Courses & Events

Asian Entrepreneurial Activity: the 30,000 Foot View: 2013 Asia Entrepreneurship Update

Tuesday, Apr 2, 2013

04:15 pm - 05:30 pm

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By Riva Gold, M.A. Candidate, Department of Communications at Stanford University

In a 2012 study, more than half of Americans not currently engaged in entrepreneurship expressed belief that they were capable of becoming entrepreneurs. But does this confidence hold outside of the country?

On April 2, Dr. Richard Dasher, Director of the US-Asia Technology Management Center, offered a high level overview of Asian economies and their prospects for new businesses. The lecture kicked off a 10-week series on entrepreneurship in Asian high-tech industries, as Dasher explored what was driving— or hindering— the growth of start-ups across the Asian continent. This series is receiving major support from ISI-Dentsu as well as support from the Allen Miner Foundation.

In a broad sense, it’s been a tough year for economic growth, particularly for Thailand, following mass flooding, and Japan, as it deals with the disaster in Tohoku. In 2012, according to PPP calculations of GDP, Japan dropped from the third to fourth largest economy in the world, with the United States, China, and India topping the list.

Dasher says 2012 saw a major economic shift in China, which drove a series of far-reaching changes. For the last few years, he said, “China has been a gold rush.” Now, the growth rate has slowed, and fiscal policies have shifted, with a greater focus on constraining domestic growth and managing the bubble. Trading has also shifted, with more Chinese output staying in the domestic economy.

China’s 2-3 percent economic slowdown, meanwhile, has had a major impact on countries like Hong Kong, Singapore, Taiwan, and South Korea, which have all seen drops in growth rates in the last two years.

Dasher also examined TEA rates across the United States and Asia, which captures “total early stage entrepreneurial activity.” The measure reports the number of people between 18-64 who are either nascent entrepreneurs or the owner-managers of a new businesses.

Notably, China’s TEA rate dropped from 24 percent in 2011 to 13 percent in 2012. “This is a combination of a psychological process and also the availability of venture capital.” Venture capital, in China, dropped 40 percent in the last year.

For now, Thailand has the highest TEA rate, with the TIGERS mostly in the middle, and Japan at the bottom.

Cultural attitudes towards entrepreneurship, Dasher said, can also play a key role in predicting and understanding entrepreneurial activities. “We’re very self-confident in the U.S.,” Dasher said. Domestically, 43 percent of respondents not engaged in entrepreneurship saw good opportunities for entrepreneurs, and 56 percent believed they had the capabilities to be an entrepreneur.

In China, people perceived fewer opportunities for entrepreneurs and rated their own capabilities less highly- lower still in Singapore, Taiwan and South Korea. In South Korea, he says, it’s very hard to get to market without a connection to a very large company.

This difference may in part be due to the “incredibly mobile” American labor market. Americans, Dasher said, averaged 11.3 jobs over their lifetimes, a rate that is even higher amongst university graduates. In the United States, he says “You better learn how to be an entrepreneur. You have to be in charge of your own career, because no one will set the rails for you.”

However, Dasher adds, the study’s self-reporting methodology could be misleading, because “people tend to be more humble in Asia.”

Further complicating the issue is the “universal social stigma against entrepreneurial careers in Asia,” particularly in light of China’s reverence for age and experience and Japan’s tradition of lifelong employment.

When Dasher asks students in Japan why they don’t start businesses, he said, many have cited social and family pressures to seek a more traditional, stable career. In India, an audience member joked that venture capitalists have spent time on the phone with entrepreneur’s fiancées, trying to convince them it would be fine to marry a business owner.

When entrepreneurs do start companies across the Asian continent, they tend to have lower expectations than Silicon Valley. “Many Asian entrepreneurs start a company without a sense of the growth expectation we have here,” Dasher said. Many, he says, aim to create niche family business rather than publicly traded companies.

In contrast, he said, Silicon Valley has a real entrepreneurial culture, where businesspeople have willingness to think big and be ready to change the world. The area has a culture where everyone is interested in the next new thing, he says. “The single most important group of people in Silicon Valley are the people who go to work in growth-based companies,” he noted. “It’s not just founders or entrepreneurs but the people willing to take this risk.”

For additional details about our 2013 distinguished public seminar series on “Entrepreneurship in Asian High-Tech Industries”, please click on the following link.

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