China is introducing incentives to promote startups and small businesses in rural areas. Policies set up by China’s cabinet, the State Council, encourage recent college graduates, discharged soldiers and migrant workers to return to their rural hometowns and invest in entrepreneurship in their own communities.
In recent years, China has encouraged, if not ordered, markets to favor homegrown technology and businesses. Part of the success of Chinese brands is the internationally competitive products the country is able to produce, in part because domestic manufacturers are favored. This success has translated into a startup gold rush of sorts, with young entrepreneurs scrambling to open their own businesses in the country’s financial, political or technological hubs. According to statistics by private equity research firm Zero2IPO Group, in the first quarter of 2015 Chinese investors raised about $260 million in angel capital, tripling the amount raised during the same period the year prior.
However, China’s government does not want to leave rural China behind.
China’s state-run Xinhua News Agency reported the State Council hopes the new incentives will encourage entrepreneurship and innovation, creating jobs within the community in rural areas where some industrial and agricultural economies have started faltering. Some of the incentives include waived or reduced taxes and administrative fees that go along with opening a business. Depending on the nature of the new businesses, some operations could be eligible for government funding or offered stipends.
Specifically, the government hopes the plan will drive growth in agricultural sectors, in addition to local tourism, and pave the way for businesses to flourish based on what the community has to offer.
Beijing also reportedly will facilitate relationships between new businesses and private investors and encourage the country’s state-run banks to approve loans to ease the process of gaining capital. The State Council is relying on the demographics of migrant workers, retired military personnel and college graduates because they are believed to have an expanded viewpoint of the world that can help jump-start a local economy.
Still, a business is only as good as the infrastructure it can build on. Across the country, China struggles to maintain a standard of infrastructure with problem areas specifically focused in rural areas, particularly when it comes to information technology capabilities.