Date
24 July 2017
Aside from cutting logistics costs, express delivery firms contribute much to employment by hiring hundreds of thousands of workers. Photo: Xinhua
Aside from cutting logistics costs, express delivery firms contribute much to employment by hiring hundreds of thousands of workers. Photo: Xinhua

Encourage entrepreneurship and innovation to boost China growth

Chinese Premier Li Keqiang stressed the significance of encouraging people to start up their own businesses and to make innovation in a meeting last week.

In the early days of the nation’s opening-up, many got rich. Fortune awaits millions more who will be able to tap their creativity.

China should switch from the old days of relying excessively on natural resources to a new model of depending more on human resources.

Li said: “We need not only diligent hands but also wise brains. How to motivate the hundreds of millions of people in the nation? We need to encourage people to start up their own businesses and to make innovation.”

In a previous column, I mentioned Ko Yo Group. The company has successfully launched a polyphenylene sulfide (PPS) project, which is a great innovation in new materials.

PPS is an organic polymer consisting of aromatic rings linked with sulfides. Synthetic fiber and textiles derived from this polymer are known to resist chemical and thermal effects.

PPS is used to make filter fabrics for coal boilers, papermaking felts, electrical insulation, specialty membranes, gaskets and packings.

Filter bags using PPS can capture 99 percent of tiny dust like PM2.5, airborne particles smaller than 2.5 microns in diameter. And it can resist a temperature of 280 degrees Celsius. By contrast, canvas-made filter bags can only filter PM10.

Currently, China’s demand for PPS products is expanding at 15 percent per year. Domestic supply can only meet 47 percent of the requirement, while the rest must be imported.

If Chinese producers are able to produce fiber-level PPS products with good quality and reasonable price, they could quickly supply the domestic market, do away with the need for imports, and even tap into overseas markets.

Experts said mechanism design is the key to driving reforms. Some reform measures have failed to achieve expected results mainly because of limited incentive mechanism.

Premier Li hopes that encouraging people to start their own businesses and make innovation would bring out creativity from the nation’s massive population.

In the meantime, the government needs to streamline administration, delegate power to lower levels and reduce red tape. Instead, the authorities should focus on their key responsibilities and ensure a fair market environment.

The nation has witnessed the creation of more than 10,000 new companies each day over the last two years.

These firms have unleashed huge market vitality and forged a new growth momentum.

“Take the express delivery industry for example. It has created far more jobs than we’ve expected. Some companies even hire over 100,000 people and significantly reduce logistics costs,” Li said, adding that policymakers have to think out of the box and adapt to new developments.

Li said traditional industries should explore Internet Plus growth potentials in a bid to cater to personalized customer needs. “If you don’t actively embrace the internet, you will become isolated and eventually eliminated by market competition.”

He stressed that encouraging people to start up their own businesses and to make innovation is not only for the grassroots and small or micro firms.

Many big companies, including large state-owned enterprises, are also in the middle of exploring new growth models.

China would press ahead with its “Made in China 2025” and internet strategies.

This article appeared in the Hong Kong Economic Journal on Feb. 1.

Translation by Julie Zhu

[Chinese version 中文版]

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JZ/DY/CG

Senior investment banker

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