To Compete With China, the US Needs More Entrepreneurs

Members of small business owners take part in a “Save Small Business” protest in Los Angeles, Calif., on Dec. 12, 2020. Ringo Chiu/AFP via Getty Images

Commentary

Entrepreneurs grease the wheels of economic growth. They create new products and services. They create new jobs. Entrepreneurs are the lifeblood of economies. Of course, one cannot discuss economies without discussing the United States and China.

Obviously, the United States offers a more favorable environment to its entrepreneurs than China, a country known for surveillance and censorship. Or so we are led to believe.

Edward Tse, the founder and CEO of Gao Feng Advisory Company, a global strategy and management consulting firm, told me that China offers a fertile ground for all of its entrepreneurs to flourish. The United States, on the other hand, only serves the interests of a select few. I asked Tse to expand on this point in greater detail.

“Entrepreneurship,” he said, thrives in China, “but the ‘lanes’ of where it manifests have evolved.” He continued, “China’s entrepreneurship emerged some 40 years ago when Deng Xiaoping initiated China’s reform and opening up.” Initially, according to Tse, “entrepreneurship was rudimentary.”

However, “it quickly evolved in its style and areas of focus. The major breakthrough came around the end of the 2000s as the Chinese entrepreneurs took up the wireless internet as a tool to create innovations.”

Over the past decade, “an incredible number of entrepreneurial companies emerged and many were very successful,” he added. Tse expects “China’s entrepreneurs to continue to manifest going forward.”

I asked Tse for his thoughts on the state of entrepreneurship in the United States.

“With respect to the U.S.,” he answered, “my sense is that it is quite active on the west coast and pockets of the east coast but not much in the rest of the country.”

Entrepreneurship, he said, “requires a supportive environment in which opportunities present themselves. That environment is an ecosystem with the needed participants. In most parts of the U.S., those conditions don’t exist anymore.”

Tse’s point is a valid one. According to research carried out by Christopher Wink and his colleagues, rates of entrepreneurship in the United States have been declining for decades. In 1980, 15 percent of all U.S. firms had been created the year before. In 2011, that share had been halved. In the decade since, things have gotten considerably worse.

Meanwhile, the entrepreneurial sector has grown exponentially in China over the last half-century. A decade ago, there were 10 million registered private businesses in China. By 2018, there were 15.61 million. Today, the country has more than 20 million registered private businesses.

Tse paints a rather rosy picture for entrepreneurs in China. Last year was an incredibly rough one, especially for small business owners. This year could be even worse. In fact, in major cities like Beijing, Guangzhou, and Shanghai, it’s shaping up to be a “total disaster.“ The CCP’s ”zero-COVID” obsession could be the country’s undoing.

Regarding entrepreneurship in the United States, I asked Tse if the likes of Amazon, a company known for crushing small businesses, has played a prominent role in killing the American Dream for so many.

“In some respects, Amazon would stifle entrepreneurship. In some other respects, it wouldn’t,” he replied. “In its core area of e-commerce, Amazon stifles entrepreneurship, as it essentially killed everyone that it came across.”

However, he added, “if you are a merchant that operates on Amazon’s platform, you still have the opportunity to build a business of your own. Of course, your fate will ride on Amazon’s ecosystem.”

Workers prepare orders for customers at the Amazon Fulfillment Center in Tracy, Calif., on Nov. 29, 2015. Fred Greaves/Reuters

Tse believes that blaming companies like Amazon for the death of American entrepreneurship distracts us from the bigger picture. Remember, entrepreneurship was in decline long before Jeff Bezos burst onto the scene.

I reached out to Richard Cooper, an entrepreneur and bestselling author, for his thoughts on the state of U.S.-based entrepreneurship.

“America is still one of the top 5 best environments for entrepreneurship in the world for networks, support, systems, and innovation,” he told me. “The barrier to beginning is very low; anyone can do it.” All you need is a bit of drive, some savings, “a computer, internet, and a good idea.”

Moreover, he stressed, “the USD is the dominant currency to bill in,” and “taxation is very low if you have a good structure and an accountant supporting you.”

However, even Cooper, an inherently optimistic man, conceded that numerous disadvantages exist. In the United States, he said, there is a “total lack of education on what makes a good business, versus a bad business model,” with too many people building “businesses they hate, that aren’t very profitable.”

Unsurprisingly, the United States presents entrepreneurs with a highly “litigious environment.” In America, according to Cooper, “people sue for fun.”

He’s right. More than 40 million lawsuits were filed last year. That works out at about 110,000 cases per day. Cooper believes “employees are generally too expensive, inefficient, and entitled today. The laws are entirely on the employees’ side and hostile to employers. Employees are generally a liability.”

Sadly, according to Cooper, “wokeness, cancel culture and virtue signaling is now engrained in corporate America. If you are an 8 or 9 figure business, you will be pressured to comply with their agendas.”

Entrepreneurs, once lauded by the American people, now find themselves vilified. They find their businesses targeted, “especially during riots,” he opined. Again, Cooper is right.

For many Americans, looting has become a recreational activity. Some authors argue, rather unconvincingly, that looting is a form of reparations for slavery. When shelves are emptied, and windows are broken, small business owners are left to clean up the mess.

When one talks about making America great again, resurrecting the entrepreneurial spirit must not be omitted from the conversation. However, talking about resurrecting the spirit and actually resurrecting the spirit are two very different things.

To compete with China, the United States must find a way to assist entrepreneurs across the entire country, not just in the pockets populated by the elites.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.