Global Entrepreneurship Monitor
Hong Kong andShenzhen
* Entrepreneurs drive renewal and progress in market economies * GEM is the mos t comprehen sive country-by-country study o f entrepre neurship in the world . GEM measures entrepreneurship by the percent of the population involved in business sta rt-ups. GEM calls this measure "total entrepreneurial activity" or "TEA" * Hong Kong's TEA is a low 3.2 percent, compared with Shenzhen's 10.5 percent, China's 11.6 percent and GEM average o f 8.9 pe rcent * Shenzhen's entrep reneurs start businesses mainly to s eize opportu nities (oppo rtunity TEA of 8.6 percent) rather than out of necessity (nece ssity TEA of 1.8 percent). These TEAs are more like an advan ced entre preneuri al econom y's than a develo ping econ omy's * Hong Kong's necessity TEA of 1.1 percent is similar other developed economies' and mid-ranking in among the GEM economies, but its opportunity based TEA is fourth from the bottom * In Hong Kong, those with matriculation or with a universitydegree are the most entrepreneurial while those with vocational and technical diplomas or post graduate degrees are the least entrepreneurial * In Shenzhen, young people with post graduate degrees are the most entrepreneurial * In both Hong Kong and Shenzhen, the higher the income, the more likely a person is to be involved in a startup * Most start-ups in both Hong Kong and Shenzhen bring familiar products or services to market * In both Hong Kong and Shenzhen, more frequent cross border travel is associated with much higher levels of entrepreneurship * Far more Shenzhen entrepreneurs in Hong Kong than Hong Kong entrepreneurs in Shenzhen wish to obtain government support * Both Shenzhen's and Hong Kong's key strengths lie in the entrepreneurial character of our people * Shenzhen's unique immigrant culture places its entrepreneurship in a position that Hong Kong enjoyed a quarter of a century ago, but Shenzhen lacks social cohesion * Hong Ko ng has an efficie nt but ineffective administration . Hong Kong's po litical, institutional and social context for entrepreneurship is excellent * Shenzhen has an effective but inefficient administration, carrying out reform in a political, institutional and social context that still falls far short of ideal * Both Shenzhe n and Hon g Kong Experts recommend strongly th at education and training b e impro ved * R&D transfer from universities to industry is poor in Hong Kong because of poor university-industry links and is poor in Shenzhen because of the lack of research universities
Hong Kong GEM 2002 made 25 general recommendations. This year, we clarify two of last year's recommendations:
1. To improve education and training in Hong Kong Education and Manpower Bureau should
* Take an active role to lea d and support entrepren eurship edu cation * Survey exi sting entrepreneurship education programs an d resources * Speed up reform o f the examination system university admissions criteria * Ha ve a m ulti-di scipli nary ap proach to teacher ed ucatio n and train teachers in in teracti ve and experiential entrepreneurial education * Prepare youth for en trepreneurial careers
Community members, especially parents and businesspeople can
* Push the schools and the gove rnment to prepare youth for work and successful transition i nto the community * Tell schools what they want from the youth who enter the work force. * Work on n on-profit bases as m entors, facilitators , and tutors in scho ol programs
2. To Improve R&D transfer in Hong Kong
* The government should recognize that a major objective of universities is to transfer knowledge to the community * The government should s et up a single technology transfe r office for all of Hong Kong un iversitydeveloped intell ectual property * University professors shou ld be encou raged to do all external practice in keepin g with university reputation, including initiating contacts with industry on a personal basis * The distance between researchers and industry should be shortened by increasing links with manufacturing bases in Shenzhen and the Pearl River Delta
Shenzhen's entrepreneurship should be improved by
* Reforming the government to make it more public-service oriented * Recognizing that the main source of financing for start-ups should be market oriented. Government should release the private sectorÕ s energies * Financing entrepreneurship with government funding only in early stage and R&D-transfer intensive activities that do not compete with the private sector * Reducing barriers to immigration to and residency in Shenzhen * Developing research universities and management training for entrepreneurs * Improving protection o f intellectual property * Increasing links with Hong Kong * Improving social security and the stability of society
TABLE OF CONTENTS
2 5 7 8 10 Ex ec ut iv e s um m a ry T a ble of c on t en t s Lis t of f ig ures A c k n o w l ed g e m e n t s F ore w ord by Kev in H o, D i rec t or Genera l of t h e H ong Kong T rade an d I nd us t ry D ep ar t m e nt 12 F or ew ord by Le Z heng, D irec t or of t he S henz he n Ac ad em y of Soc i al S c ien c es
15 18 20 25 28 32 35 39 40 43 49 53 56 57 60 61 62 63 65 65 68
I n t rod uc t i on t o G EM Conceptual model Research methodology Ad u l t p o p u l a ti o n s u rve y fi n d i n g s Demographic characteristics of entrepreneurs Entrepreneurs in Shenzhen and Hong Kong in comparison Dynamics of Hong Kong and Shenzhen Specific concerns of Shenzhen entrepreneurs Remarks on adult population survey Exp e rt I n te rvi e w Fi n d i n g s Financial support Government policies and programs Education and training Research and development transfer Access to commercial and professional infrastructure Market openness and barriers to entry Access to physical infrastructure Cultural and social norms H o ng Ko n g : Tw o We a k EFC s Entrepreneurship education and training in Hong Kong Teaching entrepreneurship in schools
69 70 73 73 74 80 80 84 85 89 89 91 93 95 97 98 98 101 101 102
En t re pre neur s hi p e duc at i on and t ra ini ng in t er t ia ry ins t it u t io ns The role of the community in teaching entrepreneurship An army of volunteers Kudos for the community Recommendations to improve education and training in Hong Kong R &D t ran s f er in H ong K ong Reasons for underperformance International experience Recommendations to improve R&D transfer in Hong Kong She nz hen : bac k groun d dis c us s i on of t he E F C s Financial support Government policies Government programs Education and training R&D transfer Access to commercial and professional infrastructure Market openness and barriers to entry Access to physical infrastructure Cultural and social norms Recommendations to improve entrepreneurship in Shenzhen
10 7 11 1 11 7 12 0 12 5
Ap pen dix I : GE M H ong Ko ng 200 2 r ec o m m e nda t io ns Ap pend ix I I : GEM H ong Kon g and Shen z hen 2003 ex pe rt s Ap pend ix I I I : Ac adem ic lit erat ure on R &D t r ans f er Ap pe ndi x I V : Gl oba l G EM t ea m s Ap pe nd ix V : GEM H ong Kong and Shenz hen 2003 res ea rc h t eam
LIST OF FIGURES
F i gu re T i t l e 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Hong Kong and Shenzhen at a glanc e The GEM concept ual model Total ent repreneurial activity by ec onom y Total ent repreneurial act ivity of opportunit y and necessity Total entrepreneurial ac tiv ity by gender Total ent repreneurial activit y by age Total ent repreneurial act ivit y by educ ational at tainment Total entrepreneurial act ivity by monthly incom e Total entrepreneurial activit y in Hong Kong by age and incom e Cult ural s upport index and busines s prospect s Distribut ion of ty pes of bus iness activit ies conduc ted by entrepreneurs Number of s tart-up companies by income and indus try sec tors in Shenzhen Total ent repreneurial ac tiv ity by frequency of t ravel ac ros s the border Indust ry sec tors and t ravel f requenc y Cross -border c haract eris tic s of enterprises The influence of not opening the "s econd board" on the entrepreneurial environment in Shenzhen The influence of t he first and second border on t he ent repreneurial env ironment in Shenzhen P ag e 17 18 25 26 28 29 30 31 32 33 33 34 36 36 38 39 39
St rengt h of ent repreneurial f ram ew ork conditions in H ong Kong and Shenzhen versus t he GEM global av erage 44 Ex pert ass ess ment of H ong Kong and Shenzhen strengths , w eak nesses and rec omm endat ions A. Strengths B. Weak ness es C. Recom mendat ions 45 45 46 47 50 52 55 58 59 60 61 62 83
20 21 22 23 24 25 26 27 28
Financial s upport Government program s and polic ies Educ ation and training Researc h and dev elopm ent transfer Commercial and prof ess ional infrastruc ture Market openness and barriers to entry Physical inf ras truc ture Cultural and social norm s Roy alty dis tributions of universities
On behalf of the GEM Hong Kong Research Team, I would like to thank the many people and organizations that have helped us accomplish this study. We continue to take the pulse of Hong Kong's entrepreneurial activity with the generous support of our sponsors. The Trade and Industry Department (TID) with the SME Development Fund has enabled us to do this work in 2003 and 2004 and expand the study into Shenzhen, Hong Kong's twin city in Mainland China. We recognize the significance of TID's mission to foster the conditions that create opportunities for Hong Kong's SMEs and entrepreneurs. The Asia Pacific Institute of Business of The Chinese University of Hong Kong and the Chinese Executive Club of the Hong Kong Management Associations gave us the "s eed funds" to launch the study in 2002 continues to give us the support.
We are exceedingly pleased that the Shenzhen Academy of Social Sciences has joi ned the GEM Hong Kong Team . Profess or Le Zhen g, Aca demy Director, Dr. Wang Weili, Shenzhe n Team Leader, Dr. Dong Xiaoyuan and the Academy's team of researchers including Mr. Yin Qingxun, Mr. Yang Lixun and Miss Pan Xiaofei are committed to enhancing our knowledge about entrepreneurship development in Hong Kong and the Pear River Delta. The combined findings will give insights to our respective governments as they formulate their strategies for the integration of Hong Kong and the Pearl River Delta. We hope that these strategies will take heed of the need to create an environment for entrepreneurship to flourish.
Our 2003 grou p of Experts were exemplary in their desire to help us assess the quality of Ho ng Kong's and Shenzhen's entrepreneurship environm ent. The Experts are knowledgeable and experienced in their fields and their candid assessment h elped us id entify the issues and solutions concerning entreprene urship development. We also appreciate the 2002 Experts for accepti ng our invitation to evaluate the entrepreneurship framework conditi ons of Hong Kong fo r the 2003 study. We thank the 4000 Hong Kong and Shenzhen residents who gave their time in taking part in the adult population surveys.
My personal thanks go to the GEM Hong Kong Research Team for their unrelenting efforts, ideas and initiative in the three-year study. Professor Kwok Siu-tong played an important role in bringing the Shenzhen Academy of Social Sciences to join the GEM Ho ng Kong te am. We are delighted that Professor Kwok, a disting uished professor who has served as Dean of the Faculty of Arts, is now a member of our team . I have speci al gratitude fo r Profe ssors Hu gh Thom as and Kevin Au who have significant roles in ensuring the success of the GEM Hong Kong-Shenzhen stu dy. With the i nclus ion o f She nzhen , the repo rt has exp anded in s cope and complexi ty. Professor Thomas has taken the lead for coordinating the work and writing of this report. Professor Au is dedicated to ensuring the quality of the data analysis of the Adult Population findings.
The research team is grateful to the people who have helped promote GEM especially Ms. Emmeline Mok, Director of External Rela tions. We also val ue the encouragement given by Professor Lee Tien Sheng, Dean of the Faculty of Business Administration.
The Hong Kong Producti vity Council an d the Hong Kon g Chamber of Small and Medium Business continue to be our supporting organizations in 2003. The Hong Kong Small and Medium Enterprise Association and the Hong Kong Venture Capital Association have joined these fine organizations in helping us reach their members to inform them about GEM.
We thank Professor Paul Reynolds and his GEM colleagues at London Business School and Babson College for their persistence and dedication to the GEM Consortium as well as their efforts to increase the awareness of GEM among governments and world bodies to see entrepreneurship as essential to economic growth. Finally, we congratu late the research teams, supporters, and interviewees in the other GEM economies around the world for making GEM a truly global study.
Chua Bee-Leng Project Coordinator
FOREWORD BY KEVIN HO, DIRECTORGENERAL OF TRADE AND INDUSTRY, GOVERNMENT OF HONG KONG SAR
Entreprene urship is ke y to H ong Ko ng's economic succe ss. As a so ciety that thrives o n a dynamic busine ss cul ture, Hong Kong i s an e xcelle nt cas e for researches and studies on entrepreneurial development.
The Global Entrepreneurship Monitor (GEM) examines and compares the levels of entrepreneurial acti vities of ind ividual econom ies. By iden tfying and me asuring framew ork conditi ons essentia l to fostering entrepreneurial activities, GEM provides very useful data for individual economies to review their current position and benchmark each other's performance.
I would like to thank the Chinese University of Hong Kong for once again taking on the cha llen ging task of condu ctin g the GEM survey for H ong Kong. We in the Trade and IndustryDepartment are pleased to have supported this very meaningful initiative this year with the SME Development Fund.
I wou ld like to congra tulate Professor Bee-leng Chua and her team for the very compre hensive survey and the profession al analysis . Apart from looking at the level o f entrepreneurial activitie s in Hong Kon g, they have j oined hands w ith the Shenzhen Academy of Social Sciences for a study on the special economic zone that has seen increasin g investment from Hong Kong b usinessmen. Th is joint project will certainly shed plenty useful light amid rapidly expanding business opportunities in Hong Kong and Shenzhen.
GEM 2003 has underl ined th e importance o f Government po licies and sup port measures in motivating entrepreneurship in Hong Kong. The Government is fully com mitted to pro vidin g an envi ronm ent condu cive to the de velo pment of new businesses. The signing of the Mainland and Hong Kong Closer Economic Partnership Arrangement in June 2003 is the best testimony to this. And we will continue our effo rts to maintain Hong Kong as an ideal place for doin g businesses, and for individuals to fulfil their business vision with their entrepreneurship.
Kevin Ho Director-General of Trade and Industry
FOREWORD BY LE ZHENG, DIRECTOR OF THE SHENZHEN ACADEMY OF SOCIAL SCIENCES
It is good that Shenzhen is undergoing its first GEM assessment. China has just marked 25 years of the most entrepreneurial p eriod in mode rn times. N ational policies centered on economic construction and the realities of development have fostered a modern market economy. These policies have created great opportunities for en trepren eurs. In 2003 , the e conomy grew by about 8.5 percent in the whole of China and about 13 percent in the coastal regions. China maintained its number one ranking in global incoming foreign direct investment. Our exports are ranked fourth in the world and we are closing in on the third position. China is a large, rapidly devel oping trading nation. Shenzhen, the li nk between Hong Kong and the Pearl River Delta, has al ready changed from an ordin ary farming d istrict into a large metropolis of seven million people. Our 24-year gross domestic product and industrial growth rates have been 28 percent and 41 percent respectively. Our forei gn tra de makes up one se venth of Ch ina's total foreig n trad e and the annual value of output of our information technology processing industry is RMB200 billion. In 2003, Shenzhen's gross domestic product growth rate was about 17.8 percent, making Shenzhen the fastest growing modern city in China.
Shen zhen, a youn g city, was the fi rst area in the ma inland of Ch ina to set u p a special economic zon e. Here we have a cadre of young entrepreneurs in a Chinese start-up dream hotbed and playground. Shenzhen is a city facing the dawn of inte rnati onal izati on. To u se i ntern ation al s tanda rds to an alyze and ass ess Shenzhen's environment and to compare it with other regions in the world, identifying Shenzhen's characte ristics i n the larger inte rnational context, is a res earch objective we are fully pleased to pursue. Because of this, the inaugural participation of Sh enzhen in GEM is an event that has tanta lized and excited ou r research instincts. We highly appreciate the innovativeness of Babson College and the London School of Business and opportunity it has given us.
From the time that Shenzhen's construction started, we have been bound to Hong Kong. Although these two regions' political and legal systems and economic levels of development are still very different, in truth, the world has no other twin cities so inti mately connected such that neither city could exist wi thout the othe r. The future developments of Hong Kong's international service sector and Shenzhen's international production sector are mutua lly reliant. Hong Kong's finance, trade, shipping, and business intermediation services and Shenzhen's information technology production, export processing and modern logistics both target the global economy. Each side needs the other's help to ach ieve international competitive advantage. Hence fo r Hong Kong to assess accurate ly its e ntrepre neurship , it must add Shenzhen. Our two cities form one metropolitan entity, blending without loss of identity in an inevitable pro cess of i ntegrati on. We believe that, be ing a region full of energy and hope, the metropolis of Hong Kong and Shenzhen, with its com bined and ration alize d res ource s, wil l dem onstrate m ore e ntrepreneurial strength. For bringing us into the GEM research system, we wish to thank deeply our colleagues at the Faculty of Business Administration of The Chinese University of Hong Kong and especially Professors S.T. Kwok, Bee Leng Ch ua, Hugh Thomas and Kevin Au. We have been very happy working with them and have gained tremendously. I personally wish to thank my colleagues at the Academy of Social Sciences o f Shenzhen, who ha ve entered a new re search area: your hard work has been well worth the effort.
Professor Le Zheng Director of the Shenzhen Academy of Social Sciences
INTRODUCTION TO GEM
Renewal is essentia l for market economies. Economic theory models factors of production being allocated effortlessly by markets, but the reality is different. Compani es and governm ents n aturall y ossify and s tagnate . Entreprene urs pla y an integral part in breathing new life into society, discovering desires and needs, recogni zing wh ere val ue can be cre ated, s implifying pro cedure s, introducing new technologies and helping drive forward progress. Entrepreneurs set up new and growing firms bringing innovation and experimentation that leads to technological change and employment. Entrepreneurs are essential for Hong Kong, Shenzhen, the Pearl River Delta, China and the whole world. Joining researchers in more than thirty other countrie s, we try to she d light o n entrep reneursh ip for the benefit of policy makers and the general public.
The Global Entrepreneurship Monitor (GEM) is an international project that annually measures entrepreneurial activity. GEM examines the factors that contribute to an entrepreneurial environment and the links between entrepreneurship and economic growth. It brings together multi-disciplined researchers interested in entrepreneurship from all over the world, to study the complex relationships between new venture creation, economic growth, culture, government policies, and national prosperity. The central aim of GEM is to assemble the world's leading scholars to address these compelling questions:
* Does the level of entrepreneurship activity vary between countries? * Is entrepreneurship activity related to national economic growth? * Why are some countries more entrepreneurial than others? * What can be done to enhance entrepreneurial activity?
Each team of scholars from each GEM economy conducts its own investigation of domes tic entrep reneurshi p but eve ry team us es exactl y the sam e investig ation methods across the globe. This allows the construction of a unique database. In
each year that GEM is cond ucted, scholars can co mpare e ntrepren eurship between economies. And because GEM kee ps the methodologies consistent from year to year, GEM builds up a longitudinal data set.
Scholars from Babson College and the London Business School, sponsored bythe Ewing Marion Kauffman Foundati on developed and launche d GEM in 199 9 with te n co un trie s taki ng p art d urin g th e fi rs t ye ar. Recog ni zi ng the b en efits of benchmarking entrepreneurship internationally, scholars from around the world have joined GEM in subsequent years.
GEM re search is summarized annually in the Globa l Entrepren eurship Mo nitor: Executive Report to be published on January 8, 2004 and is available on the GEM website ww w.gemconsortium.org . Working with bo th the internationa l data and economy specific data, each team in the GEM economies also submits a written report outlining the findings specific to its economy and the policy implications of its research.
In 2002, scholars from The Chinese University of Hong Kong joined the GEM consortiu m to inves tigate entrepreneurshi p in Hong Kong. We d id so beca use we recognized that GEM is the most comprehensive country-by-country comparison of entrepreneurship in the world. Our first study led us to make 25 recommendatio ns (se e Appe ndix I). La st yea r's study le d us to conclude that Ho ng Kon g's entre preneursh ip shoul d not be analyzed in isola tion. Ho ng Kong, a city o f approximately seven mi llion people shares the southeast corne r of the Pearl River Delta with anothe r city of approximately seven mill ion people with which we are increasingly integrated: Shenzhen. In 2003, with the support of scholars from the Academy of Social Sciences of Shenzhen, we expanded our study. Figure 1: Hong Kong and Shenzhen at a Glance highlights comparative economic statistics of the two regions.
Figure 1 Hong Kong and Shenzhen at a glance
It e m
Population GDP GDP per capita Land Area in square kilometers
H o ng Ko ng
6.82 million HK$1,323 billion HK$ 195,000 Hong Kong 80 Kowloon 47 NT - Mainland 747 NT Islands 227 Total 1,101
Sh e n zh e n
5.04million* RMB 226 billion RMB 46,388 Shenzhen SEZ 396 Cityoutside SEZ1,557
GDP by economic sector: Agriculture Manufacturing Services Transport Marine Shipping Tonnage loaded plus discharged Air Shipping Tonnage Containers shipped Kilometers of roads Licensed vehicles Percent of workforce in Wholesale and retail trade restaurantsand hotels Finance, insurance and real estate Community and Social services Manufacturing Transport and communications Construction Agriculture, fishing and other 31% 13% 12% 6% 6% 5% 27% 18% 2% 4% 53% 2% 3% 18% 192.5million 2.5 million 19.1 million TEUs 1,924 525,551 6.8 million 0.3 milion 7.6 milion 1,800 506,637 0.1% 13.4% 86.5% 0.8% 55.2% 44.0%
* Official registered residents (permanent and non-permanent). There are addition approximately 2 million unregistered residents. Source: Hong Kong Government Information Center; Blue Book of Shenzhen; Statistical Yearbook ofShenzhen
The Ho ng Kong an d Shenzhen Team began our rese arch in Ma rch 2003. In the following pages we present our findings. We first outline the GEM conceptual model and research methodology. We then present results of two surveys in each of the twin cities. Following the presentation of our findings, we discuss conditions forming the entrepreneurial environment
Figure 2 The GEM conceptual model
GEM i s based o n an unde rlying co nceptual model of the major causal m echanisms affecting national economic growth. This model has three primary features. First, it focuses on explaini ng why some nation al economies are growing more rapidly than others. Second, it assumes that all economic processes take place in a relatively stable political, social and historical context. Finally, and perhaps most unique to GEM, it considers two distinct but complementarymechanisms to be the primary sources of national economic progress Figure 2.
The first major mechanism, as illustrated in the top portion of Figure 2, reflects the role of large established firms that provide national representation in international trade. The assumption behind this part of the model is that if the general national conditi ons are appro priately deve loped, the international co mpetitive pos ture of large firms wi ll be enhanced. Then, as these firms mature and exp and, they will create s ignificant deman d for goods and services in th eir host economi es. The increase in demand w ill, in turn, p roduce m arket op portuni ties for many mi cro, small, and medium-sized firms. This scenario is particularly robust when international exchanges are restricted to stable commodities with little change in markets or prod uction techn ology.
The second primary mechanism driving economic growth, as illustrated in the lower portion of Figure 2, emphasize s the role of entrep reneurship in the creation and growth of new firms. According to this portion of the model, another set of contextual factors, referred to as entrepreneurial framework conditions (EFCs) intervenes between the social/cultural context and the emergence and expansion of new firms.
In addition, two critical features in the entrepreneurial process are specified: 1) the emergence or presence of market opportunities and 2) the cap acity (i.e., motivation and skill) of the people to initiate n ew firms in pursuit of those opportunities. The entrepreneurial process is particularly robust in dynamic market settings where success is dictated by higher levels of creativity, innovation and speed to market.
Perhaps the greatest value in the GEM model is its focus o n the complementary nature of the underlying mechanisms, both of which have been empirically linked to economic growth. Indeed, large established firms, through technology spillovers,
spin-offs and increasing demand for goods and services, often provide opportunities for new business initiatives. Entrepreneurial firms, on the other hand, provide a competitive advantage for established firms - their major customers - in global arenas, through low er costs and accelerated technology d evelopment. Though previous GEM findings have supported this complementary perspective, it is also clear that these processes are extremely complex. The GEM model will continue to be adjusted to refle ct insigh ts derived from the research in an effort to b etter understand the impact of these mechanisms on economic growth.
GEM employs three main sources of data:
* Adult Population Survey * Expert Interviews * Standardized economic data from external sources
We describe these data below.
Adult population survey
Teams in each of the GEM econ omies se lected randomly from 1,0 00 to 15 ,000 adults who se responses to up to 40 questions e ach were used to m easure the entrepreneurial beha vior and attitudes of the population. In 2003, GEM sampled over 100,000 adults worldwide. Our joint Hong Kong Shenzhen GEM team supervised a professional su rvey firm which sampled 2000 adults in Hong Kong and 2000 adults in Shenzhen by telephone interviews conducted in the evenings during the months of May and June 2003. The survey produced a measure of entrepreneuri al activity th at is called the total entrep reneurial acti vity (TEA) Ind ex. Because the TEA Index is computed id entically for each of the GEM economie s, it provides an ob jective basis for international comparisons. In the study, we used three types of TEA: "opportunity-based," "necessity-based," and "total". Opportunity-based TEA reflects the voluntary nature of participation (pursuit of a business
oppo rtunity for pe rsonal i nterest). Nece ssity-b ased TEA reflects the involun tary nature of participation (pursuit of a new business because of no other choices for work). Total TEA is the sum of opportun ity-based TEA and necessity-based TEA.
An entrepreneur, for the purposes of calculating the TEAindices, is a respondent in the survey who is currently participating in either
* A business start-up where work has been done to effect the start-up1 but wages have been paid for less than three months or * A new firm where the firm is less than 42 months old at the time of survey.
The respondent can participate in the business start-up or the new firm either privately or as a part of his employment, but in either case, the respondent must have an equity stake.
TEA is the percent of the respondents in the study who met either or both of these criteria.
In addition to finding out who the entrepreneurs are, what are their characteristics and calculating the TEA index, the adult population survey polls the random sample for informal investors. These individuals, often called "angel investors" make informal investments in business start-ups and new firms.
A s econd type of d ata w as provide d by wide -rang ing p erson al in tervi ews conducted by scholars with 20 to 70 Experts in each GEM economy. Across the GEM
1 The following questions were asked to determine whether work had been done. "Over the past 12 months, have you done anything to help start this new business, such as looking for equipment or a location, organizing a startup team, working on a business plan, beginning to save money, or any other activit y t hat w oul d h el p l aun ch a business?"
economies, over 1,200 Experts were interviewed. In Hong Kong and Shenzhen we interviewed 47 Experts.
In selecting Experts GEM applies a stan dardized procedure. GEM d efines an Expert as a pers on directly invol ved in de livering a major aspect of the econ omy's basic EFC (see Figure 2 above). Experts can be politicians, university professors, en trep re ne urs, go ve rn me nt offi ci al s, or o th er p ro fes si on al s in th e fi el d of
entrepreneurship. They have considerable knowledge of the entrepreneurial phenomenon and have or could have contributed to policy debate. Approximately half of the GEM experts are themselves involved in running their own businesses.
We identified at least two experts in each of Shenzhen and Hong Kong in each of the nine basic EFCs. When selecting experts, we ensured that one of the experts was d irectly involved in deli vering a major aspect of the rel evant EFC. Many experts had interests and expertise in more than on e EFC. We did not require any experts to restrict themselves to their own EFC in presenting their views. Instead we encoura ged them to present their views on what they felt to be critical EFCs, even if they were different from the one they had been selected to represent.
Each expert was asked to complete:
* A one-hour face-to -face in terview. The exp erts were asked to identity and discus s th ree stren gths and thre e we aknes ses of the econom y in stim ulating entrepreneurship. Experts were also to give at least three recommendations on how to stimulate entrepreneurship.
* A structured seven-page questionnaire that investigated the status of the EFCs in his or her economy.
Each interviewer wrote up a summary of the interview. GEM subjected the summaries of the expert in terviews to content analysis to capture the issues and trends. And the joint Hong Kong Shenzhen GEM team analyzed in detail the summaries of the interviews of the 47 experts.
The seven page questionnaire was also sent to previous years' experts who competed and returned it by mail. The data from the questionnaire was consolidated for the 31 economies (32 economies including Shenzhen) to facilitate cross-economy comparisons.
Standardized economic data from external sources
National economic data were collected from sources that included the World Bank, the United Na tions, th e World Competiti ve Index and the Internati onal Mon etary Fund. These source s provided comparable data of basic fe atures such as economic growth, population structure, educational attainment, and institutional and technical infrastructure.
ADULT POPULATION SURVEY FINDINGS
Hong Ko ng's entrepre neurial prevalence rate i n 2003, as me asured by th e total entrepreneurial activity (TEA) index, is 3.20 percent of the adult population (Figure 3 and Figure 4). This is s imilar to the 3.44 p ercent tha t we reported in the 2002 GEM Hong Kong Study. Among the economies studied in 2003, only Croatia, Italy, Finland, Japan, and France have TEA index smaller than Hong Kong's. Shenzhen, on the o ther hand, has s trong entreprene urial prevalence as reflected in its TEA index of 10.49 percent. This figure is similar to that of China and above the average of all economies studied in GEM.
Figure 3 Total Entrepreneurial Activity by economy
Figure 4 Total entrepreneurial activity of opportunity and necessity
Econ om y Argentina Australia Belgium Brazil Canada Chile China Croatia Denmark Finland France Germany Greece Hong Kong Iceland Ireland Italy Japan Netherlands New Zealand Norway Shenzhen Singapore Slovenia South Africa Spain Sweden Switzerland U.S.A. Uganda United Kingdom Venezuela All Countries T otal T EA 19.73 11.60 3.87 12.90 8.01 16.90 11.60 2.56 5.90 3.14 1.40 5.20 6.80 3.20 11.20 8.10 3.19 2.80 3.60 13.60 7.46 10.49 4.90 4.00 4.30 6.77 4.10 7.40 11.90 29.20 6.36 27.30 8.93 Oppo rtunity T EA 14.20 9.90 3.34 6.90 6.45 10.50 5.50 1.74 5.30 2.70 0.81 3.70 4.20 2.20 9.40 8.10 2.90 2.00 3.00 11.50 6.39 8.63 3.90 3.10 2.90 6.05 3.70 6.30 9.10 16.90 5.33 16.10 6.40 Ne cessit y T EA 7.46 1.50 0.32 5.50 1.05 5.90 5.50 0.59 0.40 0.30 0.51 1.20 2.60 1.12 0.80 1.30 0.22 0.59 0.40 1.70 0.67 1.83 1.00 0.80 1.50 0.51 0.40 1.00 1.70 13.40 0.97 11.60 2.40
Countries that have high TEAindex include countries from a wide range of levels of deve lopmen t: the less de velope d Ugand a, Arge ntina, Venezu ela and Chile are joined by developed countries such as New Zealand. In total, TEA Brazil is similar to the USA, Australia and China. More can be revealed when one compares opportunity-b ased TEA and ne cessity-based TEA (columns two and three of Fi gure 4). Entrepreneurs who have no better choices for work, as indicated by the latter, are a leading cause of entreprene urship in less deve loped countries and countries experiencing rebounds from severe economic crises. In comparison, developed countries that have high TEAindices, such as the USA, Australia and New Zealand, have more entrepreneurs of opportunity than entrepreneurs of necessity.
Unlike China as a whole, Shenzhen reveals patterns of opportunity-based TEA and necessity-based TEA indices similar to those of developed countries. Shenzhen is the "promised land" for entrepreneurs in China - and those who fail to achieve that promise are more likely to return home to other pa rts of China than to remain in Shenzhen, to join the ranks of the entrepreneurs of necessity.
Hong Kong's opportunity-led entrepreneurship, although twice its necessity based entrepre neurship, is seriously lagging, being fourth from the bottom among the GEM economies.
DEMOGRAPHIC CHARACTERISTICS OF ENTREPRENEURS
Hong Kong men are more likely than women to become entrepreneurs in terms of the total TEA index (Figure 5). Male entrepreneurs also tend to be more opportunity-bas ed than female entrepreneurs. Shenzhen men are also more likely than women to be entrepreneurs.
Figure 5 Total entrepreneurial activity by gender
As shown in Figure 6, an intriguing pattern emerges with the age distrib ution of Hong Kong entrepreneurs. The most entrepreneurial groups are the 31 to 35 and the 21 to 25 groups whereas the least entrepreneurial groups are those between from 18 to 20 and 26 to 30. Contrary to Hong Kong, the most entrepreneurial group in Shenzhen is 26 to 30, followed by those aged 21 to 25 and 36 to 40. In general, youngsters above 21 are the most active in Shenzhen.
Figure 6 Total entrepreneurial activity by age
In terms of educatio n (Figure 7), Hong Kong adults with matriculation and those with a first university degree are the most entrepreneurial. In comparison, adults wi th a profes sio nal dip loma an d th ose wi th a gradua te degree are the least entrepreneurial.
Education and entrepreneurship in Shenzhen exhibits an interesting pattern. Those with no formal education are unable to do start-ups, p erhaps because they lack basic wri ting and arithme tic skills. Thos e with some education are very active in start-ups, but this trend tai ls off with vocati onal and tech nical education. More remarkable is that university educated ad ults are extremely active i n doing startups, with post-graduates being the most active. This indirectlyshows whyShenzhen is famous for its hi-tech based entrepreneurship. This also contrasts sharply with Hong Kong where none of the post-graduates are interested to be entrepreneurs.
Figure 7 Total entrepreneurial activity by educational attainment
As shown in Figure 8, high-income adults (monthly income of HK$ 25,000 or above) are more likely to be entrepreneurs than middle-income (from HK$ 10,000 to HK$ 24,999) and low-income adults. The highest income group (HK$ 40,000 or above) is the most likely to be entrepreneurs. Shenzhen also exhibits the same pattern. In particular, op portunity-based entreprene urship is the strongest am ong the highincome group.
Figure 8 Total Entrepreneurial Activity by monthly income
In the 20 02 Hong Kong GEM R eport, youngsters from high-income h ouseholds were found to e xhibit a very high TEA index. Although the findin gs are bas ed on small numb er of observations, this interesting fin ding triggered us to speculate about its reas ons. It may be because rich families were able to he lp youngsters into business or because youngsters were able to get rich th rough starting their own business. Figure 9 shows the TEA index of 2003 by age and income. We do not see th e dramatic result as in 2002. Youth of a ge 21 to 25 in the h igh-income group has a higher than average chance of being an entrepreneur, but their coun-
terpart in the low-income group has a similar rate of being an entrepreneur. On the other hand, a noteworthy finding is about the age group (31 to 35) with the highest TEA. Those in this group who are rich have a much higher rate of TEA(16.1 percent) than the gro up average.
Figure 9 Total entrepreneurial activity in Hong Kong by age and income
ENTREPRENEURS IN SHENZHEN AND HONG KONG IN COMPARISON
Shenzhen is much more entre preneurial than Ho ng Kong as measure d by TEA. This is remarkable because Shenzhen's cultural support index, as defined by GEM using responses to questions about ideal career choice, respect for entrepreneurs and po pularity of entreprene urs in the media, lags Hong Kong and is at s imilar level to China as a whole (Figure 10).
Hong Kong's entrepreneurs are far less confident about job creation than Shenzhen's entrepreneurs (Figu re 10). Among entrepreneurs in Hong Ko ng, only 28 percent expect to create 19 or more jobs in five years after the business has started whereas half of those in Shenzhen expect to do so. However, entrepreneurs of the two cities expect to make similar impacts on exports and m arket expansion. About ha lf of Hong Kong and Sh enzhen entre preneu rs exp ect mo re than 11 p ercent of th eir customers to live in other countries.
Figure 10 Cultural support index and business prospects
H o n g Ko n g
Cultural Support Index (minimum-1; maximum-3) Expect to create 19 or more jobs 5 years after the business has started Expect >11% of their customers to live in other countries Claim that only some customers are unfamiliar with their products Claim that few rivalsexist 2.23 28% 50% 78% 16%
Sh e n zh e n
1.98 53% 48% 65% 19%
Figure 11 Distribution of types of business activities conducted by entrepreneurs
The majorityof Hong Kong and Shenzhen entrepreneurs claimed that only some of their customers are unfamiliar with their products. Moreover, fewer than one fifth of Hong Kong and of She nzhen entrepreneurs claimed that few rivals exist to compete with them the same target customers. Similar to most entrepreneurs in GEM, only a sma ll minority of entrepreneurs in Hong Kong and Shenzhen be lieve that they are selling innovative products or services for which few competitors exist.
Another set of intriguing findings is about the industrial sectors of new businesses (Figure 11). Despite Hong Kong's advantage in service industries, more entrepreneurs in Shenzhen engage in consumer and professional services than those in Hong Kong. Asignificant number of entrepreneurs in Hong Kong actually do manufacturing business although they maybe locating their operations in China.
It is commonly known that many of Shenzhen's entrepreneurs invest in food and beverage, and hotel industries (Figure 12). The Figure also shows that the entrepreneurs involved in the above-mentioned industries can earn personal incomes of any levels. This implies that earnings fluctuate highly in these industries. There are, on the other hand, some businesses in which the high-income entrepreneurs would invest, but n ot the low-income entrepreneurs. These businesses include mining and construction, consumer services and the like.
Figure 12 Num ber of Shenzhen startup companies by income and industry sector
DYNAMICS OF HONG KONG AND SHENZHEN
We studied several aspects of Hong Kong and Shenzhen entrepreneurs to understand the dynamics between the twin cities. Regarding the relationship between traveling across the border and TEA, as shown in Figure 13, both Hong Kong and Shenzhen residents who travel more across the border are more likely to engage in a sta rt-up. This tende ncy is p articularly apparent amon g Hong Ko ng resid ents. Those who travel once or twice per month are four times more likely than an average resident to be an entrepreneur. In contrast, those traveling fewer than once every thre e months are half as likely to be an entrepreneur. Shenzhen entrepreneurs travel much less frequent to Hong Kong, perhaps due to the restrictions at the border. Nonetheless, those crossing the border once or twice per month have the highest incidence of entrepreneurship. The reason for the correlation between crossing the border and becoming an entrepreneur is not clear. It is possible that entre preneurs s imply travel across the borde r to enjoy the entertainment i n the other city; how ever, we b elieve tha t a more d irect rela tionship e xists. She nzhen entrepreneurs may cross the border to purchase professional services while Hong Kong entrepreneurs may travel across the border to take care of their operations or customers in China.
Figure 13 Total entrepreneurial activity by frequency of travel across border
Figure 14 Industry sectors and travel frequency
Further analysis was conducted on the business sectors in which entrepreneurs operate and the frequency of travel across the border (Figure 14). Almost all Hong Kong entrepreneurs in the manufacturing sector cross the border once or more per week, and few of them travel only once every three months. In comparison, entrepreneurs in consume r service seldom travel across the border once every week and m any more o f them travel acro ss the border only once every three mo nths. Thes e find ings a gree w ith th e anecdotal b elief that H ong Ko ng man ufactu rers oftentim es set up their operation acros s the borders. The patterns of Shenzhen entrepren eurs are not as dramatically different. It is, how ever, clear that those in manufacturing tend not to travel cross the border whereas those in consumer service travel much more often.
We also asked entrepreneurs about setting up cross-border operations and their need for assistance from the Hong Kong and Shenzhen governments (Figure 15). Although these responses are collected from small groups of entrepreneurs rather than from the whole adult sample, they ma y still be usefu l as a starting point for further research. Over one third of Hong Kong entrepreneurs have already set up operations in the Pearl River Delta or intended to do so in the next two years. Close to h alf of these operations a re intended for marketing and sa les an d abou t 40 percent of them are for production.
When we asked about government support, more than 30 percent of Hong Kong entre preneurs want to have as sistance from th e Hong Kong and the Shen zhen governments. Among these respondents, more than 70 percent of them want capital and subsidies from government while about 60 percent of them want procedures to be simplified and more market information.
Figure 15 Cross-border characteristics of enterprises
H o n g Ko n g En tr e p re n e u rs
Already or intended to set up operations across border Operations intended for marketing and sales Operations intended for import and export Operations intended for product design Operationsintended for production Operations intended for management Want to have assistance from the Hong Kong governments Want capital and subsidies from Hong Kong government Want more market information from Hong Kong government Want procedures to be simplified from Hong Kong government Want to have assistance from the Shenzhen governments Want capital and subsidies from Shenzhen government Want more market information from Shenzhen government Want procedures to be simplified from Shenzhen government 29.6% 40.0% 25.7% 22.9% 42.9% 31.4% 34.3% 75.0% 58.3% 66.7% 40.0% 35.7% 28.6% 71.4%
Sh e n zh e n En tr e p re n e u rs
27.8% 63.3% 44.3% 20.3% 7.6% 7.6% 59.5% 46.8% 72.3% 55.3% 58.2% 60.9% 50.0% 54.3%
With respect to Shenzhen entrepreneurs, about 27 percent have already set up an office in Hong Kong or plan to do so in the next two years. The purposes of these offices are mostly fo r marketing and sales and import/export. Also, about 18 percent are for product design, and only 10 percent are for production and 8 percent for man ageme nt. When aske d ab out their need for assi stance, 6 0 percent of Shenzhen entreprene urs want such service from the Hong Kong government, of which the majority want to receive more market information and about half of them want to have assistance on capital or subsidy and simplification on procedures. In addition, about half of them want assistance from the Shenzhen government. More of them want procedures to be simplified and about half of them want assistance on capital or subsidy and more market information.
SPECIFIC CONCERNS OF SHENZHEN ENTREPRENEURS
Several as pects are of specific interest to Shenzhen entrepreneurs. The Growth Enterprise Market has been stalled for years. This policy se ems to affect the financing of start-up in Shenzhen. The survey on entrepreneurs in Shenzhen showed that most people agree that it has an influence but only about 28 percent of them think that the influence is large (Figure 16).
Figure 16 Influence of not opening the Ò second boardÓ on the entrepreneurial environment in Shenzhen
Figure 17 The influence of the first and second border on the entrepreneurial environment in Shenzhen
Another concern is about the two borders in Shenzhen. The first border separates Hong Kong from Shenzhen and the second border separates the Shenzhen Speci al Eco nom ic Zon e from th e rest of She nzh en Mun ici pal ity an d Guan gdo ng Province. Inconvenience of traveling across the two borders may restrict interflow of people and undermine entrepreneurial activities in Shenzhen. Our findings show, however, that only one third of respondents think these inconveniences cause serious problems. (Figure 17).
Lastly, we investigated whether different districts of Shenzhen have different levels of entrepreneurial activities. The findings show that no significant differences exist.
REMARKS ON ADULT POPULATION SURVEY
Althoug h Hong Kong and Shenzhen a re separated only by a tin y river, the difference in entrepreneurship prevalence can hardly be more striking. Hong Kong has one of the lowest TEA indices whereas Shenzhen has a TEA indexabove the GEM average. Additionally Shenzhen entrepreneurs are dominantlyopportunity-oriented, , similar to the US and other entrepreneurially vibrant, developed economies. In line with this finding, university educated ad ults in She nzhen are e xtremely active in doing start-ups, with post-graduates being the most eager ones. In China, Shenzhen is famous for its hi-tech entrepreneurship. This contrasts sharply with Hong Kong where few, if any, post-graduates are interested in becoming entrepreneurs. Indeed, although Hong Kong has more opportunity-oriented entrepreneurs than necessityoriented ones, the difference is small. These findings show that Shenzhen lives up to i ts re pu ta ti o n fo r b e i ng a p l a yg rou n d fo r e n tre p ren e u rs . Mo tiva tin g entrepreneurship, especially among highly educated post-graduates likely to develop hi gh technology start-ups will con tinue to be a challenge for Hon g Kong's economic restructuring.
An im portant objective of this study is to understand th e linkage between Hong Kong and Shenzhen as the twin cities evolve into an integrated metropolitan entity. The findings open us to the dynamics of the twin cities regarding entrepreneurial acti vities. We find that abo ut 30 pe rcent o f entrep reneurs from both sides have
alre ady set up opera tions across th e border. A subs tantial number of entre preneurs call for assistance from governments on both sides of the border. We also find that residents of both cities who travel more frequently across the border are more likelyto be entrepreneurs. More interestingly, entrepreneurs in different sectors of the two cities exhibit different kinds of traveling frequencies. As discussed above, these findings maybe attributed to reasons that imply no direct relationship between crossing the border and becoming an entrepreneur. Unfortunately, we do not have a large enough sample to warrant high confidence in these conclusions. Nonetheless, we believe that the findings reflect the increasing integration of the two cities.
EXPERT INTERVIEW FINDINGS
GEM 200 3 identified the economic, political, social and cultu ral factors th at promote and impede entrepreneurship by interviewing over 1200 Experts worldwide. Our team conducted 47 one-hour face-to-face interviews wi th 25 Hong Kong experts and 2 2 Sh enzhe n experts wh ose n ames app ear in Append ix II. We requested both groups to fill out extensive questionnaires concerning the conditions leading to entrepreneurship in Hong Kong and Shenzhen. We further augmented the Hong Kong respondent pool by sending questionnaires to the experts from the GEM 2002 study of which 18 returned fully completed questionnaires.
We present the findings of our expert interviews in three ways. Figure 18 shows the EFC streng th of Hong Kong, Shenzhe n and the average of the GEM countri es. Figure 19 summarizes the specific comments of the interviewed experts concerning the strengths, weaknesses and recommendations for improving entrepreneurship in Hong Kong and Shenzhen. We also report selected answers to the detailed questionnaire topically by EFC in the following sections.
Figure 18 graphs the EFC strength measures calculated as follows:
number of times cited as strength total number of times cited
EFC Strength Measure =
The Ò total number of times citedÓ in the denominator gives the sum of the times that the experts in the region cite the EFC as either a strength or a weakness. Since the expe rts were required to ci te thre e streng ths and three w eakness es each, and since all strengths and weaknesses were categorized, the EFC Strength Measure is a relative measure.
Hong Kong is strong, rel ative to b oth its o wn factors and to Shenzhen an d GEM econom ies in its government policies, access to commercial and profes sional infrastructure, and political, institutional and social context but is weak in terms of
R&D transfer and market openness/barriers to entry. Shenzhen, on the other hand is rated strongly in terms of its government programs and market openness but is weak in education and training and political, institutional and social context.
Figure 18 Strength of entrepreneurial framework conditions in Hong Kong and Shenzhen versus the GEM global average
Figure 19 Expert assessment of Hong Kong and Shenzhen strengths, weaknesses and recommendations
A. Stre n g th s
P e rc e n t 89% S he nzh en S t re n gt h Shenzhen's people are entrepreneurial Shenzhen'sgovernment policies are stable and market oriented Shenzhen's government has specific effective policies to stimulate entrepreneurship Shenzhen's location especially proximity to Hong Kong creates opportunities Shenzhen has a good commercial and professional infrastructure Shenzhen has good physical infrastructure Shenzhen has a developed financial system Shenzhen's market system is well developed P e rc e n t 69%
Hon g Ko n g S t re n g th Hong Kong People are entrepreneurial Hong Kong is a free, transparent, clean city.
Hong Kong has an excellent commercial and professional infrastructure
Hong Kong has good physical infrastructure
Hong Kong's geographic location, especially proximity to the rest of China createsopportunities The society is highly educated It is easy to set up a business in Hong Kong The government supports entrepreneurship through effective programs Financing is available from VCs, private investors and banks
20% 16% 16% 12%
23% 23% 14% 9%
There are good examples of successful entrepreneurs Labor and land ischeap
9% 9% 91%
T ot a l p e rce n t o f co m m en t s
T ot a l p e rce n t o f co m m en t s
B. We akn e ss e s
Ho n g K o n g We akn e ss Schools provide inappropriate education and training P e rc e n t S h e nzh e n We akn e ss P e rc e n t
Enterprises lack startup finance There isinsufficient management expertise, education and training The government isinefficient The society lacks trust and cohesion
Entrepreneurs lack startup finance New companies face high costs Government programs stimulating new enterprises are inadequate People are not interested in starting businesses The Hong Kong market is small Hong Kong is dominated by oligopolies Hong Kong people have narrow perspectives The economic climate ispoor R&D transfer is poor T ot a l p e rce n t o f co m m en t s
59% 55% 36%
36% 36% 20% 20% 20% 20% 8% 100%
Vestiges of state planning inhibit entrepreneurship 36% Special Economic Zone policies no longer confer an advantage R&D transfer is poor Physical Infrastructure development lags Legal and accounting systems are poor Travel outside the country is restricted T ot a l p e rce n t o f co m m en t s 18% 14% 9% 5% 5% 98%
R e co m m en d a tio n s
P e rc e n t S he n zh e n Reco m me n da t io n P e rc e n t
Hon g K o n g Reco mm e n da t io n The education system should be reformed to encourage entrepreneurship
Passadditional lawsand regulations to promote 88% property rights, efficient market operation and clarity of administration 64%
Lower startups cost and raise access to finance Government should abandon non intervention and pick industries to support Experienced entrepreneursmentor SMEs Increase link with the rest of China. Boost self reliance, confidence and social cohesion and responsibility Increasessupport for universities to commercialize research The government should have a positive non-interventional approach Allow a freer flow of people with the rest of China The government should develop its own priorities T ot a l p e rce n t o f re co mm e n da t i on s
56% 20% 20% 20% 20%
Increase financial access of startup firms
50% 50% 41% 23% 14%
Educate entrepreneurs Build effective mechanismsfor R&D transfer Reduce the control of government over industry Improve commercial and professional infrastructure Improve physical infrastructure
16% 12% 12% 91%
Reform the residence policies to allow freer flow of people with the rest of China Improve social welfare and cohesion Provide better information to management T ot a l p e rce n t o f re co mm e n da t i on s
14% 14% 9% 94%
The above strengths, weaknesses and recommendations are a summary of the expert interviewees' response to the open-ended questions asking for the interviewees' assessment of the three most important factors that limit the development of entrepreneurship, the three m important factors ost that contribute to the developm ent of entrepreneurship and three suggestions made as to what can be done to increase the development of entrepreneurship in Hong Kong or Shenzhen. "Percent" gives the percent of experts who cited the strength, weakness or recommendation. Each expert gave up to three responses for each item Percent of recommendations represents the sum . of percentages divided by 3.
Figure 19 summarizes the strengths, weaknesses and recommendations given by the experts of Hong Kong and Shenzhen. In both Hong Kong and the Shenzhen, experts overwhelmingly cite the entrepreneurial character of the people as the top strength. Moreover, in both Shenzhen and Hong Kong, the developed state of the financial institutions and commercial and professional infrastructure and geographical proximity to each other were cited as major strengths. We share some weaknesses as well - education and training and access to finance are first- and second-ranked weaknesses in Hong Kong and second- and first-ranked weaknesses in Shenzhen respectively, while poor R&D transfer also is cited in both. In terms of recommendations, similarities also appear. Both groups of experts recommend that improvements be made to education and training, that entrepreneurs be given better access to fin ancing , tha t R&D trans fer be improved and tha t res tricti ons over the flow of people in and out of the SAR and the SEZ be reduced.
Notwithstanding these similarities, significant differences exist. To illustrate our discussion Figures 20 through 27 show the ratings given by 1,286 experts in the GEM countries, 43 Experts in Hong Kong, 22 Experts in Shenzhen and 30 experts in the rest of China (with the rest of China interviews being conducted by the China GEM team at Tsinghua University) in response to agreeing or disagreeing to statements. Agreem ent is indi cated by responses ra ted greater than zero . Disagreem ent is indicated by responses rated less than zero.
As Figure 20 shows, Hong Kong and to a lesser extent Shenzhen perform relatively well in availa bility of entrepreneurial finance. Most of Hong Kong experts agreed that Ho ng Kong has e nough govern ment subsidie s for financi ng startups. Criticisms of financial support in Hong Kong - and the dismal performance reflected in Figure 18 - focused on increasing risk aversion among investors, negative equity that reduced available capital, the shifting focus within the venture capital industry over the last few yea rs, to later stage growth and the high co sts of startups. Recommendations for improving financial support for entrepreneurs in Hong Kong were specific and focused:
* Half of the recommendations to helping finance for new and growing firms said that the government should provide low rent for startups * Other recommendations included o Rela x p erce ive d strin gent re quireme nts on exis tin g go vernmen t fundi ng schemes for SMEs o Provid e administrative support, tax concessions, exp ort credit and a dvice to start-ups o provi de SMEs with loans guarantees and loans with stri ct repayment conditions (i.e., no grants) o increase tax incentives for funding for new ventures
Figure 20 Financial support
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
Shenzhen's relatively positive performance in financial support seems at odds with Figure 19B, which sh ows the lack of financial support to be Shenzhen's greatest weaknes s. L ack o f fo rmal ventu re capita l, th e practice of banks to lend only if there is colla teral valued greater than th e amount of the loan, the preferential access to de bt and equity enjoye d by s tate ow ned en terpris es re lative to pri vate sector companies, the existence of fore ign exchange controls and the postponement of the Second Board (a venture capital board like Hong Kong's Growth Enterprise Market) were a ll cited as Shenzhen's we aknesses by e xperts. But experts also noted Shenzhen's developed banking system, insurance companies, investment companies and an emergent venture capital industry. Among the Shenzhen experts , recommendations for increased financial support w ere largely marketoriented:
* Relax restrictions on movement of capital * Stimulate the venture capital industry * Set up the Second Board * Stimulate liquidity in the commercial bond market
Figure 21 Government programs and policies
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
GOVERNMENT PROGRAMS AND POLICIES
Differences in government programs and policies are seen throughout our study of Hong Kong and Shenzhen. Figure 18 shows Hong Kong performing well in government policies and political-institutional-social context but poorly in government programs. Shenzhen performs poorly in policies and context but well in programs. This reversal is also reflected in Figure 21: Hong Kong's specific policies on new and growin g firms are n ot rate d high ly whil e Shen zhen's are. Yet rol es are reversed when it comes to regu latory speed and efficiency.
The political, institutional an d social contexts of entrepreneurship - where Hong Kong excels and Shenzhen lags - are laws, government institutions and regulatory regimes. Government policies shape those contexts. Government programs, on the other hand, are specific initiatives to address problem s that the macro economic policies leave una ddressed. As a rich, service -based economy, bui lt on positi ve non-intervention and rule of law, facing problems of l oss of compe titive advantage, Hong Kong is fundamentally different from its twin city, a newly developed immigrant, industrial city in the later stages of transition from a planned to a market economy.
Figu re 19A s hows tha t over three qu arters of experts belie ve that Hong Ko ng's strength lies in its tradition as a free market economy with a transparent, efficient and clean government.Amuch smaller percentage see Hong Kong's major strength as being a place where it is easy to set u p business (16 percent). A still smaller group think that the government is effectively supporting entrepreneurship through its programs (12 percent). But that minority opinion is outweighed in Figure 19B by those who view Hong Kong's government programs to stimulate entrepreneurship as inad equate (36 pe rcent). This difference o f opinion reappears in the recommendations in Figure 19C, where 20 percent of the experts believe that Hong Kong should abandon its non-intervention stance to pick new in dustries whe re Hong Kong has a comparative advantage. However, there is no consensus as to which those industries are. Sixteen percent of the experts wish Hong Kong to continue its non-intervention tradition.
In Shenzhen the dichotomy has a different tone. The majority of experts applauds the government's stable, market-oriented policies, and 46 percent say that its specific policies to stimulate entrepreneurship are effective. But most interviewees also consider that the Shenzhen municipal government is inefficient while 36 percent consider that vestiges of state planning inhibit entrepreneurship. They combine to give the largest single set of recommendations:
* pass additional laws to promote property rights * Promote government efficien cy, transparency and honesty * Simplify administrative procedures * Relaxconstraints on private companies * Enhance efficient market operation
At the ris k of o versim plifyi ng, we concl ude th at Hon g Kong has an effi cient but ineffective administration leading a region where the political, institutional and social context for entrepreneurship is excellent. Shenzhen has an effective but inefficient administration, carrying out reform in a political, institutional and social context that still falls far short of ideal.
Figure 22 Education and training
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
EDUCATION AND TRAINING
As Figure 18 shows, for both Shenzhen and Hong Kong, education and training is a weak EFC , where our experts see both regions as lagging the rest of the GEM countries. Although education and training is the only EFC that the majority of experts from both Shenzhen and Hong Kong identified as a weakness in Figure 19b, the problems with this EFC manifest themselves in different ways in the Shenzhen and Hong Kong, a difference borne out in Figure 22. The Sh enzhen experts consider that se lf-sufficiency, creativity and initiative a re far be tter inco rporated into their primary and secondary education than do the Hong Kong experts looking at Hong Kong. On th e other han d, Hong Kon g hosts wo rld-class u niversitie s with modern management education. Hence, the recommendations of the experts in Hong Kong and those in Shenzhen differ.
In Hong Kong
* Reduce secondaryschool class sizes and invest in training teachers * De-em phasize exam s; teach youn g people how to think cri tically and analyze opportunities and risks, proposing answers rather than choosing them * Expand universities enrollment from Greater China and overseas; promote studyterms abroad * Place te chno logy in a bu sine ss conte xt; offer cours es i n en trep rene ursh ip (secondary schools, undergraduate and graduate) * Introd uce no n-tradi tio nal cu rri cul a to s uit th e rapi d d evel opm ent of di gital technol ogy; encoura ge students to study a broader range of subjects even at the risk of getting poorer grades and broaden the curricula to include liberal arts * Oppose negativity associated with failure and encourage two-way communication to stimulate curiosity * Seek private sector partners to help support strategy after special funding runs out; promote entrepreneurs (especially those running SMEs) as role models
The importance of ed ucation and training to Hong Kong has le d us to highlight it later in this study.
In Shenzhen, the experts recommend
* Provide education for entrepreneurs, especially manageme nt education - this recommendation recurred the most frequently * Other less common recommendations were o Increase the quality of teaching staff in schools o Develop an internationally recognized educa tion sys tem from kinderg arten through university and o Improve the foreign language environment.
RESEARCH AND DEVELOPMENT TRANSFER
For the second year running in our GEM study of Hong Kong, the only EFC about which no Hong Kong expert had any positive comments to make was the transfer of R&D from universities to the market. Experts pointed to the lack of clustering of research and the inability to bring new products and services to market and suggested that universities work more with industry, that research funding be tied to commercial viability and that the existing Applied Research Fund be reassessed. To investigate the persistent weakness of R&D transfer in Hong Kong, we examine the problem more closely later in this study.
Figure 23 shows that both Shenzhen and, to a lesser extent, China outshine Hong Kong in R&D transfer. Experts consider that in Shenzhen, new technologies are efficiently transferred, that there are adequate government subsidies for acquiring new technologies, that there is support for the creating of world class technology based ventures in at least one sector and that there is support for scientists to have their work commercialized. What accounts for this success? The SEZ's incubator programs and High Technology Zone have had considerable government support, which is reflected b y Shenzh en's exp ert rati ngs. Bu t 14 percent als o state that R&D transfer is poor. One exp ert noted:
Compared with its policy towards traditi onal industry, Shenzhen's policy towards high technology is concessionary to encourage the development of rising industries. , But Shenzhen has insufficient technical strength or rather the complementary facilities to support the development of high technology industry. First of all, we do not have a good university. The American experience in high technology entrepreneurship from the 60s of the last cen tury co nfirms that this factor is absolu tely critical. In fact, the quality of Shenzhen's population is extremely high. But we are lacking the "coral reef" effect ....
Figure 23 Research and development transfer
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
Concern for R&D transfer ranks high i n Shenzhen 's experts recommenda tions. Among the detailed suggestions of the 41 percent wishing to improve R&D were:
* Improve the i ncentives for the developers o f technology by o Paying more to the te chnology developer and o Improving the protection of intellectual property so that scientific research can yield returns o Developing a technology market * Increase the linkages between universities and industry
Figure 24 Commercial and professional infrastructure
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
ACCESS TO COMMERCIAL AND PROFESSIONAL INFRASTRUCTURE
As no ted above, access to commercial and professiona l infrastructure is Hong Kong's most pure strength . Whether it is leg al, accou nting, ban king or su bcontracting services, H ong Kon g provid es them to high profess ional s tandards . In Figure 19B it is the SAR's third strength. Figure 24 shows that Sh enzhen enjoys similar strengths, although to a lesser degree. Shenzhen's, experts commented that Sh enzhen's law, accounting, information, finance and insurance are among the best in China. But the experts also cite problems. Accounting legal and information services are insufficient and the level of professionalism has yet to reach deve loped country standards. Moreover, entrep reneurs are un willing to pay for in te rme di ary se rvice s. An d socie ty's l ack o f coh es ion , born perhap s, of the immigrant's lack of a sense of belonging in Shenzhen, mean that outsourcing of services is particularly difficult. There is a severe lack of trust between economic agents - noted by 36 percent of experts in discussing Shenzhen's weaknesses.
Figure 25 Market openness and barriers to entry
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
MARKET OPENNESS AND BARRIERS TO ENTRY
Hong Kong and Shenzhen are substantially different when it comes to market openness and barriers to entry. Figure 25 sho ws that Shenzhe n is mo re open than Hong Kong in terms of ease of entry of markets and cost of that entry. This difference is even more dramatic in Figures 18 and 1 9. Forty percent of Hong Kong expe rts say that th e high cost of doing b usiness is a s ubstantial factor limi ting entrepreneurship. In contrast, Shenzhen's land and labor is relatively cheap. Note, however, that Figure 25 shows that Hong Kong's experts bel ieve that those high costs are affordable, even if they inhibit entrepreneurship. Noting the rental costs high, Hong Kong's experts recommended the provision of free or subsidized premises as the most popular direct subsidyfor SMEs.
Figure 26 Physical infrastructure
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
ACCESS TO PHYSICAL INFRASTRUCTURE
As Figure 18 shows both Hong Kong and Shenzhen have good access to physical infrastructure. Hong Kong's and Shenzhen's experts both noted the high quality of telecommunications, roads, railroads, ports, airports, and water, gas and electricity distribution. Among the recommendations for Shenzhen, 14 percent of experts cited a need to improve physical infrastructure. Commenting about the traffic jams in Shenzhen, they suggested that mass transit construction should be speeded up that the infrastructural links with regio ns outside of the SEZ should be improved. As Figure 26 shows, the overwhelming majority of experts in both Hong Kong and Shenzhen consider that the physical infrastructure provides good support and can be linked to new firms quickly.
Figure 27 Cultural and social norms
The following chart shows the agreement of experts with statements. Positive numbers show agreem ent; negative numbers show disagreement
CULTURAL AND SOCIAL NORMS
As we noted a t the beginning of this se ction, Shenzhen and Hong Kong are very similar in how our cultural and social norms foster entrepre neurship. Figure 27 confirms th at simi larity. Both culture s emphasize in dividua l succe ss achi eved through one's own efforts. Both culture s encourage entrepreneurial risk taking. Both cultures encourage creativity, although Shenzhen seems to encourage it more than Hong Kong. We both emphasize the responsibility of the individual. Strikingly, these norms differ from the rest of China. A reason for this difference may be that both Hong Kong and Shenzhen are immigrant cities. Whereas Hong Kong's greatest immigration took place in the 1950s and 1960s, Shenzhen's has taken place in the last 25 years, a generation after Hong Kong.
In H on g Kon g, wh ere 89 pe rcent o f exp erts te ll u s tha t Hon g Ko nge rs a re entrepreneurial. This points to the strong desire to create and own a business, to be your own boss, to become socially respected through making moneyin business, and continue familytraditions in entrepreneurship. We also hear from 36 percent of e xperts that the youn ger ge neratio n is l ess wil ling to take risks and do work necessary for running their own businesses and that, spoilt by prosperity, people are increasingly reliant on the government.
Shenzhe n, on the oth er hand, is a youthful, vi gorous, open-minded city o f immigran ts from all parts of Chi na. The y came to pursu e opportunity. They res pect privacy, pursuit of wealth, taking of risks, entrepreneurs hip and technolo gy. Like Hong Kongers, they pride themselves on their market orientation and international outlook. Although m any of its pe ople do not yet call Shen zhen home, th ey have developed on Hong Kong's doorstep, a unique entrepreneurial Chinese melting po t.
HONG KONG: TWO WEAK EFCS
ENTREPRENEURSHIP EDUCATION AND TRAINING IN HONG KONG
The discussion of whether entrepreneurship should be taught in schools is significant at a time when cuts to the education budget in Hong Kong are being planned. The Curriculum Development Council of the Education and Manpower Bureau is currently revising th e secondary s chool curricul um. This is a pivotal time for the government to decide on a policy that would promote entrepreneurship education in the schools.
What are the b enefits of entrepreneurshi p education for Hong Kong? It will reinforce and strengthen Hong Kong's entrepreneurial culture. Focusing on youth is important. Although it can take place as early as primary school, secondary school is a good place to begin. Entrepreneurship education can enable students to gain a basic un derstanding of the business environmen t and the skills ne eded to be successful in a free market economy Students experience the creative processes . of idea generation, opportunity identification and business development to meet the needs of the community.
Good business governance and social responsibility would also be key elements in the entrepreneurship curriculum. Critical thinking, resourcefulness, and self-efficacy are precursors to be ing entrepreneurial. Equally imp ortant is a heal thy attitude towards change, and understanding that uncertainty and failure can be valuable for a daptation and innova tion. The ability to express oneself an d communicate well with others would be cultivated and developed through the educational experience. In the end students would understand that becoming an entrepreneur is a viable career choice. If owning and running a business is not one's goal, the
knowledge and skills acquired will enhance one's career in an organization. Most important, life and work skills are forged.
This section of the report reviews the current level of entrepreneurship education in Hong Kong at the school and tertiary level. We believe that the potential for entrepreneurship education to be taught in the schools should be fulfilled. This section will also give recommendations for how this can be accomplished.
Education and tra ining refers to all levels of the educa tion system th at pro vide instruction in the creation or management of new, small, or growing businesses. It can be delivered in primary schools, secondary schools, undergraduate university programs in business and engineering, vocational training institutes and postgraduate pro grams includ ing MBA and other masters degrees programs. The United States ranks first worldwide in offering the most number of entrepreneurship courses in post-secondary education. Seventeen courses in entrepreneurship offered nationwide in 1970 have grown to more than 1,500 courses in U.S. universities and colleges as of 2002 2. The American experience is a useful benchmark concerning entrepreneurship training and development.
In the Hong Kong 2002 GEM report, education and training received a low relative ranking, a fact that led us to make two recommendations last year summarized as follows:
* redesign school curricula to promote entrepreneurships and * let students work in business and increase business mentors
Appendix I, points 20 and 21 give the full recommendations.
The expert interview findings from this 2003 GEM study sho w that education and trainin g continues to receive low relative ranki ngs (Figure 18 ). Eighty-eig ht percen t of H ong Ko ng exp erts i n 2003 reco mmende d that schoo ls in Hong Kong promote entrepreneurship (Figure 19C). We must note that Figure 22 demonstrates
2 Charney, A. and Libecap, G (2000) Ò Im pact ofEntrepreneurship Education.Ó Ewing Marion Kauffm Foundation. an
strength s as well as weaknesses in the education syste m. In overall terms the educational system performs rather well, especially concerning tertiary business
education. Yet Hong KongÕ s education system does not encourage creativity, selfsufficiency, and personal initiative, key factors in entrepreneurship.
Schools at present a re not preparing students for entrepre neurship in terms of motivation and skill s. The learni ng environmen t is hindered by large classes in wh ich stud ent mana geme nt b ecam e th e teach ers' mai n ta sk rathe r th an the teachi ng. The cu rriculum is also orien ted towards passing examinations. Students learn by rote and memorize prepared notes and summaries on subjects that the y wil l be tested on for the Hong Kong Certi fica te of Education Examination (HKCEE) for the basic secondary course and later the Hong Kong Advanced Level Examina tion for admis sion to terti ary institutio ns. As such, they are not encouraged to exercise creativity and curiosityin learning. Independent and critical thinking skills that are deemed essential to being entrepreneurial are not sufficiently developed in the students. Schools are being publicly assessed bytheir students' performance in th e exam inati ons and teachers are p rimarily mo tivated to teach in ways that ensure students can recall academic material. The narrow curriculum excludes non-traditio nal subjects that teach students the pra ctical application of market economics and how to start a business.
Expe rts sh ared the vie w that one of Hong Kong's key strength s was its strong entrepreneurial cultu re but they perceived the youth generati on as less willing to take risks and do the necessary work to run their own businesses.A reason given was that the years of prosperity prior to the financial downturn have dampened the entrepreneurial spirit. The youth have the expectations of their needs being taken care of. Being entrepreneurial requires taking the initiative, and being entirely re3 The Shell Live Wire workshops had participation rate of 250 to 350 youth at any time; The Millennium Entrepreneurship Prog ram (MEP ) and Ju nior Achievement Hong Kong (JAHK) reported 250 students from 25 schools taking part in their programs. 4 "S ta te V al ue En trep re ne ursh ip Education". Consortium for Entrepreneurship Education. www.entre-ed.org. 11 Decem 2003. ber
sponsible for a new venture from start to growth.
Hong Kong suffers from low TEA, but there are relatively higher levels of entrepreneurship among the young. We believe that there is a demand for youth entrepreneurship activities as se en in the high le vels of particip ation in the pro grams offered by non-profit organizations 3. Studies in other countries in particular the United States reported that entrepreneurship education is important in helping the youth make the transition from Ò school to workÓ 4
We pose the question of whether schools should take up the mantle of imparting entrepreneurial knowl edge and skills. If the answer is affirmative, it has to be articulated in the educational policy and implemented in the cu rriculum. A strategy that incorporates collaboration and partnerships among the community, schools and education officers would be necessary for effective use of available resources.
Teaching entrepreneurship in the schools
Hong Kong has 499 secondary schools. The curriculum for the Senior School Curriculum is set bythe Curriculum Development Council (CDC) of the Education and Manpower Bureau.
No courses specifically on entrepreneurship are being taught in the schools. Students who take courses in economics and business studies may be exposed to it and this would vary from school to school. The senior secondary school curriculum in Hong Kong is currently being reviewed. There are plans to include a module on entrepreneurship for students enrolled in Technical Education and the Business and Financial Studies. If implemented, it will be an elective in the curriculum.
Schools have to be aligned with the Curriculum Guide put forth by CDC. CDC in its preamble has stated that its aim is for students to receive a more Ò broad and balanced curriculumÓ 5, and to develop the capacity for critical thinking and creativity. In the school-based curriculum, schools will select on average seven to ten subjects from 26 subjects to offer th eir students. Schools have the choice to select entrepreneurship for its curriculum. The decision would largely depend on the availability of teachers who are trained to teach the module. Students in general select two to three sub jects for the Hong Kon g Ce rtifi cate of Educa tion Exam ination (HKC EE). Accordin g to a CDC official, i t may b e expected tha t one tenth of the students may select entrepreneurship. The plan to include a module on entrepre5 Education. Hong Kong: The Facts. Information Services Department, Hong Kong Special Administrative Region Government . www.gov.hk.
neu rship is en courag ing an d sti ll in an em bryoni c sta ge. It will be a few ye ars before it appears in the formal school curriculum.
Entrepreneurship education and training in tertiary institutions
A number of universities have entrepreneurship courses in the business and engineering curriculum for the undergraduate and postgraduate studies. These are Uni vers ity of H ong Kong, The Chi nese Universi ty o f Ho ng Ko ng (CUHK), C ity University, Hong Kong Polytechnic U nivers ity an d the H ong Ko ng Uni versity of Science and Technology (HKUST) 6. The courses range from Ò principles of entrepreneurshipÓ and Ò innovation and creativityÓ to more specific subjects as Ò financing a start-upÓ . Most of the courses require students to write a business plan. A faculty member 7 interviewed for the report said that Hong Kong students need to improve their capacity for idea generation. He also observed that students generally write busi ness plans for ventures that are small er in scal e. The CUH K and HKUST have organized business plan competitions for their students. These have been effective in bringing realism as the students must present their business proposition to potential investors. At CUHK, engineering graduate students form teams with MBA students to write the business plan and as far back as 1998 efforts were
6 The information on the courses related to entrepren eurship was gathered from the latest calendars of the un iversit ies in Hong Kon g. The se courses were listed in the curriculum of bo th busine ss a nd eng ine eri ng stud ies at underg raduate and p ostgrad ua te le vel s. No at tempt w as made to find out when and how these cou rses were del ivered. It i s qu ite possible that electives may not be offered annually and could be cancelled when there is insufficientenrollment by stude nts or wh en there is no fa culty me mb er a va il ab le t o co nd uct th e cou rse. Cha nges to th e cu rricu lum may be ant icipated. 7 In ad di ti on t o t he t he n at io na l experts, we interviewed some university professors an d secondary school principals and teachers for their views on te aching e ntrepren eurship. See Append ix II.
made to offer loans of $50,000 for grad uating students who could submit viable busin ess plans . The prog ram was a bandoned due to lo w levels o f interes t and poorly written business plans. The program's failure demonstrated the weak entrepreneurial enthusiasm among undergraduate students at that time.
The role of the community in teaching entrepreneurship
In the absence of entrepreneurship education and training in the educational system, non-profit organizatio ns have taken the initiative to fill the void. They have invited the schools to take part in the programs that they have organized. The following section summarizes their key efforts.
1. Business plan competitions
Business plan competitions are often an effective means for students to apply what they l earn about entrepreneu rship and b usiness. Students may participate in a competition at their schools if it is organized or they may compete with other schools in a Hong Kong-wide competition. Students from universities that do not have entrepreneurship courses have participated in these competitions. A business plan entails elements of marketing, finance, production and management. The integratio n of thes e bu sines s fu nctio ns i nto a busi ness plan is an effective l earn ing experience.
The Hong Kong Shanghai Banking Corporation (HSBC) runs the HSBC Young IT Entrepreneur Awards for post-secondary school students. Non-profit organizations have held business plan competitions for students from universities and secondary schools. Junior Achievement Hong Kong (JAHK) works with individual universities to conduct one for their students. JAHK is part of an international organization operati ng in many parts of the world. Several Hong Ko ng-base d non-profit organizations have also responded to the need for helping the youth develop their entrepreneuri al capacity. The Young En trepreneurs Development Council's YDC E-Challenge sends the winning team to compete in theGlobal Entrepreneurs' Challeng e organi zed by Stanford Univers ity. Started i n 2000, YDC E-C hallenge has made progress in reaching increasing numbers of university students to develop their entrepreneurial skills.
Awards and prizes given to wi nning teams are cel ebrative events with much opportunity for visibility and accolades given to the schools and universities.
While business plan competitions have a lot of merit, there are also limitations. The business plans are overwhelmingly documents that are never transformed into real businesses. They represent the idea stage. Most, when completed, Ò sit on a shelfÓ indefinitely. Michele Cheow of JAHK believes that students learn best when they actua lly expe rience s tarting a real co mpany. Its 15-wee k Compan y Program requires stu dents to form and o perate a Ò mini-corpo rationÓ with real p roducts or services. The students have to do what real entrepreneurs do. This would include keeping records, conducting shareholders' meetings, making decisions, and eventually liquidating the company and distributing its profits to the business partners in the 15th week. The Ò companyÓ may also trade with a Junior Achievement Ò companyÓ from another country. Conducting global business is a learning outcome. JAHK also has a Ò trade fairÓ whereby these budding entrepreneurs show and sell their products and service s to the p ublic. Thi s gives th e students a total e xperience of what being an entrepreneur is all about.
Michele Cheow advocates that entrepreneurial learning should Ò stretchÓ the student in many ways. In the Company Program, students may decide to close down a po orly performing compan y. Stude nts lea rned the most w hen the y failed and reflected on why it happened. The experience teaches them to take responsibility for their decisions, to be resilient by learning from their mistakes. To facilitate this, the learning is interactive and discussion-based.
2. Seminars and workshops for young entrepreneurs
Apart from business plan competitions and running real companies, there are various other pedagogical methods of imparting entrepreneurial knowledge and skills. The Shell Corporation offers the Shell Live-Wire Program aimed also to reach people between the ages of 18-30 years. Shell works with the Hong Kong Federation of Youth Groups with the Trade and Industry Department of th e Hong Kong Government assisting. Public workshops and seminars are organized bringing together hundre ds of participants a t a time. Entrepreneu rs are invited to te ll their e xperiences of starting and running their businesses. The learning is by role-modeling and vi carious. Professionals in smaller sized workshops bring the participants through the paces of writing a business plan. For those with business ideas, they are paired with Ò mentorsÓ who counsel and give them relevant industry information and co ntacts. The public sem inars are i nteractive with much time for que stions from the partici pants. Sh ell Live-Wire is for the youth who are s tudying in postsecondary institutions, employed or otherwise. The goal is to expose the participants to various industries where there are entrepreneurial opportunities. It is explicit in the objective of encouraging the participants to see entrepreneurship as a career choice.
The Millennium Entrepreneurship Program (MEP) selects a theme for the main program for each year. The theme varies according to the current business concerns for that year. Groups of students from vari ous second ary schoo ls are ass igned mentors to help them write the business plan or thesis. The groups present their thesis to a panel of judges and the winning teams are selected. MEP is organized by the Hong Kong Youth Development Institute, a non-profit organization set up by the Wofoo Foundation. Participants who sign up for the programs are given basic training in two areas-writing the project or business plan, and presentation skills. This is the basic entrepreneurship training provided by the non-profit organizations.
An army of volunteers needed
The non-profit organizations recruit an Ò armyÓ of volunteers to help them deliver the programs. In any prog ram, they form strategic alliances and collaborate with corporations and other organizations. To illustrate, JAHK's principal sponsor provides funding for that year. Its advisory board is made up of senior executives from schools and corporation. Corporations encourage their executives to be volunteers. Corporations open up their offices to students for the Ò Company ShadowÓ and Success Job Skills programs. JAHK Volunteers are corporate executives who on average give two hours a week to conduct and facilitate activities in the schools.
All the non-profit organizations invite experienced entrepreneurs volunteer as speakers to Ò shareÓ their experiences and theÒ doÕ s and donÕ tsÓ of starting and running a business. Professional experts talk about protecting intellectual property, writing marketing plans, and making a sales call.
With on ly space for an office, non-profit organizations conduct activities in public venues and schools where use of the pre mise is free of charge or at a minimal charge. Operating with efficiency, their websites are the main channel for communication and provide the information for interested parties and potential participants.
Kudos for the community
By far, it is the corpo ratio ns an d non -pro fit o rgani zatio ns th at ha ve wo rked the hardest to deliver entrepreneurship education to the schools. Fueled bytheir mission, they raise the funds and recruit the volunteers to do the job. For entrepreneurship education to make greater inroads, endorsement and commitment must come from the Education and Manpower Bureau (EMB). School principals take their cue from EMB. Adherence to trad itional forms of education prevail s, observes one o f the no n-profit pro vide r. There i s still a re luctance to take ri sks with inn ovation in education. Entrep reneurship ed ucatio n to be effective has to b e activity-based, and interactive. This runs counter to the one-way lecture-mode of teaching that is entrenched in the schools. Learning from failure is not an option for an education
system that is exami nation-based. However, entrepreneurs l earn best from their failures and use the experience to improve their products and ways to reach their customers.
We believe that many members of the community are eager to provide supplementary ed ucation to th e schools. Some schools have recognized the benefits and incorporated the programs into the formal curriculum allocating class time in addition to tim e for extra-curricul ar activities . Howe ver, the numb ers are small and there is still a long way to go before school administrators, educators and teachers firmly integrate entrepreneurial experiences in the curriculum.
Recommendations to improve education and training in Hong Kong
The goals for the Hong Kong education system are reported to be:
Ò ...making use of an open, coherent and flexible curriculum framework composed of ...key learning areas, generic skills and val ues and attitudes, the scho ols are now offering their students a broad and balanced curriculum. The school curriculum is sufficiently diversified, providing students at all levels with a variety of options to cater for their different aptitudes, abilities, and learning needsÓ 9.
These aims are commendable and progressive. There is a definite role for entrepreneurship education to become permanent offering to the students. The curriculum for imparting entrepreneurial knowledge and skills will include a range of topic areas and pedagogy that will also develop important career and life skills.
8 We sin cere ly th ank t he t eache rs, principals, entrepreneurs, and governme nt o fficers whom we spoke wi th about whether and how entrepreneurship educa tion can be de livere d in Hong Kong. Their views have helped in forming the recommendations. 9 Education. Hong Kong: The Facts. Information Services Department, Hong Kong Special Administrative Region Government . www.gov.hk.
What the government can do
1. The government and the Education and Manpower Bureau must take an active role to lead and support entrepreneurship education
EMB must articulate its vision and write a policy for entrepreneurship education to have a vital role in the schools in nurturing and developing students to build interest in and capacity for entrepreneurship. This is based on the vision that its mission is to develop Hong Kong's human resources through the education system, and prepare its youth for higher education and for transition into the community. It will be the sig nal fo r the s chools to actively plan and imp lement the programs and activities.
2. Build the infrastructure for entrepreneurship education EMB's key role is to build the infrastructure that will enable and support the schools that have decided to incorporate the learning of entrepreneurship. A team of officers who are dedicated to implementing the policyshould be formed.
The Ò infrastructureÓ should include professional training for teachers who are interested in the design and delivery of entrepreneurship education. These courses will count towards the te achers' continuing education portfolio. Teachers who are attending courses could be given paid leave and receive training grants s et up by EMB.
3. Survey existing entrepreneurship education programs and resources With a commitment advocating the development of entrepreneurship learning experi ences i n the schools, EMB nee ds to em bark on an in-depth an d exten sive study to determine how it can be and should be done, with participation from various stakeholders that include principals, teachers, parents, relevant government departments, business community, for-profit and non-profit educational providers. The study will survey existing programs already launched and operated by schools that promote entrepreneurial skills. Their experiences will be valuable for planning
10 The Consortium for Entrepreneurship Education www.entre-ed.org and the National Foundation for Teaching Entrep reneurship www.nfte.com are United States non-profit organizations that promote entrepreneurship education and have designed and developed materials and content for teaching entrepreneurship in primary, secondary and vocational training schools. The Ewing Ma rion Kauffman Fo undation actively encourages entrepreneurship development in universities www.em kf. org.
and implementing entrepreneurship education in Hong Kong. Available resources in the community should also be identified. Each provider has its own goals and programs in entrepreneurship education and could offer schools a range of activities and pro grams to select. The study shou ld look at what other countries are doing and build the appropriate links for future collaboration 10.
For immediate action, a compendium of community resources should be put together for principal s and teachers should they decide on incorporating entrepreneurship training and development into the curriculum. The EMB should have on its home page a sub-site for entrepreneurship education. This will contain goals, communication, resource guides, curriculum products and appropriate links to relevant sources of information.
In addition to the curriculum support, schools should be given incentives to incorporate entrepreneurship education in their curriculum.
4. Speed up the reform of the examination system An examination-oriented curriculum discourages schools and teachers from teaching su bjects that are not go ing to be e xamined. Entrepreneurship education is best delivered through experiential and interactive learning. As long as the examinations is the main assessment process, courses that cannot be taught and examined the traditional way, will not be implemented by the schools.
What the schools and universities can do
5. Review the university admissions criteria Universities have a role in making entrepreneurship education a part of the school curri culum. Universi ties do influence the school curriculum by their criteri a for admitting students. Student admissions to the universities are largely determined by examination results. Universities should admit students on the basis of schoolbased assessment and on-going performance in projects and course assignments. This will send a message to students, schools and parents that the universities do
not just admit students who score well in examinations. It will encourage schools to incorporate entrepreneurship courses whereby assessment is determined by the schools.
6. Have a multi-disciplinary approach to teacher education Teacher ed ucation provid ed by the universitie s and the Hong Kong Institute of Education could work with the business schools to offer coursework for preparing the future teachers for business, economics, and entrepreneurship courses. Crossdiscipline work must be encouraged to develop a comprehensive curriculum. Interdisciplinary programs for undergraduate and graduate students who are interested in entrepreneurship could also be developed.
7. Give teachers professional and continuous training Workshops and seminars on teaching entrepreneurship should be periodically offered to support the teachers with continuing professional development.
Entrepreneu rship courses in the second ary schools s hould b e inte ractive and experiential. Teachers should use the facilitation method and not the lecture format. The co urses shoul d also not have a trad itional examination re quirement. Students' performance can be evaluated in innovative ways and simulate actual business criteria such as whether the businesses are profitable or making a loss, the level of cooperation in the entrepreneurial team. Teachers and educators can be traine d to observe and evaluate criticall y and effectively.
8. Prepare youth for entrepreneurial careers Young pe ople who do not continue to se nior secondary school should have access to learning how to start businesses in the Vocational Training Institute and other organizations offering vocational training. Training programs should focus on particu lar areas of busin ess where Hong Kon g possesses advantages over other countries such as tourism, professional services for China business and restaurant management. More pragmatic approaches would include hands-on training that can be immediately applied to business start-ups. These include topics
such as registering a ne w company, reporting tax, findi ng suppliers and buyers, set up an office, hi ring employee s, selecting pay, benefits and reward s ystems, finding a business partner, and eve n choosing a lawyer and accountant.
9. Monitor the long term outcomes of entrepreneurship education The entrepreneurship module when implemented in the schools should be monitore d to as sess i ts success in encoura ging youth an d gradu ates to engag e in entrepreneurial projects.
10. Have an integrated approach to entrepreneurship courses and extra-curricular activities Schools generally offer their students many extra-curricular programs all of which are greatly beneficial. Teachers and parents are generally concerned that students sp en d to o mu ch ti me o n th es e p ro gram s ra the r th an o n prepa ri ng for the examinations. Such people are likely to take the view that an additional program to promote entrepreneurial activity would unacceptably eat into more of the students' time. Schools that are committed to developing entrepreneurial capaci ty among the students could work towards a model that incorporate values and activities that are relevant to entrepreneurship. To illustrate, students could contribute the profits from their "business" to a charitable cause or organization.
What the community can do
11. The business communitymust push the schools and the government to prepare the youth for work and successful transition into the community The business community should speak up and tell parents and the schools what they desire of the youth who enter the work force. Work skills can be developed via
11 Th ese no n-p rof it organ iza tio ns include: Junior Achievement of Hong Kong, Shell LiveWIRE, MillenniumEntrepreneurship Programme (MEP) run by the Youth Developm Institute, and ent the Youth Entrepreneur Development Council.
They can sponsor public and school programs on entrepreneu rship education. They could en courage their employees to contribute as volunteers with schools and non-profit organizations as mentors, facilitators, and tutors in their programs 11.
We know that entrepreneurs who share their experiences do inspire the youth and show them that it is possible to be successful and fulfilled. Interaction with entrepreneurs is an important part of the social learning process for the students. Few teachers have the experience of being an entrepreneur and may need assistance in delivering the message.
12. Parents must recognize the positive impact of entrepreneurship education on their children Parents must realize that entrepreneurship education will prepare their children well fo r future work. Students w ho undergo exp eriential lea rning also ga in personal development such as confidence, interpersonal and communication skills. The capacity to be creative enables the students to see opportunities, and alternatives to solving problems. Students learn to be adaptive, and become empowered in helping the mselves deal with difficul ties and challenges. Pare nts need to be fle xi bl e an d en co ura ge the ir chi ld re n to un de rg o no n-tra di ti on al l ea rn in g experiences.
We be lieve that entrepren eurship e ducation can, and s hould be d elivered a t all levels of the educa tion system. The Education and Manpo wer Bureau must see promoting entreprene urship is a sustainable way in creating in a vibrant and dynamic economy. By doing so, the entrepreneurial culture that Hong Kong is known for worldwide, will be nurtured in the future generations. Much work is to be done and we advocate that it begins soon.
R&D TRANSFER IN HONG KONG
Expert interviewees agree that Hong Ko ng underperforms in R&D transfer. Hong Kong boasts several excellent universities funded by the government. The government states that technology transfer is one of the four areas it supports, in addition to e ducati on, res earch and developmen t and b ecomin g cente rs of e xcelle nce. We seek to answer two questions: why does Hong Kong score so badly and what, if anything, can be done about it. To answer these questions we conducted a search of the academic literature on technology transfer and we interviewed the technology trans fer officers at The Chi nese University o f Hong Kong , The Hong Kong Polytechnic Uni versity, The Hong University of Science and Tech nology and City University of Hon g Kong and The University o f Hong Kong. We were gracio usly received by all of the universitiesÕ officers (whose names appear in Appendix II). As our co nversa tions were in con fidence, how ever, we do not d ivulge speci fic response s. And of the recommendations we make are no t those of any specific technology transfer office.
Reasons for underperformance
Research takes precedence
Leading universities and scholars aim to produce academic research. Professors in universitie s are expected to perform three duties: teaching, res earch and service to th e commu nity. Althou gh university fundin g is l argely based on stu dent numbers, the prestige of a university flows mainly from its academic research record. Compa red with teachin g performance an d service to the communi ty, acad emic research is easily meas ured because th e academic jou rnals to which scholars submit the papers that report research findings are international; moreover, scholars worldwide in each discipline broadlyagree on the ranking of academic journals. The Research Grants Committee of Hong Kong allocates research funding ($4.8 billion in 2002) largely by considering its potential for academic publications and reports the output of research funding in terms of academic publications. A scholar who wishes to preserve job mobility and maximize career prospects, while satisfying the requirements of teaching and service, will concentrate his or her efforts on
academ ic research - by both applying fo r research grants and writing academic pape rs. A good research record is fu lly verifiable and can be e asily transfe rred from one university to another. So at leading universities a round the globe - and Hong Kong's un iversities are striving to be leading universities - research takes precedence.
Applied research counts as second class research
Academic research involves discovery, pushing forward the bounds of knowledge. In each discipline, good scholars have a clear notion of what has and what has not been discovere d, modeled, hypothesized, proven, or refuted. The p ublication in an academic paper of the discovery, model , hypothesis, proof or refutation is the end product of academic research. Applied research, on the other hand, involves taking th at academic rese arch and using i t. A scholar can publish articl es in applied research but usually they appear in lower ranked journals. While academics rate most highly academic research, only through applied research does academic research lead to new products and services.
At universities the "D" of "R&D" is often a tainted community service
A greater g ulf exi sts between ap plied research and d evelopm ent. Even after a new product or service is shown by applie d research to be technically feasible, it needs to be developed into a profitable business model. The "D" in "R&D" involves working closely with a new company's manufacturing, sourcing, and marketing in order to refine the innovation into something customers will payfor. Although all of Hong Kong's universities say that they encourage the interaction of professors with companies to serve the community, in most cases professors must seek university permission in advance to consul t to industry, sit o n boards of directors and start companies. Uni versities tend to re strict th e income from such o utside practice and some universities discourage outside practice unless those activities are those sponsored by the university itself. Universities implement such policies and norms to upho ld their comm itment to th e higher call ing of advancing knowledg e. They note that scholars have a responsibility to the community as a whole that should not be lowered by bui lding loyalties to single companies or i ntroducing potential conflicts of interest.
Given the difficulty of developing an invention into a commercial product or service, the high risk involved with starting a company, the ambivalent attitude of universitie s to i ndivi duals workin g with indu stry and th e strong in centive for acade mic research, it is not surprising that few professors personallyset aside the considerable time and energy necessary for it.
At the official level, however, the Hong Kong gove rnment, through the Innovation and Technology Commission has identified this problem and has set up - in addition to other initiatives - a $750 million Applied Research Fund under administered by venture capitalis ts Walden Technology and SoftTech Inve stment. Since 1999, theARF has provided considerable resources to some 25 start-up companies from Hong Kong's universities.
Hong Kong's industry is not receptive to high technology transfer and has not built up links with universities
Hong Kong h as a n arrow commerci al base , concentrate d in se rvices . Prio r to movi ng its manufacturi ng bas e north to Sh enzhen and the res t of C hina, Hong Kong excell ed in OEM man ufacture which relied on imp orters ' techn ology. Not having built up the univers ity - indus try links prior to its industria l hollowin g out, Hong Kong now lacks geographical proximity with the manufacturing base. This lack of geographic proximityis not a problem with a few industries - notablysoftware, logistics, business services and medicine - which remain in the SAR.
Hong Kong universities started paying attention to technology transfer only recently
Although different universities started paying attention to the problem of poor R&D transfer at different times - City University and Polytechnic Universitywere certainly in the fo refront - in gen eral we started l ate. Technology transfer officers at most universi ties noted that only since 199 7 has there bee n great emphasi s on R&D trans fer from universities to th e private sector. Many of the programs, less than three years old, have not been around long enough to be objectively assessed.
The technology transfer offices of universities have insufficient resources to do the screening, patenting and licensing they are mandated to perform
A major focus of Hong Kong's universities technology transfer offices is innovation disclosure, patenting and licensing. The inventions of professors working at our universities belong to the universities. To give an incentive to professors to invent and to disclose those inventions, each uni versity has a different policy of sharing the proceeds of the inventions. Professors who invent are encouraged to disclose those inventions to the university (see Figure 28).
Each university's technology transfer office decides which inventions to patent and where to file the patents. Patents are filed in the jurisdiction where the product or service is to be sold, so the US, China and Hong Kong are major locations of Hong Kong's patent registration, with the US predominating. Totally the US patent office , receives more than 200,000 patent applications per year; hence, the body of outstand ing pate nts on e ach techn ology is conside rable. U S Patents that can be legally defend ed are expensive to file, n ot because of filing fees, but because of the time it takes for patent lawyers to describe the new technology with knowledge of parallel and competing patented technologies. Patent costs average $250,000 but can range anywhere from $30,000 to $600,000. Most patents that are filed are never used profitably But a patent that is used in a successful product or service . can generate considerable royalties.
Figure 28 Royalty distributions of universities
P e rce n t o f R o ya l t i e s o n P a t e n t e d I n ve n t i o n U ni ve rsit y To I n v e n t o r To U n i ve r si t y ( i n cl u d i n g d e p a rt m e n t o r s ch o o l ) Chinese University of Hong Kong City University of Hong Kong Hong Kong University Hong Kong University of Science and Technology 25% 30% 50% 50% 75% 70% 50% 50%
For some universities with mature, established technology transfer offices that have been patenting success ful produ cts for years, ro yalties accruing to the pa tents exceed the costs of running the technology transfer offices. For the vast majority of universities, including all of Hong Kong's universities, however, technology transfer offices run at a loss. At the same time, they have insufficient trained (expensive) personnel who can ass ess accurately the potential for profita ble patenting of the disclosures made by their faculty.
One can gain perspective on Hong Kong's dilemma by considering the academic literature on technology transfer (see Appe ndix III). The key findings are that University technology transfer programs are more likely to succeed if
* The university research budgets are generous * The university has high quality researchers * The university clearly embraces the technology transfer mission * The technology transfer office has evidence of past success * The technology transfer programs are clear about their terms * The rewards for disclosure and technol ogy transfer office involvement clearly outweigh the costs * The technology transfer office is flexible and helpful * The companies that can use the technology transfer are nearby * University researchers are cross-disciplinary * University researchers do corporate consulting
Points one and two, the R&D budget and the current competence of our researchers are not factors that Hong Kong can be changed in the near term. However, the other eight points can be taken into account in the following recommendations
Recommendations to improve R&D transfer in Hong Kong
1. Th e governm ent shou ld clearl y state that the o bjective of techn ology transfer from universities to the private sector is not the making of money for the university or the maximizing of intellectual property filings, but is the transfer of technology to the community to incre ase the economic wellbeing of the entire re gion. Within university technology transfer offices this changed philosophy would lead to maximizing successful business use of technology rather than revenue to the university from technolo gy transfer.
2. The process of assessing the patent-worthiness of invention disclosures is time consuming and requires legal knowledge, business sense and highly specialized technical expertise. None of the technology transfer officers we contacted felt that he o r she h ad the resources to d o the j ob prop erly across al l techn ologies researched bytheir universities and none was confident that under the current funding conditions those resources would be released to them in the near future. Since ultimate ownership of patents lies with the government who funds the universities, centralizing the investigation of patentability should cause no problems and could achieve considerable economies of scale. It would also allow a single agency to serve as a high technology window in marketing Hong Kong's university patents to ind ustry globa lly. The central Ho ng Kon g uni versi ty pa tent review offi ce co uld design an appropriate revenue sharing function w ith a fair di stribution of the returns to the originating inventor and university designed to stimulate more patentable innovations. The centralized agency would be more able to standardize policies and advertise its successes than would separate and understaffed technology transfer offices of the current regime.
3. More technology transfer can be achieved from universities to industry outside of the form al patent system than inside it. This i s because the patent system in China is new; inventors are less confiden t that their inventions can be protected (rather than simply exposed) through patenting; the technology being transferred to industry is more likely to be currently used technology, rather than cutting edge; software, which makes up a disproportionate share of Hong Kong's R&D is subject to cop yright pro tection, b ut compara tively little software is paten ted and th e soft skills of business, some of which are available in universities, lie outside formal intellectual p roperty. To encourage such technology transfer, pro fessors should be free, on ce they fulfill thei r teaching, research and service requirem ents, to do any external practice in keeping with university reputation. Professors should only have to declare, after the fact, their income from external practice. Currently, this system exists in some Hong Kong universities, while other universities suppress and tax outside consulting, company startups, serving on boards, etc. initiated by individual professors. We believe that the community as a whole - led by the government - should establish the standards of conflicts of interest and the degree to which university professors should be integrated into business activities. The current fra gmented system sows confusion and increases apprehension o f future changes to regulations.
The government should sta te that it is the responsibility of professors to initiate contacts with industry on a personal basi s. As long as that contact can generate profit for the pro fessor w ithout comprom ising h is or h er respo nsibili ties to the university, the professor should be entitled to all of the revenue from such contact. At a time when academic salaries are being cut, the encouragement of professors to seek outside practice and incidentally increase technology transfer can increase the probability that research capability built up over the last decades in Hong Kong is not dissipated to other parts of the globe.
4. The distance be tween researche rs and industry should be sho rtened. The distance between Hong Kong's universities and the industrial base in Shenzhen is currently b eing re duced by stre amlinin g and i ncreasi ng the number of boa rder crossings. The government should allow more private cars to drive to Shenzhen (and from Shenzhen to Hong Kong). Currently, at some Hong Kong universities, profe ssors mus t apply in advance for permission to travel to China . While this regulation is largely ignored by those who travel frequently, the potential for technology transfer would be increased if it were removed entirely.
5. High cost, high profile sponsorship of governments to pick winning high technology companies may be less effective and involve hig her risks to go vernment than al lowi ng in divi dual professo rs to pursue more dece ntra lized technol ogy transfer.
BACKGROUND DISCUSSION OF ENTREPRENEURIAL FACTOR CONDITIONS OF SHENZHEN
In Shenzhen there is adequate private investment capital, bu t there is almost no formal venture capital.
As long as an entrepreneur has sufficient funds for expenses and working capital, with the financial structure of Shenzhen being fairly complete, private capital being rela tively adequate and a lot of real estate developers and capital ra ised in the stock market available, investment can flow to new and growing enterprises. Entrepre neurial capi tal availabi lity is a la rge advanta ge in Shenzh en relative to the interior of China.
Bu t to day in She nzh en, the re is virtuall y n o acces s to p riva te venture capita l. Moreover, the policies to encourage private investment as opposed to state-owned enterprise investment are not the same. This difference is not good for stimulating entrepreneurship, and means that much excess capital is not efficiently used, generally restricting social progress.
On one hand, investment capital in society is relatively pl entiful, but on the other hand, Shenzhen's equity venture capital, from both government and private sources, is insufficient, leading to a lack of capital for entreprene urship. If there is a good
project, once the project idea is developed, it needs a risk taker to finance it. Ideally, th ere wou ld be a co mple te sys tem to provide entrep ren euri al capi tal . Yet in Shenzhen, resources for entrepreneurs, including the resources supplied by the government, are quite limited. Moreover, these li mited resources are mainly directed towards enterprises in th e mid or late r stages of d evelopment, because profits are higher and more stable. The capital markets do not support enterprise merger and acquisition, and lack system s to deal with enterprise obsolescence and fail ure. Good enterprises find it difficult to expand. Poo r enterprises bitterly struggle on, leading to unhealthy competition to the detriment of all.
Financing SMEs is difficult; liquidity is poor; forei gn exchange restriction s mean that capital cannot freely come and go. Venture capital investors lack channels to cash out their investments. Shenzhen has not done enough in the area of attracting foreign risk capital. Venture capital is too much under state control; privatization is insufficient. Shenzhen should better utilize foreign venture capital. Now, those bringing projects from overseas find that inward and outward funds transfer is very inco nvenient. The e ntry barriers fo r venture capita l are to o high: a minimu m of RMB30 million is needed for domestic venture capital firms to start business and RMB50 million for foreign firms to start business capital. These barriers mean that firms that are all owed to invest in Silicon Valley a re not good enough for China. This restricts the de velopment of venture capital. The devel opment of high technol ogy h as fel t the cons train ts of finan ce: o nly 10 percent o f so-called venture capital actually goes to high technology. Most of it is invested in securities markets.
Bank debt capital
Shenzhen has quite a lot of financial institutions with many banks and insurance companies. But SMEs, especiallystart-ups, generally say that finance is a problem, with most comp anies relying on private capital. Today in Shenzhen , most entrepreneurs rely on themselves, family members, friends, etc., to source their capital. It is very diffi cult to ge t funding from a bank or from b ond markets. Enterp rises, especia lly startup companies, in the early sta ges of growth cannot meet the requirements for bank loans. They have insufficient assets for collateral and they are often in a negative cash position.
Banks look down on the poor and love the rich; they decorate banners with flowers rather than delivering coal in snowstorms. Just when a start-up needs the capital most is the time when banks find it most difficult to lend. Financing, including bank financi ng and securities markets financing, obviously is bias ed in favor o f state owned companies. And some allocations of non-financial resources from government are also biased in favor of the stated owned economy.
Entrepreneurial companies also lack the support that some government policies, if implemented, would give them. For example there is no over-the-counter market and the opening of the second board (the risk capital board of the Shenzhen Stock Exchange) has been repeatedly delayed. In terms of bank and securities market support of SMEs, there still exist a number of government policy obstructions.
Shenzhen has a relativelyopen, free market philosophy and system. Its tax system is open; the processes for starting a company are simple; its legal system is relatively complete, and the openness of the govern ment is incre asing. All o f these factors greatly stimulate entrepreneurship in Shenzhen. Moreover, preserving and developing these strengths will in the future continue to be of great importance for Shenzh en's entrep reneurial activities. Because of this, one should asse ss the changes in the Shenzhen city government policies on the basis of whether or not they positively affect the development of these strengths.
Changes in policies carry with them seve ral implied ris ks that they may instead perversely: * Reduce transparency * Reduce industrial development * Restrict the development of private sector enterprises
In striving for healthy, sustainable economic development, the higher the level of government openness, the greater the degree and precision to which those implementing government p olicies and those affected by governme nt policies will understand policies. Through implementing government policies concerning financial support, commercial infrastructure, physical infrastructure, market accessibility, educational development, etc, the Shenzhen government has demonstrated that it is far in the lead when compared with oth er regions of Ch ina. This directly validates the link between Shenzhen's economic development, the income of entrepreneu rs and a trans pare nt g ove rnme nta l en viro nme nt. An d it als o reduces corruption, raises government efficiency and improves the effectiveness of honest policies.
Although Figure 21 reflects the degree to which Shenzhen leads the other areas of China in this respect, in our research we found that, without exception, the experts were concerned by government restrictions of entrepreneurial activities. They considered that for the good of Shenzhen's economic development, the government should seriously review the policyrestrictions and policy implementation concerning entrepreneurship.
More and more people are coming to believe that the government should, from a macro perspective, release the restrictions on industrial development at the same tim e as imp rovi ng overal l in dustrial plan ning , to rais e th e com peti tive ness of Shenzhen industry.
The intervi ewees w ere particularly concerned about the prob lem of the pri vate sector. The successes of Shenzhen's economy ha ve been es tablished on the foun dation of a su bstantia lly developed private sector. Looki ng at current economic condi tions, to relax the restrictions on priva te enterprise, especi ally to reduce the restrictions on private individuals entering industry is extremely important for the development of the private sector. The support that government g ives to industry must be extended. Not only shou ld it make policies to sup port industry, but it should also improve the legal system-wide protection of private sector entrepreneurship in industry.
We noted in the course of our research that the vast majority of interviewees support the development of the private sector. In fact our research was an reexamination of the role of government vis-a-vis the economic system and entrepreneurship: that is, how d o you reduce the various u neven restrictions over do mestic private capital and foreign investment capital in order to set up reasonable and fair competitive structures.
Through analysis of interviewees' suggestions, we must point out that, in Shenzhen, the governmen t and the main participants in entrepreneurship - i mmigrants and average local people - lack effective communication channels, leading to the people not understand ing the policies of govern ment. A substantial gap e xists between the public and the g overnme nt, lead ing to a lack of appreciation o f govern ment policies. This not only reflects the risin g expectations of the people in respect of the legal and commercial environment as the economy develops; it also graphically shows that the Shenzhen government has not met the needs of entrepreneurship in a timely way, es pecially changes in regulations concerning self-employment and SMEs. We think that the se are th ings that the Shenzhen government should avoid in setting economic policies.
The Shenzhen municipal government has several programs to support SMEs. It also has funds with which to encourage and support entrepreneurship and development programs for high, new technology entrepreneurship. But with the exception of high technology industries, the effect of government's support for entrepreneurship i s insub stantia l and weak. Here, we will briefly revi ew a fe w of these programs:
1. Venture Capital Fund: This fund is mainly from government, to support projects from RMB0.5 million to RMB 1.0 million in risk capital, to encourage members of the pop ulation to start companies . With this o bjective, the government s et up a new investment guarantee entity, the Insurance Bureau, to give credit guarantees to entrepreneurs.
2. High Technology Industry Fund. To increase the quality and competitiveness of Shenzhen's economic development, stimulate the development of high and new technolog ies an d increase the rates of R&D transfe r to i ndustry, the Shenzhen government established the Shenzhen City High Technology Industry Investment Service Company Limi ted to give service support to high te chnology enterprises and proj ects by gu aranteeing inve stmen ts in high tech nolog y enterpri ses. To compleme nt this, the Science and Tech nology Bureau o f the Shenzhen Government issued and implemented a series of policies to encourage and support high and new technologies at the same time as it established the High and New Technology IndustrialDevelopment Zone and the Software Park, to encourage and support technical R&D personnel to become entrepreneurs.
3. Foreign Studies Entrepreneurial Fund. To attract and encourage Chinese students who have studied abroad to return home to start businesses, especially to attract talented individuals to start companies in Shenzhen, the Shenzhen government has set up integrated encouragement and support policies.
4. SME Development Fund. To encourage entrepreneurial activities, the SME Bureau has been set up. At the same time, the government finance department has invested RMB 2 20 mi llion to se t up an SME cred it gu arante e cen ter to provide support in the form of mentorin g and low interest rate loans with the o bjective of raising the overall related industry competitiveness of Shenzhen's SMEs.
At the same time, the relevant departmen ts of the Shenzhen government - for example the Bureau of Economic Development, Bureau of Science and Technology, Bureau of Foreign Trade - have set up internal coordination structures, to give informational assistance to those relevant enterprises that have significant strengths, to support SMEs in their entrepreneurial activities, to improve and raise the technology of enterprises equipment and to extend concessionary loans to encourage the increase of exports.
EDUCATION AND TRAINING
According to th e e xpe rts, ed uca tio n an d trai nin g i s on e o f the weak EFCs of Shenzhen. We believe that the experts were completely sincere in their criticisms and that Shenzhen should emphasize education and training.
One aspect of the problem is that the primary and secondary schools, the examination-oriented system of force-feeding students does not stimulate entrepreneursh ip an d is no t use fu l for e nco uragi ng the creativity n ecess ary for s tarti ng companies. A s econd asp ect is th at Shenzhe n has few post-secondary ins titutions and insufficient research institutes, so Shenzhen is unable to supply its own needs fo r human capital, which must be imported. Beca use of this, the experts have pointed out: "... several years ago, when the interior had not yet opened up, a lot of talented people came to Shenzhen, bringing with them much technology and man y pro jects. Now, how ever, thin gs are different. Th e rate of o penin g in the interior is much increased and the concessionary policies of Shenzhen have been gradually eliminated. A lot of technological talent has returned to the interior, leadin g to a d earth o f te chno log ical tal ent for sta rtup en terp rise s. And for matu re enterprises, there is insufficient experie nced managerial talent." Aside from this there is insufficient basic research strength.
Without a reform of the secondary school examination system, it is extremely difficul t fo r pri mary and seco ndary teachers not to s trive to help stud ents achi eve good e xam results , but the force feedin g system o f education can be reformed, and more attention can be paid to stimulating student inventiveness and creativity. As to post-second ary edu cation, Shenzh en sho uld correct th e prob lem of only having one university and having no first rate university commensurate w ith the level of development of Shenzhen's society. In building UniversityCity, the Shenzhen government has brought in Peki ng University, Tsi nghua Un iversity and othe r famous unive rsities to Shenzhen to set up classes, but it has not recei ved a commensurate return. Shenzhen should consider using the resources of Hong Kong's universities, to meet the personnel needs of Shenzhen entrepreneurship.
In training, Shenzhen also has a lot of problems. Firstly, there is a lack of screening mechanisms for management teams and a lack of systems to train and select truly excellent entrepreneurs. When the government selects and supports a high technology enterprise, too much emphasis is placed on the tech nological content of the enterprise and very l ittle attention i s paid to the man agement team; ve ry little inves tigation is done o f the man agerial ab ilities. Secondly, there i s insuffi cient training, especially entrepreneurial management training. Some of the experts felt that "...the course content of MBA and EMBA programs now being taught in China falls far short of meeting the needs of enterprises." Thirdly, looking at Shenzhen's private enterprises, they are still at the stage of being managed as familybusinesses. To grow and strengthen these enterprises requires the strengthening of training for the entrepreneurs. There are two types of entrepreneurs today in Shenzhen. One type is the entrepreneur has technical expertise but lacks managerial capabilities and shoul d have re-traini ng. A seco nd typ e is non-sp ecial ized. Most of th ese have amassed capital from another i ndustry and use it to i nvest in science and technolo gy industries. This second grou p also has to reform along the lines of modern management techniques.
Other experts pointed out, "...few public servants understand the market economy so , wh en man agin g the market, th ey e nco unter a reas w here th ey mana ge it incorrectly. Fortuna tely, Shenzhen has experience with this shortcoming, and often sends its government leaders abroad to study. This is extremely important and is money well spent.
For this reason, one must not onlytrain entrepreneurs. One must also train government employees. This means that government and enterprises should together, invest more time and money on training and establish complementary structures and intermediaries to offer training services.
Shenzhen's experts unanimously think that in Shenzhen, R&D can be swiftly transferred into commercial potential. Because much of Shenzhen's R&D capability lies within enterprises, and many of the enterprises have strong R&D capabilities, the fruits of their research can be speedily translated into productive strength. But at the same time, this R&D structure restricts benefits from spreading the technology, product improvement and continued product innovation.
Many participants in technology transfers are dishonest. Excess bureau cracy in the technol ogy market is seriou s. The efficiency is very low, further l owering the success rate of tech nology transfer. In Shenzhe n, technology transfer fre quently ru ns into o ne of thre e p rob lem s. Th e firs t p rob lem is tha t m any te chn olo gy developers, once they have transferred the technology, are unable to receive payment from the technology recipient and the project is not implemented. A second problem occurs with projects where the technologydeveloper does implement the technology transfer but oversees only the technology transfer, not the marketing. Once the technology p roves itself, the transferee shifts his production to another location where manufacture and sales are carried out, denying the developer his share. A third problem occurs when produ ction starts, but capital p roves insufficient res ulting in interrupted production . If some of th e investment is from bank loans, the technolo gy developer/transferor may be forced to repay the debts.
At present, in Shenzhen much of the technology market is s et up as government agencies or agencies under government control. Several technology markets just functi on by placing a few materials in an offi ce and wai ting for the custome rs to come to the door. Because their work and their economic interests are not aligned, government officials in this market are not motivated.
ACCESS TO PROFESSIONAL AND COMMERCIAL INFRASTRUCTURE
From our research we basicallyagree that Shenzhen has a relatively good professional and commercial foundation from which to serve all types of enterprises and entrepreneurs. Most of the interviewees concurred that in Shenzhen most enterprises - large or SMEs - and most self-employed individuals were able to access this base. Although professionals with rich experience tend to gravitate to large organizations, multinational companies and government departments, as the employment pressure in China increases, even they are starting to join those SMEs of a certain size, including those in the private sector.
But in Shenzhen, because loyalty is not yet widespread, the turnover of professionals has increased, adding to cost and risk for enterprises.
MARKET OPENNESS AND BARRIERS TO ENTRY
On one hand, Shenzhen compared with the surrounding areas, has already established a rational, complete production environment. The soft infrastructure is comparatively good and the level of openness is relatively high.
The cities around Shenzhen, Hong Kong and the small and middle sized cities of the Pea rl Ri ver Delta , ha ve a virtuous cycl e economy. At pre sent, She nzhe n's industry, includi ng the tradi tional comp arative advantage indus tries (e.g., gems and watches) , finance (funds, trust, large scale financial i nformation companies and commercial banks), high technology industries and a large number of consulting companies have basically stabilized. Start-up companies can choose to enter one of many industries. And those industries that have demonstrated comparative advan tage throu gh competition pres ent to th e entrepre neur exce llent refe rence points, helping entrepreneurs form more complete business plans. At the same time, the mobility of Shenzhen's resources, especiallythe mobility of talented people and capital are very high, allowing Shenzhen to develop rapidly its market economy.
Moreover, the entrance barrier to the Shenzhen market is low. The costs of starting an enterprise is lower than in Beijing, Shanghai or Guangzhou. For example, the costs of factory workers are below those in Beijing and Shanghai. Rent and salaries for management are much lower than in Shanghai.
She nzhe n is a city o f im migrants , wi th re lati vely ope n and pro gres sive ide as. Shenzhen was the window of China's reform. Post WTO conditions in the rest of China were first implemented and tested in Shenzhen. In the opening of Shenzhen's service industry there are many innovations, approaching international standards. Shenzhen's foreign i nvestor service work has already underg one four sets of reforms so all relevant offices are coordinated, with government services offered at one w indow. Efficiency has rap idly increased, s o that Sh enzhen can work fairly well with foreign investors.
One the o ther h and, b ecaus e of Shenzhe n's li mited area, the residen cy pol icy restrictions, the end of the special eco nomic zone's concessionary policies, and the fact that, among other things, government's level of openness with information is insufficient, the level of openness is constrained.
At present, all of the basic structures in Shenzhen are not encouraging the development of traditional industry. The reason is very simple: Shenzhen's resources, including water and land, are limited. Another restriction is the right of residence. The second boarder (between the Shenzhen SEZ and the re st of the Sh enzhen municipality) is a problem restricting entrepreneurship in the traditional industries. Ever since the establishment of the SEZ, traditional industrial development has not been taken seriously. All of the concessionary policies have been targeted at new industries. But the land taken u p by the High Technology Zone takes up only 11 square kilometers and now it is already very crowded. Most other high technology zones are located outside of the SEZ, but the land available in Shenzhen outside of the SEZ is only 10 square kilometers. Even though the government has a lot of conces sionary pol icies to sup port private high tech nology enterprise, they can't find the land in Shenzhen on which to develop.
From a regional perspective, during the 1980s following the establishment of the SEZ, Shenzhen's strengths came from its special economic zone policies and its proxim ity to Hong Kong and the internati onal markets. At that time, Shen zhen's SEZ uniqueness was very clear. Recently, following the gradual elimination of the special policies, the old strengths have become weaknesses. The growth opportuni ty has come unde r pressu re from the Guan gzhou an d Hong Kong markets. Tod ay, fo llowin g the entry of Chi na into the WTO, the Ch inese market is be ing opened to the world, causing massive population movements. The consolidation of the Guangdong-Hong Kong-Macau economy is making the whole of the Pearl River D elta become an economic trade zone, so Shenzhen's comparative geographic advantage has weakened.
At the time that a person or a company begins entrepreneurial activities, one must assess very accurately resources. But today in Shenzhen, one cannot find many of the statistics. Our research in many organizations has demonstrated that experts conclude it is very difficult to get information. A lot of statistics are kept in the hands of government and are hard to access. There is a lot of false information. Some of the information in the media is incomplete. Some of the information that is slightly controve rsial is not mad e public. The co ntrast with Hon g Kong on this aspect is great.
ACCESS TO PHYSICAL INFRASTRUCTURE
The experts give very high marks to Shenzhen's access to physical infrastructure but noted government neglect of management of physical infrastructure. Because the efficiency of government management o f physical infrastructure is rather low, there is an increase in the cost of access to physical infrastructure and a decrease in the effectiveness of usage of physical infrastructure, increasing the social cost of its use.
The Shenzhen government has suggested that it set up a "regional international logistics hub city", but to build such a city, one must not only increase investment in infrastructural construction. A more important aspect is how does one effectively up grad e and i mprove the m an age me nt le ve l and e ffici en cy of the ph ys ical infrastructure. Many of the experts expres sed this view.
CULTURAL AND SOCIAL NORMS
Shen zhen i s a ne w, immi grant city. At pre sent, within Shenzh en, mo re than 95 percent are immigrants from elsewhere. Over 72 percent of those who reside in Shenzhen have no Shenzhen residence permit. For over 20 years, endless streams of immigrants have brought to Shenzhen a diverse, mixed, compatible, open immigrant culture, making this city replete with entrepreneurial spirit and creative desire. In Shenzhen, the young people are active, valuing advancement and individualism, encouraging innovatio n and forgiving of failure. The vast majority of people, who believe in the pursuit of wealth, are enlightened and progressive, with a great desire to be entrepreneurial. At the same time, those who are successful can enjoy the proceeds of their success.
Shenzhen's culture is an excellent environment for entrepreneurial activity. In 2003, "Chin a Competi tiveness Report" confirmed the exp erts' opi nion. In this re port, Shenzhen's cultural competitiveness was ranked first among 47 Chinese cities. This report's cultura l competitiveness index included a value index, an entrepreneuri al index, creativi ty index and contacts and personal integrity index. Among
thes e, She nzhen's value index, entre preneu rial in dex an d crea tivity index were ranked number one. But on the contacts and personal integrity index, Shenzhen ranked number 13.
The shortcoming in social order is a serious flaw in Shenzhen's otherwise excellent entrepreneurial environment. This is associated with the incomplete legal and regulatory framework and general soci al morality. It may also be associated w ith the special character of Shenzhen's population - that 72 percent of Shenzhen's population lack a residence permit. Given the mobility of the populatio n, many people and even enterprises in Shenzhen have no feelings of attachment to the city and, hence, levels of trust within society are weak.
For this reason, Shenzhen must strengthen the passage and enforcement of laws and place emphasis on increasing the civic morality and building systems of trust. We note that the Shenzhen citygovernment is currently promoting the new Shenzhen spiri t of "De velop an d innova te; sincerely res pect the law; wo rk efficiently; unite with dedication." This shows that the government has already recognized the importance of "s incerely respecting the law " to the city's development. At the same time, "The Shenzhen City Man agement System for Credit Reporting and Rating" has been implemented starting on January 1, 2002. The work to increase creditworthiness is being deepened; the database development will continue to be improved and wil l be expanded into related fields. The final objective is to create a developed s ocial credit rating system. This is a good start and we b elieve that implementation of the social credit system will increase Shenzhen's entrepreneurial competitiveness.
RECOMMENDATIONS TO IMPROVE ENTREPRENEURSHIP IN SHENZHEN
1. Reform government to make it more service-oriented.
* Simplifyapplication procedures and lower the application time in every bureau * Increase the transparency of policy making and implementation * Implement in each government bureau information systems accessible to the general public, allowing easy access to relatively complete and accurate information from all industries
2. The main source of financing for start-ups should be marketallocated capital from the private sector, not government allocated capital. The government should im plement policies that release the energies and allocating abilities of the private sector. These policies include:
* Decrease the degree to which government controls industrial development * Increase the ease of private sector en terprise investment by entry of capital * Use Shenzhen's legislative powers and its leading role in China to enact a clear and effective legal protection of property rights of the private sector * Encourage the deve lopment of financial markets as exit channels for venture capital, including allowing more companies to list on the Shenzhen Securities Exchange and, at a propitious time, implement the Second Board
3. Government programs to finance entrepreneurship should focus on early stage and R&D-transfer intensive activities that do not compete with private sector and the provision of services to upgrade private sector SME management and competitiveness.
Curre ntly, gove rnment re sources are often d irected at competitive areas where private sector enterprises already want to enter. This is like "decorating banners with flowers". Instead, government resources should be directed to the early stage in ves tme nt of en tre pre neu rs and start-up acti vities , i .e. "d eli verin g coal in a snowstorm". An advantage of early stage investment is that less capital is needed to support each start-up so more startups can be formed. This gives government the appropriate means to stimulate entrepreneurship.
Government programs are subject to politicizing and corruption. Once the government can guarantee that the process can be transparent and perceived as fair, the government should
* Set up venture capital funds as stimulants for entrepreneurship * Set up an SME lending fund or guarantee fund to provide debt capital on commercial basis to SMEs * Set up a publicly funded SME service platform to provide information, managerial training, and technological, managerial and market services
4. Attract talent and stim ulate a Shenzhen entrepreneurial identity by reducing barriers to immigration from the rest of China reforming the residency policy.
Although Shenzhen's economy is developed and the population has risen rapidly, the ed ucational le vel of the population i s not ideal. According to the Popu lation Bureau's statistics, over half of the popu lation is factory production workers. And within this group, the education level is upper middle school. To achieve long term economic development, Shenzhen has to face the problem of developing its educational system and attracting new talent. Looking at conditions today, attracting talen t, especially R&D talent, middle and uppe r managem ent tale nt, and engineers and technicians with rich experience can improve this condition and correct the problems of the population composition.
Shenzhen is a city of immigrants, a fact that helps entrepreneurship. But entrepreneurs do not identify themselves sufficiently with Shenzhen. This condition must be changed. A reform of the residence system can gradually establish an identification of entrepreneurs with Shenzhen.
5. Develop higher education and training.
Develop vocationa l and high er ed ucati on; attra ct ta lent, adju st the po pulation composition. The quality of entrepreneurs should be raised. From the point of view of Shenzhen's private sector technol ogy ente rprises, they are still being ru n as family businesses. In order to grow and strengthen these enterprises, the entrepreneurs must do training.
The universities should become the main force for advancing entrepreneurship. Universities should increase their links with industry, sharing with entrepreneurs the fruits of rese arch. They sh ould make avai lable to SMEs technical supp ort, enthusiastically taking part in entrepreneurial education. In the process of reform, the must foster students ' entrepreneuria l attitudes and abilities, and e ncourage students to integrate with industry and take part in entrepreneurship.
6. Improve protection of intellectual property.
In an environment where in tellectual property is not protected, it is likely that the rate of new product and technology R&D is slowed. Shenzhen's R&D should emphasize new product and new process technology, at the same time as protecting intellectua l property.
7. Increase links with Hong Kong.
With the implementation of CEPA, Shenzhen city government should increase avenues of contact and transport links, implementing new types of links. Not only will more Hong Kong peop le come north, buy real estate and o pen businesses, but als o clo ser cooperation can be achieved be tween Shen zhen and H ong Kong industries.
8. Improve social security; increase the peace and stability of society.
From a long-term perspective, we should implement a social security system, enhance the social system, protect social stability, reduce the degree to which unemployment and illness causes hardship for ordinary people, thereby reducing social stability. Unlike other district governments in China, Shenzhen has comparatively mo re fund s to se t up a s oci al s ecu rity system to pro tect so cial stabil ity. For Shenzhen, which has j ust undergone a period of historically rapid growth, this is very important.
Appendix I: 2002 HONG KONG RECOMMENDATIONS
The follow ing are the rec ommendations f rom the Global Entrepreneur ship Monitor Hong Kong 2002 study published in January 2003 by the Chinese University of Hong Kong. Copies of the study may be view ed at http://www.baf.cuhk.edu.hk/news/press/2002/pdf/CU_GEM_Bro%20for.pdf 1. Implement no policy change that w ill cause substantial increases in government spending, tax system complexity or procedures for starting a business. 2. Reduce barriers to entry that protect or are seen to protect the interests of large companies over the interests of small companies. 3. Strengthen intellectual property protection and disbursal of information concerning intellectual property protection in Hong Kong. 4. Periodically review w ith the objective of simplification and reduction of process time the application procedures for small businesses especially in the provision of services. 5. Review existing programs to ensure that the interests of the entrepreneur rather than the government department are being fulfilled, reducing red tape and coordinating the programs so that entrepreneurs are referred to the correct one.
6. Do not attempt to prop up property prices. 7. Increase democracy in Hong Kong. 8. Focus on entrepreneurship in services.
9. Increase the number of border crossing points to China. Open the border 24 hours a day. Work w ith the Guangdong and Shenzhen governments to reciprocally recognize vehicle licenses allowing cheap, private automobile access to the P RD. Increase links throughout the PRD. 10. Neither the government nor any regulator of financial institutions should attempt to affect the portfolios of Hong Kong financial institutions (banks, other authorized institutions, insurance companies, pension funds, venture capitalists ) concerning financing for start-ups.
11. Banks should reform SMEs customer policies to increase the extent to w hich loan pricing and monitoring of cash-flow based loans and customer c ounseling on financing f or new ventures in Hong Kong and China can offset risks of lending. 12. Venture capitalists should be open-minded tow ard new technologies and ventures from Hong Kong incubators such as the Science Park. 13. Hong Kong should examine the roles played by industr y organizations and gov ernments in other countries w here collaboration betw een universities, industry and government is successful to find an appropriate cooperation model. 14. Universities should create a better atmosphere for communication and sharing of information and research w ith entrepreneurs. T echnologis ts w ithin firms and the government, professors active in relevant areas, and entrepreneurs should meet to discuss possible innovations and how to w ork together to bring needed products and processes to market. 15. Tertiary institutions, especially research universities, should make their resources available to businesses (including entrepreneurs and SMEs). This can be done partly through student projects and r esearch projects. Researchers should enhance their know ledge of and support for new companies. Universities may provide their technical assistance to SMEs and open up their libraries and labs. They could w ork together w ith governmental bodies to pool together resources and disperse meaningful innovation results. New computer-literate graduates should encourage SMEs to apply and use technology.
16. SMEs should increase their exposure to opportunities in the PRD and their understanding of business and government practice there. Programs dis pensing such information should be improved. To commercialize technology, local innovators should link innovations w ith the needs of the large market of the PRD and other parts of China. Universities should increase research links w ith enterprises in the Peal River Delta
17. The immigration policy should be review ed. In princ iple, anyone in China w ho possesses a tertiary education should be permitted to immigrate to Hong Kong, although rights of permanent abode should be based on years of tax-paying residence and rights to social w elfare, free schooling etc. should accrue only w ith rights of permanent abode. 18. The gover nment should design a simple, comprehensive unemployment insurance for Hong Kong permanent residents to be implemented after the fiscal situation improves 19. SMEs and industry associations should take the lead in building strategic alliances among themselves. 20. Review the design of school curriculums to promote entrepreneurship. Teach students about investment, how to manage personal finances, attributes of an entrepreneurial spirit, and relationships betw een risk, success and rew ards. Encourage and set priorities for education in the sciences, biotechnology and mathematics to promote the entrepreneurship environment for more technology-related areas. Train students for the know ledge-based and services-related businesses. Provide a balance of liberal arts and technical education - liberal arts in the early part of the education and tec hnical training tow ards the end of the education program. Teach students that hard w ork, determination and creativity are keys to success, even in the entertainment industry, from w here many of the youth role models are currently draw n. 21. Give students the challenge of starting business and w orking in businesses as part of the educ ational proces s. Increase the participation of business mentors in the s econdary schools and tertiary institutions w hereby people w ith much experience and success in running and starting businesses from any sectors become mentors to students and w ould-be entrepreneurs. 22. Hong Kong citizens should become more active in community building, a facet of w hich is interaction betw een entrepreneurs and other members of the community. 23. Parents and teachers should teach students that they can change the status quo, add value and improve society through their ow n efforts and independent thinking. They should encourage s elf-respect w here that respect is w on by diligence, purpose and respect for others. The adults of society have the responsibility to teach these cultural values and social norms.
24. Hong Kong's successful business people should pr ovide others w ith the know ledge, skills and inspiration to achieve w hat they have in creating value for society. They must tell their ow n story of their steady, focused w ork that created their w ealth. They should improve their honesty in income filing and take pride in paying taxes. 25. The media has a responsibility to educate the population by featuring stories of the everyday SME entrepreneur, w orking tow ard a goal of building a firm that creates value and has a good position in the market place. In this, the media can seek c ooperation of business people and gover nment
APPENDIX II: GEM HONG KONG & SHENZHEN 2003 EXPERTS
1. HONG KONG EXPERTS
Mr . A dr ian Li General Manager & Head of Cor porate Banking Division Bank of East Asia Mr. A lan Chow Managing Direc tor Go2HK.c om Mr .A lmo n Kw an Founder Fundamentum Ltd Mrs . Anna Lai Deputy Executive Director Trade Development Council Ms . A ngela Ng Program Director LiveWIRE Hong Kong Mr . Bernar d A uyang President Computime Limited Ms . Chris tine Loh * CEO Civic Exchange Mr . Conr ad Wong Vice President Yau Lee Group Limited Mr . Dav id C.W. Hui Chairman A-Fortane Gr oup Limited Mr . Duncan W. Pesc od Deputy Commissioner for Commission Tourism Commission Dr . Fr ankie M. C. Ng Associate Professor of Design The Hong Kong Polytechnic University Mr . Felix Chan * President, (2001-2002) The Hong Kong Chamber of Small and Medium Business Limited
Mr. George Leung * Chairman Economic Policy Committee Hong Kong General Chamber of Commerce Dr . Gino Y u Director Multimedia Innovation Centre The Hong Kong Polytechnic University Mr. Ho Shut Kan * Executive Director Kerry Properties Ltd
Mr. Irv ing K. K. Koo * Group Marketing and Corporate Relations Director China Light and Pow er Mr. Jos eph Lai * Deputy Director-General Trade and Indus try Department Mr . Joseph Lee Managing Direc tor WoFoo Plastics Limited Ms . Julie Cheng * CEO Infoislive Mr. K. O. Chia * Executive Vice-President (HK) Walden International Mr. K. Y . Lam Chairman/CEO Starlite Holdings Limited Prof . Kenneth Y oung * Pro-Vice Chancellor The Chinese University of Hong Kong Mr . Kev in Y ip GEM Venture Capital Chairman, Hong Kong Ventur e Capital Association Prof . Lau Siu Kai * Associate Director Centr al Policy Unit The Government of Hong Kong Special Administration Region Mr. Law renc e Fok * Deputy Chief Operating Office Hong Kong Exchanges and Clearing Limited
Pr of. Lui Tai Lok Department of Sociology The Chinese University of Hong Kong Mr . Mathias Woo General Manager Zuni Icosahedron Ms . Mic helle Cheow Director Junior Achievement Hong Kong Mr . Mike Row s e Director General Inves tment Hong Kong The Government of Hong Kong Special Administrative Region Dr . Hon. Ming Wah Lui, JP Legislativ e Council Ms . Maur a Fallon Chairperson, Entrepreneurs Group The Amer ican Chamber of Commerc e in Hong Kong Mr . Patr ic k Y eung * Managing Direc tor Asian Capital (Corpor ate Finance) Limited Pr of . Paul Mor r is President Hong Kong Institute of Education Mr . Peter K.W. Sun Chairman Kingdom Group Metal Limited Mr. Robin Wong * Centre Director Management Development Centr e of Hong Kong
Mr . Roger Mar s hall * President Hong Kong Venture Capital Association Director, ABNAMRO Asia Capital Investment Limited Mr. S. S. Kw ong * Executive Director Employee Retraining Board Dr . Saimond Ip * Executive Director Hong Kong Pearl River Delta Foundation Mr . Simon Shi Kai Biu President Hong Kong Small and Medium Sized Enterprises Association Dr. Sunny Cheng * Project Director Qleap Accelerators Limited
Pr of. Tony R. Eastham President/CEO RandD Corporation Limited The Hong Kong University of Science and Technology Ms. V enus Lee Managing Director and Founder e-crusade Mr . V ic tor Mok Managing Direc tor Exel Hong Kong Chair man of Hong Kong Ass ociation and Freight Forw arding and Logistics Mr . Wins ton Siu Chairman SOL Holdings Limited
* is 2002 National Expert who also took part in the 2003 questionnaire survey
2. HONG KONG INTERVIEWEES FOR EDUCATION AND TRAINING AND R&D TRANSFER Education and Training
We gratefully acknow ledge the as sistance of the follow ing people and organizations w ho contributed their expertise to increasing our understanding of education and training in Hong Kong Ms. Michele Cheow , Junior Achievement Hong Kong Dr. Wing- yan Pong, HKMA Li Po Chun College Mr. Ho Shu Hung, Secondary School teacher Ms. Fanny Wong, Secondary School teacher Ms. Queenie Law, Entrepreneur Mr. Desmond Tang, Entrepreneur Mr. Elmon Kw an, Entrepreneur Shell LiveWIRE Prof. John Butler, University Professor Education and Manpow er Bureau Millennium Entrepreneurs Program, Youth Development Institute
We gratefully acknow ledge the follow ing university officers w ho explained to us their roles in and advice concerning technology transfer from universities to industry. Eunice Chik, Manager of the T echnology Transfer Office, City University of Hong Kong Prof. Tony Eastham, President and CEO of HKUST RandD Cor poration Ms. Yvonne Koo, Senior Assistant Registrar, The University of Hong Kong Ms. Alice Yip, Director, Research and Technology Administration, Chinese University of Hong Kong Mr. Andrew Young, Director of the Partnership Development Office, The Hong Kong Polytechnic University: Mr. Hailson Yu, Deputy Managing Director, Versitech Ltd, The University of Hong Kong
3. SHENZHEN EXPERTS
Mr . Z han Binlong General Manager Shenzhen Overseas Chinese High-Tech Venture Park Mr . He Chunhua Permanent Deputy Pr esident Shenzhen Xinhua Bookstore
Mr . Jason Chan President World Union Properties Consultancy (China) Limited Mr . Cao Jiageng Deputy Director General Technology of Shenzhen Municipality
Mr . Y in Changlong Director Shenzhen Special Zone Culture Research Centre
Ms . Yu Jian General Manager Shenzhen Gas Corporation Limited Ms . Yu Jing
Mr . Wang Dong Assistant of Chairman Shenzhen Lionda Group Corporation
Section Chief Economic &Trade of Shenzhen Municipality Mr . John Geng
Mr . Tan Gang Director South China Research Centre China Development Institute Mr . Guo Guoc an Vice Chairman Shenzhen Pengji Group Corporation Limited
Vice P resent Kinhom Holdings Inc.
Mr . Sheng Lijun Copartner Tongsheng Venture Capital Management Corporation Mr . Z hou Luming
Mr . Z hang Ju President China Merchants Technology Holdings Company Limited
Secretary General Shenzhen Hi-tech Industry Association
Mr . Liu Luy u Undersecretary Research and Consultation Branch of Gener al Exploitation and Study College Dean Enterprise and Market Research Centre
Mr . Hua Tao Chief Secretary Shenzhen Retail Sales Association Mr . Xie Xiaof an Assistant President
Mr . Kong Qingguo General Manager Shenzhen High-Tech Industr ial Park Development and Construction Company Mr . Liu Shaox ing President and General Manager Ceramic Import and Export Market Company Limited Pr of . Wang Shour en Director General Shenzhen Venture Capital Association
Shenzhen Council for the Promotion of International Investment
Mr . Luo Y unmo Chief Secretary Shenzhen Softw areAssociation Mr . Song Z hongpin General Manager Zhongdingxuan Investment Holdings Limited
APPENDIX III: ACADEMIC LITERATURE ON R&D TRANSFER
Main findings Universities that have previously demonstrated a willingness to take an equity stake in licensees in exchange for paying up-front patenting and licensing expenses have a start-up rate that is 1.89 times that of universities that have not demonstrated a willingness to take equity. The main barriers to the success of TTO policies at universities are perceptions of professors of: * lack of evidence that the program will be successful * uncertainty about how the program works * a desire to keep all ventures in-hours and * cultural conflicts between the entrepreneurs outside and inside the university. Universities that generate the most start-ups have more favorable attitudes towards external entrepreneurs working with university technology originators. University faculty TT activities are enhanced by * greater rewards for faculty involvement in TT * location of the university in a region with a concentration of high technology firms * a clear university mission in support of TTand * the level of experience of the university's TT office. Moral hazard problem of inventors' effort means no development would occur unless the inventor's return is tied to the licensee's output when the invention is successful through royalty arrangement. The vast majority of agreements include royalty payments. Equity contracts are Pareto superior to those with royalties. A university contribution to a company's innovations increases with * quality of the university's faculty * size of its R & D expenditures relevant fields * proportion of the industry's members located nearby In basic research faculty quality is more important; for applied research proximity is more important.
Dante and Shane (2003) AUTM Survey across 101 US university over 19941998.
Franklin, Wright and Lockett, (2001) A survey of TT/business development officers at 57 U.K. universities
Friedman and Silberman (2003) J AUTM survey, 1991-2001
Jensen and Thursby (2001) A survey evidence of the licensing practices of 62 U.S. universities
Mansfield (1995) A survey from 66 firms in 7 major manufacturing industries and from over 200 academic researchers.
Investments in start-up companies are often costly to the university in terms of public relations: board of trustees of university were under investigation for conflict of interest in using school funding develop a start-up based on invention that belongs to the university Faculty decisions to disclose are shaped by their perceptions of the benefits of patent protection. Incentives to disclose are magnified or minimized by the perceived costs of interacting with TT offices and licensing professionals. Faculty considerations of the costs and benefits of disclosure are colored by institutional environments that are supportive or oppositional to the simultaneous pursuit of academic and commercial endeavors. University researchers who are active in the commercialization of the research are more likely * to be cross-disciplinary * to perform paid industrial consulting * to have former students who contact them regarding firm problems. University-bound researchers are likely to view applied industrial outreach as threatening the research mission Trust, geographic proximity, and flexibility of university policies for intellectual property rights, patents, and licenses were strongly associated with greater TT activities. Barriers to effective university-industry TT include: * culture clashes * bureaucratic inflexibility * poorly designed reward systems, * ineffective management of university TTOs. Increased licensing of university TT flows from activity by university central administrations, not a change in faculty behavior.
Matkin (1994) Case study of events that took place at the University of California (UC).
Owen-Smith and Powell (?) Quantitative study on two campuses: Elite Private University (active) vs. Big State University (inactive)
Rahm (1994) A survey of academic researchers in nation's top 100 research universities ranked by NSF based on annual research and development (R&D) expenditure
Santoro and Gopalakrishnan (?) A survey of 189 industrial firms working with 21 research centers affiliated with prominent research-oriented universities in the US.
Siegel, Atwater and Link. (2003) 98 structured interviews of key stakeholders focused our analysis on five major public and private research universities in Arizona and North Carolina, USA.
Thursby and Thursby (1998) Association of University Technology Managers Surveys (AUTM) (1991-1997)
Richard Jensen and Marie Thursby, Ò Proofs and prototypes for sale: the licensing of university inventionsÓ , American economic review, 2001, 99 (1).
Jerry Thursby an d Marie Thursby, Ò Commercial act ivity in the ivory tower: prop ensity and productivityÓ , Management science 48 (1), 90-104.
Mansfield, E., 1995, Ò Academic research underlying industrial innovations: sources, characteristics, and financingÓ , The review of economics and statistics, 77, (1), 55-65.
Dante Di Gregorio,Scott Shane, Ò Why do som universities generate more start-ups than others?Ó e Research policy. Amsterdam: Feb 2003. Vol. 32, Iss. 2; pg. 209.
Michael D. Santoro, Shanthi Gopalakrishnan, Ò Relationship dynamics between university research centers and industrial firms: their impact on technology transfer activitiesÓ Journal of technology transfer 26(1): 163-171; Jan 2001.
Jason Owen-Smith, Walter W. Powell, Ò To Patent or Not: Faculty Decisions and Institutional Success at Technology TransferÓ , The journal of technology transfer, 26 (1-2): 99-114, January 2001.
Stephen J. Franklin, Mike Wright, Andy Lockett, Ò Academic and surrogate entrepreneurs in university spin-out com paniesÓ ,The journal of technology transfer, 26 (1-2): 127-141, January 2001.
Friedman J. , Silberman J. , Ò University technology transfer: Do incentives, management, and location matter?Ó , The journal of technology transfer 28, 17-30, 2003.
Rahm, D. Ò Academic perceptions of university firm Technology T ransferÓ , Policy studies journal, 1994, 22(2), 267.
Matkin, G.W. Ò Technology transferand public policy: lessons from a case studyÓ , Policy studies journal, 1994, 22 (2), p371.
Donald S Siegel, David A Waldman, Leanne E Atwater, Albert N Link., Ò Commercial knowledge transfers from universities to firms: Improving the effectiveness of university-industry collaborationÓ , Journal of high technology m anagement research. greenwich: Spring 2003. Vol. 14, Iss. 1; pg. 111.
APPENDIX IV: GLOBAL GEM TEAMS
Teams and Sponsors
Un i t GEM Project Directors GEM Project Coordinator In s t it ut io n Babson College London Business School Babson College London Business School Paul D Reynolds William D. Bygrave Marcia Cole London Business School Paul D Reynolds Erkko Autio Michael Hay Stephen Hunt Isabelle Servais Natalie De Bono Mic helle Hale Caroline Johns Kristin Bekkeseth Nancy Chin Anwen Garston Michel Mouchiroud Bolo Olufunw a Emily Ng Shashank Pattekar Jagriti Patw ari Ingvild Rytter Charles Conrad Uy Annonymous Foundation Fellow Me mb er s William D. Bygrave Michael Hay Paul D. Reynolds The Laing Family Charitable Settlement Financ ial Spons or Kauffman Center for Entrepreneurial Leadership
GEM Co-ordinat ion Babson College Team
Te a m Argentina
In s t it ut io n Cent er for Entrepreneurship IAE M anagement and Business Sc hool Universidad Austral
Me mb er s Hector Rocha Florencia Paolini
Financ ial Spons or HSBC Private Equity Latin America
Silvia Torres Carbonell IAE Management and Business School
Aust ralian Graduat e School of Kevin Hindle Ent repreneurship, Swinburne Univers ity of Tec hnology Susan Rushw orth
Sensis Pty Ltd
Vlerick Leuven Gent Management School, Universiteit Gent
Sophie Manigart Bart Clarysse Hans Crijns Dirk De Clercq Nico Vermeiren Frank Verzele
Vlerick Leuven Gent Management Sc hool Steunpunt Ondernemerschap, Ondernemingen en Innovatie (Vlaamse Gemeenschap)
IBQP - I nstituto Brasileiro da Qualidade e Produtividade no Paran‡
Fulg• ncio Torres Viruel IBQP - Instit uto Bras ileiro da Qualidade e Marcos Mueller Schlemm Produtividadeno Paran‡ SEBRAE- Servi• o Sim ara Maria S. S. Greco Brasileiro de Apoioˆs Micro e Pequenas Empresas Nathaly Riverin Robert Kleiman Daniel Muzyka Ilan Vertinsky Aviad Pe'er Chaire d'entrepreneurship Maclean Hunt ers, HEC M ontrŽ al DŽ veloppement ƒconom ique Canada, QuŽ bec Industry Canada, Small Business Policy Branch ESE Business School - Universidad de los Andes ADIMARK ING (formerly known as 'Internatio nale Nede rlanden Group') Price Waterhouse Coopers Banco de credito e inversiones Nati onal Entrepreneurship Research Center of Tsinghua University Asian Instituteof Babson College
ƒcole des Haut es ƒtudes Commerciales de MontrŽ al (HEC-MontrŽ al) Uni versit y of B ritish Colum bia (UBC)
ESE - Universidad de Los Andes Alfredo Enrione Jon Martinez Alvaro Pezoa Gerardo Marti Nicolas Besa Dav id Kimber
Jian GAO Zhiqiang CHEN Yuan CHENG
Robert ENG Yanfu JIANG Biao JIA Tan LI Fang LIU Qung QUI
Zhenglei TANG Jianfei WANG Jun YANG Henjun XU Croatia SME's Policy Centre- CEPOR Zag reb and Facul ty o f Eco nomi cs; Slavica Singer Sanja Pfeifer Suncica Oberman Denmark University of Southern Denmark Mic k Hanc ock Torben Bager Lone Toftild Thomas Schoett Kim Klyver Faculty of Economic s, Univ ersity of J.J. Strossmayer Osijek Open Society Institute CroatiaMinistryof Crafts,Small andMedium Enterprises, Zagreb SME's Policy Centre -CEPOR Zagreb Erhvervs- og Boligstyrelsen Ernst & Young (Denmark) IRF - Industriens Realkreditfond Danfoss V¾ kstfonden FUHU Boersen Tuborgfonden Finland Helsinki Univ ersity of Technology Erkko Autio Pia Arenius Anne Kovalainen France EM Lyon Olivier Torres Isabele Servais AurŽ lien Eminet Germany University of Cologne Rolf Sternberg Ingo Lueckgen Stavros Ioannides Greece Hong Kong Panteion University The Chine se Uni versi ty of Hong K ong Bee-Leng Chua David A hlstrom Kevin Au Siu-Tong Kw ok Cheung-Kw okLaw Chee-Keong Low She nzhen Acade my of Socia l Scie nce Shige Makino Hugh Thomas Le Zheng Wang Weili Dong Xiaoyuan Ic eland Reykjavik University Agnar Hansson Ludvik Eliasson Reykjavic University Central Bank of Iceland Greek Ministry of Development Tra de and Industry Departm ent, S ME De velopm ent Fu nd, Hong KongGovernment SAR; Asia Pacific Institute ofBusiness,The Chinese Universityof Hong Kong ChineseExecutives Club, Hong KongManagementAssociati on KfW Bankengruppe Ernst & Young Chaire MŽ rieux Entreprendre Ministry of Trade and Industry National Technology Agency Tekes
Uni versi ty o f J. J. St rossm ayer, Osi jek Natasa Sarlija
Guer˜n MjšllSigureard— ttir The Confederationof Icleandic Employers Halla Tomasdottir Gylfi Zoega Ireland Univers ity College, Dublin Paula Fitzsimons Colm O'Gorman Frank Roche Italy Bocconi University Guido Corbetta Alexandra Daw son Ugo lassini Japan Keio University Univesity ofMarketing & Distribution Sciences New Zealand New Zealand Centre for I nnovati on & Entrepreneu rship UNITE C Insti tute of Tech nolo gy Norw ay Bod¿ Gradua te School of B usin ess How ard Frederick Pieter Nel Dean Prebble Anton de Wal Lars Kolvereid Svenn Are Jenssen Gry Agnete Alsos Eirik Pedersen Maiken Johansen Singapore National Univ ersity of Singapore Poh Kam Wong Finna Wong Lena Lee Yueng Ping Ho Slovenia Institute for Entrepreneurship and Miroslav Rebernik SmallBusiness Management, University of Maribor SouthAfrica Facult y of Economic s & Business, Polona Tominc Miroslav Glas ViljemPÿ cny s eniÿ Graduate School of Business, Mike Herrington University of Cape Town John Orford Eric Wood Spain Instituto de Empresa Alic ia Coduras Martinez Ignac io de la Vega Paloma L— pezGarcêa Rachida Justo JosŽ Marêa Veciana Minist ry of Educ ation, Science and Sports Small Business Development Centre Chamber of Crafts of Slovenia Finance - Slovenian Business Daily Liberty Group Standard Bank of South Africa SouthAfrican Brew eries Khula Enterprise Finance NAJE TI Cha ir of Entrepreneurship and Famil y Busi ness ÿ KarinSirec-Rantaÿ Ministry of the Economy sa Ministry of Trade and Industry Bod¿ Graduate School of Business Kunnskapsparken AS Bod¿, Center for Innovation andEntrepreneurship InnovationNorway Economic Development Board of Singapore UNITEC Schoolof Management &Entrepreneurship Tsuneo Yahagi Takehiko Isobe Monitor Company Bocconi University New Business Venture Fund Prime Minister's Office Enterpris e Ireland Intertrade Ireland
ESBRI Entrepreneurshipand Smal l Busi ness Re search Insti tute
Magnus Aronsson Helene Thorgrims son
Confederation of Swedish Enterpris e Min istry of I ndust ry, E mploym ent a nd Co mmuni catio ns, Swedis h Business Development Agency (NUTEK) Swed ish Inst itute fo r Growth Policy Studies, ITPS
HEC-Lausanne Switzerland IMD
Bernard Surlemont Benoit Leleux Diego Chaantrain
Cha mbre Vaudoi se de Comm erce et de l'Ind ustri e (CV CI) Ren aissa nce PME
CERN-Geneva Hel sinki Uni versi ty o f Technol ogy St Gallen University The Netherlands
Georges Haour Erkko Autio Thierry Volery Dutch Ministry of Economic Affairs Niels Bosma Arnoud Muizer Ro Braaksma Heleen Stigter Roy Thurik
EIM Business & Policy Research Sander Wennekers
London Business School
Rebecca Har ding Niels Billou Michael Hay
Small Business Service Barclays Bank Work Foundation East of England Development Agency One North East InvestNI Entrepreneurial Working Party Ernst & Young
United Kingdom, University of Strathclyde Scotland Unit
Jonathan Levie Colin Mason Wendy Mason
Hunter Centre for Entrepreneurship
Heriot Watt University United Kingdom, University of Glamorgan Wales Unit United States University of Wales, Bangor Babson College
Laura Gallow ay David Br ooksbank Dylan Jones-Evans William D. Bygrave Paul D. Reynolds Marcia Cole Kauffman Centerfor Entrepreneurial Leadership Welsh Development Agency
Facult y of Commerce, Makerere University Business School Instituto de Estudios Superiores de Administraci— n(IESA)
Thomas Walter Gaston Arevelo Roberto Vainrub
Makerere University Business School Groupo Mercantil
APPENDIX V: GEM HONG KONG AND SHENZHEN 2003 RESEARCH TEAM
HONG KONG TEAM
David AHLST ROM is A ssociat e Profe ssor i n the Departme nt of M anageme nt of The Chi nese
University of Hong Kong. He worked in the computer field for seven years before getting a PhD from New York University.He teachesprimarily in the area of strategic management and management of technology. His research interests include how technologies emerge and are assessed, venture capital and entrepreneurship, and management in the Greater China.
Kevin AU isAssociate Professor in the Department of Management. He was trained in both social
psycholo gy an d business, and speci alize s in human reso urces manag ement and resea rch methodology. He is active in academic research and business consulting. His consulting experience includes projects with the Hong Kong government and business corporations such as MTR, AIA, and Oracle.
Bee-Leng CHUA is Associate Professor and Director of Industry Developme nt at the Department
of Management teaching in the MBA and undergraduate programs on management principles, human resources management, entrepreneurship, and organizational behavior Current research . interests are in the areas of career decisions, entrepreneurship, micro-credit enterprises, and prosocial behaviors in the community and workplace.
Siu-tong KWOK is Professor of History and former Dean of Faculty of Arts and Dean of Students.
Cheung-k wok LAW is Admin istrative Dire ctor, Gra duate Prog rams in t he Fa culty of Busin ess
Administration. He hasbeen involved in high-level research work with the government and international financial institutions. He isvery familiar with the regulatory changes and institutional development of the Hong Kong financial sector and policiesrelating to Hong Kong's economic development. , His policy related studies included the textile industry and aviation industry.
Chee-keong LOW is Asso ciate Prof essor of Corporate L aw a nd Di recto r of the Centre for Accounting Disclosure and Corporate Governance. His research interests are company and securitieslaw with a recent focus on the issues pertaining to corporate governance and regulatory frameworkon which he has published in numerous international academic journals.
Shigefumi MAKINO is Pro fessor in the Depart ment of Man agement. His current research interests include strategiesfor international expansion of Asian enterprises, inter-organizational imitation, and management of international strategic alliances.
Hugh T HOMAS is Associ ate Professo r of Fi nance. He i s an a ctive a cademi c rese archer and
pedagogical case writer in banking and financial institutions management, international finance and securitization. Prior to obtaining his PhD in international business and finance from New York University, he had six years of banking and consulting experience.
Dong Xiaoyuan, Associa te Professor, Shenzhen Acade my of Social S cience.
Professor Dong worked for planning department of Chinese government before he received the doctorate degree from Beijing University. At present, he focuses on the study in macroeconomics and quantitative economics. He engages in consultation for the government.
LE Zheng Director, Shenzhen Academy of Social Science. Professor Le has worked in university
for more than 13 years before he received the doctorate degree from Central China Normal University. He specializes in city culture research. At present, his major focus includes the strategic development of Shenzhen, regional development of Pearl River Delta and research on the metropolitan region of Shenzhen and Hong Kong
PAN Xiaofei - Editor of Shenzhe n Science and Technology, the magazine focuses on the high
technology enterpriseswhich include high-tech development, product transformation, entrepreneur on high tech project, investment and finance, and initial public leasing. The report included both case studies and editorial view points.
WANG Weili Associa te Professor, Shenzhen Academy of Social Science. Professor Wang has
worked in university for more than 6 years before he received the doctorate degree from Fudan University. His major interest is Western thinking and modern Chinese city culture. At present, he focus on the strategic development of city culture, cultural property development of Pearl River Delta, and the influence of people mobility on the entrepreneurial culture in Shenzhen.
YANG Lixun Associate Professor, Shenzh en Academy of Soci al Science
Professor Yang focuses on the sociology study. He has been intensively involved in many projects regarding the consultation and decision making for the government and he is now doing research on the strategic development of city, the population and the environment.
YIN Qingxun Commission member of modern logistic consultation board for Shenzhen city. General Manager of the Ceramic Import and Export Market Co. Ltd. He worked for 3 years before he graduated with an MBA from Maastricht, Netherlands. He is involved in many research projects which include the enterprise in Shenzhen, governmental and national studies, consultation for both government and corporations. At present, he focuseson the interconnection between development, operation and commercial activities.
Global Entrepreneurship Monitor
Hong Kong andShenzhen