Tuesday, March 15, 2011

China and the New Entrepreneur

Allan Kupetz sent over this very interesting article from the Economist on entrepreneurship in China, titled, Let a Million Flowers Bloom. I used to travel a lot in China, and even a number of years ago, you could see the very early stages of the growth of the entrepreneurial enterprise. I remember walking through an area just outside of Shanghai, called Pudong, which at the time was just a lot of mud, and not much else. Now, as testimony to its growth, over 1.3 million square meters of prime office space was completed in Pudong in last few years.

From the article:

China’s state-controlled entities are not particularly profitable. A study by Qiao Liu, a professor at the University of Hong Kong, concludes that the average return on equity for companies wholly or partly owned by the state is barely 4%, despite the benefit of cheap leverage provided by government-controlled banks. According to a recently published paper by Mr Liu and a colleague, Alan Siu, the returns of unlisted private firms (my note: this is how the article is referring to the Chinese entrepreneurs) are no less than ten percentage points higher.

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