Grads need more help to start own ventures

Special Report:Global Financial Crisis

by Ma Hongman

BEIJING, April 24 -- The country should take more practicable and operable
measures to help fresh graduates start their own businesses.

The "zero down payment" lending policy adopted by the government, aimed at
encouraging graduates to jump-start their ventures, has encountered a setback in
Shanghai. According to a recent survey conducted on six graduating Shanghai
students, who chose start their own enterprises under the center's preferential
policy, all of them failed to open business accounts in banks, even though they
managed business licenses.

Under the influences of the global financial crisis, China's social
contradictions involving employment have become increasingly prominent. The
"zero down payment" policy was basically aimed at expanding employment channels
for fresh graduates and offering them a chance to make use of their knowledge
and tap their own potentials.

However, relevant State departments still need to take some comprehensive
and considerate measures for the policy's smooth and effective implementation.
Also, we should not pin more hopes on profit-pursuing commercial banks to play a
role, which the government should shoulder.

In the context of the economic slowdown at home and abroad, this year's
graduates are confronted with a particularly harsh employment environment. It is
reported that by the end of March, a famous high-learning institute in Shanghai,
a locomotive of China's economy, still has 30 percent of its graduating students
whose working intentions remain unresolved. In the previous years, 100 percent
of the institution's final year students usually found jobs by January. Worse,
less than 20 percent of graduating students in some other high-learning
institutes have landed job contracts as yet.

To ease growing employment pressures, the country should lower the
threshold for graduates to start their own businesses, which is expected to
inject a new vitality into the slowed national economy. To this end, a good
policy on *** alone is not enough.

When it comes to the "zero down payment" policy, the government still needs
to take workable measures to seek active coordination from relevant parties,
domestic commercial banks in particular. Otherwise, the policy will be reduced
to only an attractive pie, out of reach.

As it turns out, most graduates keen on setting up their businesses have
encountered various hurdles in the process of opening an enterprise account, a
necessary step to start a new business. For instance, all domestic commercial
banks demand that any one who wants to start a business must first deposit no
less than 20,000 yuan in his or her bank account, and must pay a procedure fee
ranging from 2,000 to 3,000 yuan.

For the 20-something graduates, who have just left their ivory tower and
have no strong economic power, such an exorbitant economic requirement is
undoubtedly equivalent to an insurmountable jolt in their dream of a business
venture.

In fact, commercial banks cannot be blamed for their lack of cooperation,
given that their overwhelming purpose is to pursue maximum profits at low risks.
Any of the existing risk evaluation systems set up by domestic commercial banks
are enough to persuade them to avoid lending to economically weak graduates.

Under these circumstances, any preferential policies launched by the
country's industrial and commercial authorities due to the lack of a necessary
risk guaranteeing system, would prove useless.

The setback most graduates have suffered is also an essential reflection of
the hardships facing the country's private-run enterprises. It is common that a
large number of private enterprises have been marginalized in the country's
preferential policies in support of industrial development.

A typical case is in the field of refined oil. According to a regulation
promulgated by the Ministry of Commerce, the wholesale of the country's refined
oil should be open to all domestic enterprises, state-run or private, as of Jan
1, 2007. But the regulation also stipulates that only those enterprises with an
oil storeroom of 10,000 cubic meters and a registered fund of 30 million yuan
are qualified to start such a business. The two requirements undoubtedly deprive
almost all of the less powerful private oil enterprises.

As the global financial crisis continues to affect the Chinese economy,
domestic private sectors' potential should not be understated anymore. The
country's enormous domestic savings, as high as 24 trillion yuan, should flow to
these sectors and help boost the national economy.

Developing private sectors will not only help promote a diversified market
pattern, but will also contribute much to the improvement of market vitality. We
should not suffocate any possibility of our young graduates becoming the next
Bill Gates and Michael Dell, both of whom have set a good example for young
graduates to create a new business empire after starting from scratch.

To encourage the country's youth to start their own businesses, a policy on
*** or slogans without any substance is not enough. A risk guarantee fund,
including risk investment and private equity, should be set up to dispel the
concerns of commercial banks when extending loans to young graduates.

The author is an anchorman with China Business Network, a TV network based
in Shanghai.

(Source: China Daily)