Chinas Spotlight on the Global Entrepreneurship Renaissance
It is an important week for entrepreneurship around the world, especially here in China where we recently wrapped up the Kauffman Foundation-led Global Entrepreneurship Congress, bringing together impressive leaders in the field from over 100 nations. In addition to launching and recognizing more than 100 national campaigns to promote entrepreneurship through this year’s Global Entrepreneurship Week (scheduled for November 14-20), we have witnessed this week entrepreneurship as a burgeoning phenomenon from Chile to China.
On Tuesday I could only be impressed when I looked out over the podium at a Chinese convention center full of more than 1,000 angel investors, educators, entrepreneurs and public officials. While I am always curious as to how one seeds organic, disruptive, entrepreneurial behavior in such a disciplined, top down society as China, I witnessed a sincere effort in my meetings these past few days with Chinese entrepreneurship policy champions to expand freedoms to start new businesses. The Minister of Science & Technology and Vice-chairman of the CPPCC National Committee Wan Gang, Vice Chairman of National People’s Congress Yan Junqi, and our keynote speaker Liu Yandong, who is Member of Standing Committee of Political Bureau all openly encouraged entrepreneurial activity and launched western-style interventions to support startups. We also heard from Chinese entrepreneurs and angel investors, who are well aware of the importance of entrepreneurship to China’s future, including an impressive panel discussion that included Carl Schramm from the Kauffman Foundation, Li Kaifu, the founder of Innovation Works, and Qiwei Chen, the founder and president of the Asia Business Group and Sequoia Capital China.
As I reported recently, China is clearly trying to catch up with various initiatives to be among those at the forefront of the global entrepreneurship movement. One further example of this today is evident in the establishment of the Entrepreneurship Foundation for Graduates (EFG) as a national entity with a mission to create a favorable entrepreneurial environment by promoting the commercialization of scientific and technological breakthroughs and to cultivate creative entrepreneurial talents. A Kauffman Labs type effort was also announced along with several efforts to foster and recognize individual angels over venture capital.
The focus on entrepreneurship as a path is not necessarily new in China. Just check out the China Rich List, which includes 143,000 millionaires in Beijing alone. Hu Run, the chair and chief researcher for this list, was on hand at the Congress to tell us more. Yet mere observations suggest that efforts among the country´s leadership are bearing fruit. There are many young Chinese entrepreneurs, as profiled in a recent Forbes article.
But this week has been about more than China. The yearly Congress began as an international meeting of the organizations from around the world driving the Global Entrepreneurship Week movement. However, following its success last year in Dubai, it has quickly expanded to a much more significant global moment for entrepreneurship.
Take Britain, for example, where the Global Entrepreneurship Congress this week heralded plenty of action. First, Liverpool was selected as the first European city to host the Global Entrepreneurship Congress, scheduled next year for March 12 - 16. The British city's success came from the leadership of Liverpool Vision along with several key figures--all of whom are committed to making Liverpool a global capital for entrepreneurs, creativity and innovation. As I passed the ceremonial GEC flag from Shanghai to Liverpool, I thought of the next generation of innovators whose ideas and enthusiasm will shape the future of the United Kingdom, and perhaps, the world.
It was a well-deserved win for Britain. The UK was the first Global Entrepreneurship Week partner when the country joined the Kauffman Foundation in launching the Week worldwide, but, more importantly, it has become more and more entrepreneur-friendly. We have seen a number of concrete initiatives in the past few months demonstrating British support for entrepreneurs as a source of growth and employment. Consider Startup Britain, launched in parallel to the Global Entrepreneurship Congress. This private sector initiative is a response to the UK government’s call for an ‘enterprise-led’ recovery. Startup Britain has the support of Prime Minister David Cameron and over 60 partner companies, including Barclays, BlackBerry, Experian, Intel, Microsoft, McKinsey & Co. and Virgin Media. Scott Case, CEO of Startup America Partnership, explained that supporting companies have already pledged millions of pounds worth of support to new entrepreneurs, from office space to finance and mentoring support for start-up companies. Google, for example, will support start ups by providing them with an amount of free advertising. Estimates suggest that in total Startup Britain will deliver a benefit package that represents over £1500 in value for every start-up company in Britain. Start-ups can browse sources of support through Startup Britain’s web portal (www.startupbritain.org).
Alongside the launch of Startup Britain last week, the British government made several announcements of entrepreneur-friendly policies. According to Dr. Nick Lambert from the Enterprise Directorate of the Department for Business, Innovation and Skills, the following are part of a package of four new announcements to help inspire, support and grow new businesses in the UK.
- A 1 per cent cut in corporation tax from April 2011 to 26 per cent, falling to 23 per cent by 2014.
- 11 Enterprise Zones across England, with simplified planning rules, superfast broadband and tax breaks for businesses, with local areas to bid for a further 10.
- An increase to the rate of SME R&D tax relief to 200 per cent in 2011 and 225 per cent in 2012.
- An increase to the rate of Enterprise Investment Scheme tax relief to 30 per cent from April 2011.
- Doubling the lifetime limit on capital gains qualifying for Entrepreneurs’ Relief.
- Continuing the Enterprise Finance Guarantee until 2014, providing up to £2 billion in lending.
- Introducing the new £37.5 million Enterprise Capital Fund to support small business with highest growth potential.
- A moratorium exempting start-up businesses from new domestic regulation for three years from April 1, 2011.
- The government also pledged support for every school in England to run its own business through the Enterprise Champions Programme. Schools will be given access to online resource materials and tools, which will give practical advice for teachers. The government will help schools engage local enterprise champions to support school businesses and extend learning into the commercial environment.
Also consider these other initiatives launched in the past few months, many of which are firmly embedded in legislation and budgets:
- Last November, Prime Minister David Cameron launched the East London ‘tech city’ initiative.
- In March, the government announced the Startup Visa, which modifies the existing visa for entrepreneurs (which currently requires £200,000 of investment) so they can potentially become residents with just £50,000 in funding.
- Several entrepreneur-friendly financial measures were in the new budget announced last month, such as a tax relief for angel investors under the EIS scheme increased from 20% to 30%, and looser restrictions on the size of investments into individual companies (increased from £1m to £10m).
- Passion Capital, supported by the government’s Enterprise Capital Fund, recently announced their launch with a $60m seed fund.
- The government also recently announced education initiatives, such as a collaboration with the Peter Jones Foundation to make Tenner Tycoon grow tenfold. Tenner Tycoon provides young people across education levels with a ten pound loan, with the challenge to make as much profit and social impact as possible through enterprising activities over one month. The aim is to reach at least 250,000 young people by 2014.
Moreover, according to some, a red tape holiday is imminent.
As with all policy measures, the true value of all these initiatives will depend on their measurable results – and of course the blogs offered ample critique and skepticism. But if nothing else, entrepreneurship evangelists should be inspired by the statistics emerging – namely in the UK 1.3 million of the last 2.4 million jobs created in the UK were created by startups. It appears we are moving past the point of no return in terms of government appreciation for new and young firms begun in the US where all net new jobs have come from firms less than 5 years old. In the UK for now, however, the intangible value lies simply in the fact that government, through its own policies and programs as well as through support to private-sector-led initiatives, is openly trying to make it easier for new ventures to start and grow, and thereby supporting the idea that the entrepreneur is to be valued. This is crucial to build cultural capital for entrepreneurs.
For the rest of the world these initiatives set the example. Begun by Chile with Startup Chile, we are witnessing competition to be favorable for startups similar to that created by the World Bank’s Doing Business Report. For example, we have already seen many articles contrasting the push for startup visas in the U.S. vs. the UK. BusinessWeek’s Bobbie Johnson recently wrote:
It's no secret that the political machine in Washington can be slow ….. Take the Startup Visa Act. First brought up for debate in 2009 and introduced for the first time last year, it has only just now been reintroduced on Capitol Hill by John Kerry and Richard Lugar.
In the meantime, Britain has managed to enact similar legislation despite undergoing a change of government, debating the ideas, and having to institute the changes to immigration laws. In fact, the pace has been so rapid that new rules to grant visas to entrepreneurs will come into force in just three weeks.
While competition for entrepreneurial talent is only part of the story, the start-visa legislation in various nations is very positive news for all who want to see innovation flourish. Startup Chile, America and Britain have begun an interesting global conversation as to how the public sector can elevate the image and success of entrepreneurs. New ideas are already emerging from entrepreneurship powerhouses such as Denmark where a possible initiative mentioned in Shanghai by the Ministry focused on “Startup Growth”. I hope the debate begun at the Global Entrepreneurship Congress in Shanghai will continue to inspire lots of smarter thinking back home– especially among those nations recognized with awards this week for outstanding work in the field. It is of course significant in its own right that it is China we have to thank for the coalitions of nations and experts formed these past few days to provide momentum for more exciting ways during Global Entrepreneurship Week of getting massive public buy-in for the role of entrepreneurs in building economies.
The Chinese have set the bar high for the next Global Entrepreneurship Congress in Liverpool by shedding light this week on an unstoppable entrepreneurial renaissance. Next March promises a whole new festival of disruptive ideas and game changing actions and policies for nations to select from as they seek to go beyond Startup Nation announcements to meaningful actions to accelerate the creation and growth of young firms. Mark your calendar.
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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.