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Finance & Economy

Outdated mindset is blocking China’s new ideas, say analysts


Vehicles are displayed at the 18th China Beijing International High-Tech Expo in the Chinese capital in May. Analysts say the government needs to create a level playing field to allow all types of businesses to flourish. Photo: AFP

Vehicles are displayed at the 18th China Beijing International High-Tech Expo in the Chinese capital in May. Analysts say the government needs to create a level playing field to allow all types of businesses to flourish. Photo: AFP

A leading mainland Chinese inventor-entrepreneur says he may not have surrendered his professorship at an elite university if government policy at the time had allowed him to set up his company while still staying in his post.

“If there had been an option, I would have definitely considered it,” Zhong Faping – one of the best-known figures in the new energy auto technology sector – said. Zhong quit his job at Tsinghua University in 1997 to establish Hunan Corun New Energy, a leading producer of batteries for hybrid vehicles.

The mainland has launched unprecedented measures in recent months to accelerate innovation. The government vowed to support university students who decide to leave early to start a business before returning to complete their studies. It also decided to reduce tax hurdles for emerging industries, such as e-commerce.

To spur “mass entrepreneurship and innovation”, the State Council also said teachers would be encouraged to start their own businesses while staying employed at their state-run universities and research institutes.

Zhong welcomed the moves, but said they would not be enough. The government itself needed to change its mindset on innovation, he argued.

“Without this, intelligent people might only drown after they decide to go to sea,” Zhong said, referring to a saying about officials who leave state-run posts to start their own businesses.

The mainland’s growth slipped to just 7 per cent in the first quarter from a year earlier, after expanding at an average of 10 per cent in the past decade.

The growth slowdown has added urgency to the government’s moves to rely on higher productivity to drive the economy. But it must provide a better environment for small innovative firms to survive, analysts say, as these are crucial to creating jobs and can operate more efficiently than most state-run players.

Deep-seated problems lie in the government’s outdated mindset, according to analysts who are calling for a revamp in education, easier financing for smaller firms and less government interference in the market.

Li Qiang, a professor of social science at Tsinghua University, said the outdated education system was hindering innovation. University disciplines were still decided by the Ministry of Education, which knew less about technology and scientific development than professors.

“Meanwhile, we should further encourage collaboration between universities and enterprises,” he told a forum on workforce issues in Beijing last week.

Li’s suggestion was echoed by Zhong, although he said enterprises that could swiftly adapt to market changes should lead the nation’s innovation campaigns.

Founded from scratch nearly two decades ago, Hunan Corun New Energy is now a leading battery maker for hybrid electric vehicles in China.

The government, Zhong said, had reached too far by dictating specific types of innovative business models that companies must adopt. Those that did not follow the policies closely risked losing substantial subsidies.

For example, companies producing purely electric vehicles received about 30 billion yuan (HK$37.5 billion) in government subsidies over the past five years, but hybrid carmakers received little even though they were also energy efficient, Zhong said.

While the mainland campaign to cut emissions and modernise industry had begun, it might miss growth opportunities because of such limitations, Zhong said.

“The government should only position itself as a judge. All it needs to do is to create a level playing field to allow all types of businesses to flourish,” he said.

Asian Development Bank economist Niny Khor said governments across developing Asia, including China, needed to give better access to financing for new enterprises, and help train a larger pool of skilled workers.

Alternatives including equity financing and bond markets could help small companies raise funds, she said. “Investment in human capital and [research and development] is also very important, as well as property rights, so that entrepreneurs can bring these innovations to the market,” she said.

The mainland lagged many countries in developing human capital, the World Economic Forum said last week. It estimated that if human capital was properly utilised, global gross domestic product would rise by 20 per cent.

The mainland had optimised 67 per cent of its human capital, ranking it No 64 in the world.

Fan Gang, director of the National Economic Research Institute, last week said legal reforms were needed to take account of new business models. “The legal system has to adapt to the new situation, and new technology,” he said. He was referring to the official crackdown on the cab-hiring service Uber and taxi rides using private cars booked via their own smartphone apps.

But Fan warned regulatory change might be difficult. “I think that’s something the business sector should be aware of. [They] should be lobbying harder.”

Contributed by “Sky in Company” – English/Chinese and Italian/Chinese translation service

Source: SCMP – Outdated mindset is blocking China’s new ideas, say analysts
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About Sky In Company

I am Genevieve Cheung, originally from Hong Kong. After completing secondary studies, I moved to Australia where I completed a degree in Bachelor of Business Management at the VUT in Melbourne. After graduation I moved to Italy where I have been living for more than twenty years. My vast cultural background and extensive linguistic knowledge (speak and write fluent English, Mandarin/Cantonese Chinese and Italian), allow me to join our company- SKY IN COMPANY (HK/ITALY). We provide main services such as web-site translations from Italian/ English to Chinese/English, and SEO services for the Chinese search engine "Baidu". Our offices, based in Hong Kong and Italy, have a young and dynamic team with collaborators around the world. Sono Genevieve Cheung, originaria di Hong Kong; dopo aver completato gli studi secondari, mi sono trasferita in Australia, dove ho conseguito una Laurea in Bachelor of Business Management presso la VUT di Melbourne. Dopo la Laurea mi sono trasferita in Italia, dove vivo ormai da più di venti anni. Il mio background culturale e la vasta conoscenza linguistica (parlo e scrivo correntemente l’inglese, il cinese mandarino e l’italiano), mi consentono di partecipare in quest’attività di traduzione in Italiano/English/Cinese. La principale attività della nostra ditta – SKY IN COMPANY (HK), consiste nella traduzione in lingua cinese di siti web italiani, nonché di servizi di tipo SEO rivolti al motore di ricerca cinese “Baidu”. La nostra ditta principale, con base in Hong Kong, dispone di un team giovane e dinamico con collaboratori in tutto il mondo. WWW.SKYINCOMPANY.COM skyinhk74@yahoo.com.hk HONG KONG OFFICE: Flat b 15/F, Block 7 Yee Mei Court, South Horizon, Ap Lei Chau, Hong Kong Island Hong Kong Tel: ++852 92235260 ITALY OFFICE: Via Metastasio 27 Firenze 50124 Italy Tel: ++39-347 1429011

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