entrepreneurship in the countryside by enhancing infrastructure.

"The government should also provide more guidance on the market and on business management," the academic said. He added that more training sessions should be held to help migrant workers overcome difficulties.

"Only in this way can we truly cultivate sustainable businesses in rural China," he said. Endi