Chinese entrepreneurs are far more ambitious for their businesses than their counterparts in India, a survey has claimed.
Results of the largest global study of entrepreneurship ever conducted indicate a vast difference in the entrepreneurial activity of the world's two largest emerging economies. The Global Entrepreneurship Monitor's (GEM) 2007 Global Report on High-Growth Entrepreneurship is based on interviews with 678,714 individuals in 53 countries.
The report has been written by Erkko Autio of Imperial College London and produced in association with Mazars, London Business School and Babson College, Massachusetts. It examines the phenomenon of high-expectation entrepreneurship (HEE) - start-up firms expecting to employ at least 20 people within five years of their establishment.
This form of entrepreneurship is important because of its significant contribution to economic prosperity and job creation. For emerging economies it is particularly important because it helps to build and sustain countries' industry, strengthening long-term economic stability.
The study analysed entrepreneurial ambition from two perspectives: as a proportion of a country's overall adult population and of its start-up community. On both counts China shows far greater entrepreneurial ambition than India.
Of the low-income countries, China is vastly ahead in terms of entrepreneurial expectation. Seventeen in 1,000 adults in China are high-expectation entrepreneurs, compared to just seven in 1,000 in Brazil and two in 1,000 in India.
India also has amongst the lowest levels of entrepreneurial expectation in the world, 88 per cent lower than in China.
Prof Autio said: "Broadly speaking, our research reveals that the lower the GDP per capita the higher the amount of necessity-driven entrepreneurship, and the lower the amount of high-expectation entrepreneurship. However, China is a marked exception to this trend."
Ian Holder, partner at Mazars in Dudley, said:"Analysts typically group China and India as fellow emerging economies. However, there are major structural differences between the two countries, not least when it comes to their entrepreneurial base.
"Whilst China's low technology manufacturing base is booming, India's growth has been based on medium to high technology products and services, which present greater barriers to entry for entrepreneurs.
"China's export-driven economy also pushes its entrepreneurs to grow quickly in order to achieve the economies of scale needed to remain competitive.
"The Indian government is starting to develop policies which support their entrepreneurial community.
"However, restrictive labour laws, volatile costs and high interest rates are still preventing Indian start-ups from growing to their full potential."
Meanwhile China has more high-expectation entrepreneurship (of the overall adult population) than any other country, ahead of high-income countries such as the US (15 in 1,000), New Zealand (14), Iceland (13) and Canada (12).
Not bad for an economy rated 86th of 179 by GDP per capita, said Mr Holder.
"While the US is traditionally seen as the promised land for ambitious entrepreneurs, today's entrepreneurial gold rush is in China.
"With such a growing powerhouse of entrepreneurs, it is China that the US needs to watch out for as a competitor on the global stage, particularly as China's entrepreneurs start to scale the value chain."
Analysis of the BRIC countries also revealed that, of the four countries predicted to gain global economic power in coming years, it is China and Russia that hold the advantage over India and Brazil with far more entrepreneurs planning for high-growth.
Globally, China has the most high-expectation entrepreneurs, but when examining growth aspirations amongst these countries' start-up communities, Russia ranks top, with 175 in 1,000 rated high-expectation.
China ranks sixth (124 in 1,000), Brazil 28th (47) and India 30th (19).
Mr Holder said: "It is not such a surprise that Russia rates so highly amongst the BRIC countries as it is a wealthier country in comparison.
"China's results however, do stand out as significant. For a low-income country, China fosters a remarkably high amount of ambitious entrepreneurship.
"When these ambitious entrepreneurs have had the chance to grow in this new business environment the world is likely to feel the full impact of this thriving economy."