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Serial Entrepreneurship in China

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Loren Brandt studies entrepreneurship and firm creation in China through the lens of serial entrepreneurs – entrepreneurs who establish more than one firm.

Image courtesy of interviewee. May 12, 2024

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This video video discusses the importance of serial entrepreneurship, emphasizing its role as a source of innovation and economic growth. Entrepreneurs often start one firm but some may establish multiple firms throughout their careers, contributing significantly to economies globally. Prominent examples include figures like Elon Musk and Richard Branson, but many less-known serial entrepreneurs also have substantial impacts.

This video video highlights that firms run by serial entrepreneurs tend to be larger and more productive than those run by non-serial entrepreneurs. It suggests that approximately 15-20% of firms may be run by serial entrepreneurs, and these firms often outperform others in terms of profitability and size. The analysis of serial entrepreneurship in China is particularly noted, as the country has undergone significant economic reforms since the late 1970s, transitioning from state-owned enterprises to a thriving private sector.

Data from China's business registry provides insights into the performance of these entrepreneurs, showing that market conditions and industry choices significantly influence success. This video video suggests that serial entrepreneurs are more successful when they start new firms in industries related to their previous ventures, as opposed to entering unrelated sectors, where their performance may lag behind non-serial entrepreneurs.

Overall, the discussion reflects on the dynamics of entrepreneurship in different environments, suggesting that factors like access to financing, market opportunities, and government policies play crucial roles in shaping entrepreneurial success. This video video concludes by noting the importance of understanding these dynamics to improve support for entrepreneurs and enhance economic growth.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

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So let me just begin by saying that, you know,

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in any country entrepreneurship,

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new startups are extremely important.

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These firms are gonna be important

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because they're gonna be sources of innovation,

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new technology, new products, new business models

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that can often be extremely disruptive.

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So we're interested in entrepreneurs, you know,

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for all of those reasons.

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Now, most of the time that, you know,

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entrepreneurs over their lifetime are only gonna

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start a single firm.

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But it may also be the case that some subset

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of these entrepreneurs may actually start two

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or three firms over the course of their lifetime.

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Uh, in every country, advanced countries,

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developing countries, there's very prominent examples

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of these types of individuals in the United States,

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Elon Musk, Richard Branson, in the uk, Jack, ma, and China.

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All of these individuals are highly celebrated, again for

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their experience

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and success as serial entrepreneurs in all

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of these countries, kind of below the surface,

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there's gonna be an awful lot

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of slightly less celebrated entrepreneurs

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who are also gonna be extremely important

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and who are also serial,

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who have been highly successful over their course

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of their lifetimes of starting more than one firm.

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Sometimes these firms are gonna be running concurrently.

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Sometimes they'll start a firm, maybe

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that firm will shut down, they'll start a second firm.

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So serial entrepreneurship is important,

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and it becomes a wonderful lens through which to view

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entrepreneurship In advanced countries, you know, as well

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as in developing countries in emerging economies,

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we're beginning to recognize

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that serial entrepreneurship is important.

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We have all of these celebrated cases,

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but to be able to go ahead and to actually measure, measure

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and determine how important serial entrepreneurship is,

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we need an awful lot of information.

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We need an awful lot of data.

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We basically need to have information

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for a country on all the firms

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that have ever been established.

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So the good news is, is

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that today we're increasingly in a number of countries,

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we're getting access to administrative records that have

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that information on all firms that have ever been started.

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Once we have that kind of information, we begin,

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we can begin to identify those entrepreneurs who,

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over their lifetime lifetimes have started more than one

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firm and are thus serial.

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So we, over the course of the last 10

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or 15 years, as a growing amount of work that is being done

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primarily in advanced countries, where we have this kind

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of data that are beginning to identify how common,

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how important these serial entrepreneurs are.

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And it may very well be the case that 15 to 20%,

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maybe even more of all firms

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that are currently being ran in a country,

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are in fact being ran by serial entrepreneurs.

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But moreover, it may, it also appears to be the case

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that these firms that are being ran by serial entrepreneurs,

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that they're better than on average.

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That if we take a look at these firms in terms of

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how profitable they are, how productive they are,

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how big they are, they are bigger again, on average, that

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what that means then is that the weight, if you like,

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of these firms and the overall economy

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is much more than just the percentage of firms

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that they happen to go ahead and to represent.

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And so, in so far as that,

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we see these serial entrepreneurs in so far as that they,

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in fact, they look better, they're growing more rapidly,

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they're more productive.

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These firms are important.

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And so that environment

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and the forces that are beginning to give rise

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and that allow these entrepreneurs to start a firm,

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to learn to accumulate capital and experience,

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and to leverage that

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and to learn more about other opportunities

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to invest sometimes in related industries, sometimes not

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so related, all of that process becomes extremely important

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and helps to kind of underlie the dynamism

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that we may observe in economy here in China.

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So if we kind of go back, we have to kind of remember

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that China's now in the fifth decade of economic reform,

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economic reform begins in the late seventies, early 1980s.

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We go back 40 years ago,

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and we take a look at the landscape.

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All firms in China were basically state owned enterprises,

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and there was a small percentage of firms

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that were collectively owned.

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There were not privately owned firms,

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but over the course of the eighties

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and the nineties, both in terms of kind

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of the policy environment, the legal environment, lots

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of the restrictions that there were on private

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firms began to be relaxed.

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It became much easier for an individual to go ahead

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and to start a firm as a private individual.

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Over time, their property rights,

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again in those firms became better protected legally.

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So if we go back then to the late eighties, early nineties,

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we begin to see the rise of private firms in China.

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And their number has been growing over time

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as a percentage in terms of all firms

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that there are in China.

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And in terms of the contribution

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that private sector firms happen to be making

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to the overall economic activity in China.

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And so today, activity in the private sector

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probably represents 65 to 70% of all GDP.

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The number of private firms today is

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literally in the millions.

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And just kind of orders

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of magnitude are just really important.

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So if we could go back to the mid 1990s

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and every year there were approximately a hundred thousand

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new private sector firms that were being established.

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If we move forward

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and go to 2015, there were over a million

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new private sector firms that were established in 2015.

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So the numbers here are really rather remarkable,

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both in terms of the numbers

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and so that every year the percentage of new firms

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that are being established is about 20%.

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Now, clearly not all of them survive.

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A lot of them are gonna go out of business. But this has

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Been a very kind of dynamic environment

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where opportunities for individuals, again, who have ideas,

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who perceive opportunities out there, have been able

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to go ahead and to enter the market.

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What's absolutely essential, you know, for us to be able

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to kind of look at entrepreneurship in serial

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entrepreneurship in China is our ability

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to be able to measure it.

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And what's key to that is our ability to be able to leverage

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and to take advantage of what's known

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as the business registry in China.

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You know, the business registry in China, this is a registry

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that is continually, again, being updated.

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It is a registry that includes information on all firms

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that have ever been established in China since 1949.

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And so if I was to go ahead

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and if I was to access that business registry today,

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that I would have information on all the firms

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that had ever been established since 1949 to today

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that were established, I would have information on

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who those firms were, where they were located, in

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what industry that they were in.

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But I would also have information again, on the individuals

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who happened to have originally invested in those firms.

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In other words, that I would be able to use that information

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to identify who established the firm, who started the firm.

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But moreover, that registry also provides us information

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with respect to those firms of those firms that happen

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to be operating today.

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So for any firm that was established over the last 70

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or 75 years, I would know when that they were established.

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And if I was to look at that registry today,

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I would know which of those firms are still operating today,

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or those that may have gone out of business.

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And so it's this information that is going to allow us

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for any individual to identify those firms that they

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established, and to be able to identify other firms

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that they will have established over their lifetime.

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I'll know where they establish those firms.

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I'll know the sectors that they establish those firms in.

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Uh, I'll know if those firms happen to be operating today.

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And then their supplementary information, that's often

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provided as part of the business registry

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that is providing us information on the sales of the firm,

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their assets, their liabilities, their profits,

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that are gonna also allow us to say a bit more, again,

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about these firms and about how well these firms happen

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to be performing relative to other firms.

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So the registry is just absolutely critical to our ability

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to be able to say again, some things about China, about all

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of China in this regard.

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So what we're interested in doing here is that to try to,

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we first, we wanna be able

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to take a look at these serial entrepreneurs

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and the firms that are ran by serial entrepreneurs,

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and we want to be able to say something again about

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how good these firms happen to be relative to

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what I'm gonna call a nons serial firm.

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So I have entrepreneurs who are opera,

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who have over their lifetimes, have established

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and ran more than one firm,

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but there's a majority of the firms that are non serial.

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Again, in that regard, what can we say about these firms

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in terms of their size?

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What can we say about their productivity?

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What can we say about their profitability?

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Well, if we go ahead, at least, you know, using the data

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that we happen to have access to from the registry,

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and we can make some comparisons between these firms

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that are being ran by serial entrepreneurs versus those

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that are being ran by non serial entrepreneurs.

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We're able to go ahead

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and we're able to take a look at the first firm

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that's being ran by the serial entrepreneur, the second firm

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that happens to be ran by the serial entrepreneur,

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and then what we're observing.

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And that what we learn is that firms that are ran

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by serial entrepreneurs in China, that they are both bigger

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and better, and firms that are being ran

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by non serial entrepreneurs.

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So they're better in the sense

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that they are more productive.

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And so in that regard, our findings, our kind

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of initial findings for China we're very similar to

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what we find for other countries.

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So that in other countries is that we're finding

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that on average, that these serial entrepreneurs,

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they're better, they're bigger,

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that they're more productive.

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And so what that is suggesting that inso forth,

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that they're bigger, they're better,

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they're more productive,

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perhaps they're even more profitable, is that what

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that is suggesting is

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that there's something again about the ability, again,

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of these entrepreneurs that's underlying the fact

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that they are serial, the fact

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that they are now successfully, you know, running,

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starting more than one firm, two firms, three firms,

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and successfully running those firms.

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So it's something, again, about those firms,

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about the ability of those firms

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and that the entire kind of economic kind of system is kind

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of encouraging that kind of behavior.

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Again, on the part of these entrepreneurs, I start a firm,

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I'm successful, I learn, I accumulate capital,

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I can use some of that capital that I've accumulated, some

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of those profits, I can use it

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to invest in the firm that I'm currently running.

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But maybe in the course of all this,

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I identify new opportunities.

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And so as I identify

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and I learn about new opportunities that I use, some

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of those resources that I've gone ahead

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and that I've accumulated, maybe I combine those

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with resources that I'm able

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to access from the financial markets

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and I start a second firm.

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But that what we see is that these serial entrepreneurs

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are successful in their first firm,

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they're successful in their second firm,

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and that that second firm often happens

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to be even more successful than the first suggesting

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that there's learning that's going on on the

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part of these entrepreneurs.

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So kind of on average, China looks like the rest

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of the world, but when we began

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to dig a little bit deeper again into these serial

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entrepreneurs, is that we found

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that there were important differences,

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that there was heterogeneity

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amongst these serial entrepreneurs,

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and that a lot of these differences that we were observing,

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you know, were in fact related to the industry

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or the sector choices

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that these serial entrepreneurs were making.

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And so one of the critical decisions

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that any entrepreneur has to make is, well,

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what sector do I go into?

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Do I go into textile? Do I go into apparel?

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Do I go into solar panels? Do I go into mining?

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Do I go into hospitality?

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So that kind of choice ends up being kind extremely

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important on the part of an entrepreneur.

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Well, for a serial entrepreneur, this is gonna be a choice

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that you're gonna be making again and again and again.

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Every time you start a firm, you have to make a decision,

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okay, well, what sector am I going to go ahead?

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Am I, am I going to start that firmin?

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Well, that what we found is that much of the, the kind

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of the success, again, of serial entrepreneurs in China

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is in fact limited to those entrepreneurs

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who are starting their second

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or their third firms in sectors that are in fact,

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highly related to the first sector in which they happen

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to establish their firm in.

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On the other hand, if you look at those entrepreneurs

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who happen to be starting their second

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or third firms in sectors that are very much unrelated

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to the lines of business that they were originally in, that

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what we find that when we compare those entrepreneurs

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to these non serial entrepreneurs, they don't look so good.

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So imagine that I'm a entrepreneur,

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I start a firm in apparel, kind of a labor kind

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of intensive kind of industry

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that China has been extremely successful in.

12:59.275 --> 13:01.165
Well, now imagine that I see an entrepreneur

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who was originally in apparel

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and now all of a sudden they're moving into solar panels,

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or maybe that they're moving into EVs.

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Is that what we find is that these serial entrepreneurs

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who are moving into very different industries, well,

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it turns out that in that first industry

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that they were operating in, they weren't so good.

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Also turns out that in that second industry

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or third industry that they're operating in,

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they're not so good as well.

13:26.425 --> 13:28.925
So that in terms of their productivity, it's much,

13:28.925 --> 13:32.165
much lower than those serial entrepreneurs who happen

13:32.165 --> 13:34.325
to be moving into related lines of business.

13:34.985 --> 13:37.205
And it also turns out to the big ca case

13:37.205 --> 13:38.565
that these serial entrepreneurs

13:39.025 --> 13:42.245
who are moving again into unrelated lines of business,

13:42.795 --> 13:45.965
that their performance is even poorer than these non

13:45.965 --> 13:47.325
serial entrepreneurs.

13:48.025 --> 13:49.885
So their performance ispor poorer,

13:50.345 --> 13:52.365
but actually turns out that they're bigger in terms

13:52.365 --> 13:54.125
of their capital, in terms of their assets.

13:54.905 --> 13:57.165
So what that is suggesting, again, to us is

13:57.165 --> 14:00.605
that these entrepreneurs are in some way favored

14:01.115 --> 14:03.965
that in fact, that the reason why these entrepreneurs are

14:03.965 --> 14:06.085
getting these opportunities to enter into

14:06.085 --> 14:08.605
and start businesses, it's not necessarily

14:08.605 --> 14:12.085
because they're good, they're wise, they're resourceful,

14:12.945 --> 14:15.085
but it may have much more to do with these

14:15.595 --> 14:19.685
entrepreneurs are able to access some kind of critical input

14:19.685 --> 14:21.485
or resource like capital

14:22.115 --> 14:24.085
that they're able either from local banks,

14:24.095 --> 14:26.525
local financial institutions, that they're able

14:26.525 --> 14:28.325
to access the credit and the finance,

14:28.385 --> 14:30.765
or maybe some other kind of critical input that they need.

14:31.385 --> 14:33.325
So it's not so much that they're good,

14:33.945 --> 14:35.245
but rather that it's favored.

14:35.345 --> 14:38.525
And that what we find, again, across these firms, again,

14:38.525 --> 14:42.925
that they operate first firm, second firm, we see a repeat

14:43.395 --> 14:45.325
that they're not good, that they are bigger,

14:45.555 --> 14:47.845
that they're favored, you know, in some kind of way.

14:48.665 --> 14:53.445
And so kind of the, the picture that emerges from China is,

14:53.465 --> 14:56.725
yes, you know, on average serial entrepreneurs are better,

14:57.225 --> 14:59.925
but that what that does is it conceals just an enormous

14:59.925 --> 15:01.165
amount of heterogeneity

15:01.395 --> 15:03.405
because some of them are clearly better,

15:03.785 --> 15:06.085
and those that are better, that are in related lines

15:06.085 --> 15:08.925
of business, their productivity is 50,

15:09.175 --> 15:12.685
60% higher than it is for non serial entrepreneurs.

15:13.105 --> 15:16.165
And it's even higher compared to those serial entrepreneurs

15:16.545 --> 15:18.525
who are moving into unrelated lines of business.

15:19.025 --> 15:20.925
So that there is some mechanism in China

15:20.975 --> 15:23.365
where ability is extremely important

15:23.865 --> 15:25.925
and entrepreneurs with lots of ability

15:25.985 --> 15:27.085
or able to leverage that

15:27.105 --> 15:30.605
to be successful in their first firm, in their second firm.

15:31.585 --> 15:34.845
But at the same time, there's also environments is where

15:35.475 --> 15:37.925
it's not so much about how good you are, about

15:37.925 --> 15:40.765
what your ability is, about how rapidly you can learn

15:41.065 --> 15:42.925
and identify opportunities,

15:43.905 --> 15:46.845
but rather maybe how connected you are, the fact

15:46.845 --> 15:49.405
that you're able to access finance or other things

15:49.465 --> 15:51.605
or land that may be extremely important

15:51.705 --> 15:52.965
to establishing a business,

15:54.065 --> 15:56.325
you may still be in some sense successful,

15:56.325 --> 15:58.325
you may make some money of it, but in a larger picture,

15:58.505 --> 15:59.565
you're just not very good.

16:00.625 --> 16:03.245
So what we've been able to do is to kind of identify

16:03.715 --> 16:06.445
that yes, serial entrepreneurs on average are better,

16:07.185 --> 16:09.005
but for simplicity, there's two kinds,

16:09.545 --> 16:11.405
and that in some kinds of environments

16:11.435 --> 16:13.525
that serial entrepreneurs, they're not good.

16:13.865 --> 16:15.485
So this just raises the question,

16:15.555 --> 16:17.885
what is it about the environments that they happen

16:17.885 --> 16:20.685
to be in operating in that are kind

16:20.685 --> 16:22.125
of giving rise in some environments?

16:22.295 --> 16:24.125
These serial entrepreneurs, they're great,

16:24.465 --> 16:25.845
and others they're not so great.

16:26.425 --> 16:29.085
And so that what that tells us is that perhaps, again,

16:29.085 --> 16:32.805
in some localities, that kind of the institutions, again,

16:32.805 --> 16:35.725
relating to your ability to start a business, to be able

16:35.725 --> 16:38.885
to access finance, to be able to access other kinds

16:38.885 --> 16:42.685
of inputs again, that are absolutely critical to starting

16:42.785 --> 16:44.645
and running a successful business.

16:45.395 --> 16:48.485
Well, maybe in some environments things like connections are

16:48.485 --> 16:50.925
gonna be much more important than what ability has.

16:51.505 --> 16:53.885
But we also know that as we kind of take a look in terms

16:53.885 --> 16:57.405
of the policy environment in China, that we also know today

16:57.405 --> 16:59.485
that there's often certain kinds of sectors that

16:59.625 --> 17:02.325
for policy purposes are being favored,

17:02.635 --> 17:04.965
certain sectors are being identified

17:04.985 --> 17:08.005
as strategically important that are being identified

17:08.005 --> 17:10.125
as important for policy purposes.

17:10.625 --> 17:13.405
And so for these sectors that are often identified

17:13.425 --> 17:17.485
as being strategically important, there may often be access

17:17.485 --> 17:21.085
to finance, access to land, access to other kinds

17:21.085 --> 17:24.085
of benefits, to encourage entrepreneurs to go ahead

17:24.085 --> 17:25.205
and to enter those firms.

17:26.145 --> 17:29.085
So entrepreneurs may be entering sectors, right?

17:29.115 --> 17:31.525
They may be entering sectors, not

17:31.525 --> 17:34.245
because they know very much about those sectors, not

17:34.245 --> 17:37.805
because they may have ability to be able to successfully run

17:38.145 --> 17:41.205
and grow firms in those sectors, but rather

17:41.205 --> 17:44.445
because the policy environment is actually encouraging them

17:44.465 --> 17:46.525
to enter those kinds of sectors.

17:46.525 --> 17:47.965
And if there's lots of subsidies

17:47.965 --> 17:51.125
and support out there that are encouraging entrepreneurs

17:51.125 --> 17:54.125
to enter those sectors, I just don't have to be as good

17:54.545 --> 17:56.565
to enter that sector and to be profitable

17:56.665 --> 18:01.245
and as successful as I would be if there were no subsidies

18:01.245 --> 18:02.525
or if there was no kind of support

18:02.795 --> 18:04.165
that was coming either from the local

18:04.165 --> 18:05.205
government or from above.

18:05.785 --> 18:08.565
So clearly there's an enormous amount of heterogeneity

18:08.915 --> 18:10.005
that is going on here.

18:10.075 --> 18:12.165
There's differences, again at the local government,

18:12.185 --> 18:13.405
at the local level in terms of

18:13.405 --> 18:15.525
how these local governments have and behave

18:15.625 --> 18:17.005
and these business environments.

18:17.585 --> 18:19.965
But we also know that over the course of the last 10

18:19.965 --> 18:22.925
or 15 years that the government has identified certain kinds

18:22.925 --> 18:24.885
of sectors as being priority sectors

18:25.025 --> 18:28.685
and associated, again, with those priorities are all kinds

18:28.685 --> 18:30.525
of benefits, both from local governments,

18:30.525 --> 18:35.005
but also top down that may be influencing the choices that

18:35.105 --> 18:37.485
of the sectors that entrepreneurs may be entering.

18:37.905 --> 18:39.685
But it may also mean that in order to be able

18:39.685 --> 18:42.645
to access those kinds of benefits, that kind of support

18:43.155 --> 18:44.205
from local governments

18:44.205 --> 18:47.045
and from above, it may not be how good I am,

18:47.145 --> 18:51.285
but rather it may be who do I know how connected am I?

18:51.505 --> 18:54.125
And that in itself would also kind of distort this kind

18:54.125 --> 18:55.925
of decision about entry again into,

18:56.145 --> 18:57.245
you know, entrepreneurship.

18:57.665 --> 18:59.285
And in turn then would be influencing

18:59.285 --> 19:00.765
serial entrepreneurship more generally.

19:01.285 --> 19:01.405
I.

00:00 - So let me just begin by saying that, you know, in any country entrepreneurship, new startups are extremely important. These firms are gonna be important because they're gonna be sources of innovation, new technology, new products, new business models

00:16 - that can often be extremely disruptive. So we're interested in entrepreneurs, you know, for all of those reasons. Now, most of the time that, you know, entrepreneurs over their lifetime are only gonna start a single firm. But it may also be the case that some subset of these entrepreneurs may actually start two or three firms over the course of their lifetime. in every country, advanced countries,

00:42 - developing countries, there's very prominent examples of these types of individuals in the United States, Elon Musk, Richard Branson, in the uk, Jack, ma, and China. All of these individuals are highly celebrated, again for their experience and success as serial entrepreneurs in all of these countries, kind of below the surface, there's gonna be an awful lot of slightly less celebrated entrepreneurs who are also gonna be extremely important

01:10 - and who are also serial, who have been highly successful over their course of their lifetimes of starting more than one firm. Sometimes these firms are gonna be running concurrently. Sometimes they'll start a firm, maybe that firm will shut down, they'll start a second firm. So serial entrepreneurship is important, and it becomes a wonderful lens through which to view entrepreneurship In advanced countries, you know, as well as in developing countries in emerging economies,

01:40 - we're beginning to recognize that serial entrepreneurship is important. We have all of these celebrated cases, but to be able to go ahead and to actually measure, measure and determine how important serial entrepreneurship is, we need an awful lot of information. We need an awful lot of data. We basically need to have information for a country on all the firms that have ever been established.

02:02 - So the good news is, is that today we're increasingly in a number of countries, we're getting access to administrative records that have that information on all firms that have ever been started. Once we have that kind of information, we begin, we can begin to identify those entrepreneurs who, over their lifetime lifetimes have started more than one firm and are thus serial. So we, over the course of the last 10 or 15 years, as a growing amount of work that is being done

02:29 - primarily in advanced countries, where we have this kind of data that are beginning to identify how common, how important these serial entrepreneurs are. And it may very well be the case that 15 to 20%, maybe even more of all firms that are currently being ran in a country, are in fact being ran by serial entrepreneurs. But moreover, it may, it also appears to be the case that these firms that are being ran by serial entrepreneurs, that they're better than on average.

02:59 - That if we take a look at these firms in terms of how profitable they are, how productive they are, how big they are, they are bigger again, on average, that what that means then is that the weight, if you like, of these firms and the overall economy is much more than just the percentage of firms that they happen to go ahead and to represent. And so, in so far as that, we see these serial entrepreneurs in so far as that they, in fact, they look better, they're growing more rapidly,

03:27 - they're more productive. These firms are important. And so that environment and the forces that are beginning to give rise and that allow these entrepreneurs to start a firm, to learn to accumulate capital and experience, and to leverage that and to learn more about other opportunities to invest sometimes in related industries, sometimes not so related, all of that process becomes extremely important

03:52 - and helps to kind of underlie the dynamism that we may observe in economy here in China. So if we kind of go back, we have to kind of remember that China's now in the fifth decade of economic reform, economic reform begins in the late seventies, early 1980s. We go back 40 years ago, and we take a look at the landscape. All firms in China were basically state owned enterprises, and there was a small percentage of firms that were collectively owned.

04:18 - There were not privately owned firms, but over the course of the eighties and the nineties, both in terms of kind of the policy environment, the legal environment, lots of the restrictions that there were on private firms began to be relaxed. It became much easier for an individual to go ahead and to start a firm as a private individual. Over time, their property rights, again in those firms became better protected legally.

04:45 - So if we go back then to the late eighties, early nineties, we begin to see the rise of private firms in China. And their number has been growing over time as a percentage in terms of all firms that there are in China. And in terms of the contribution that private sector firms happen to be making to the overall economic activity in China. And so today, activity in the private sector probably represents 65 to 70% of all GDP.

05:14 - The number of private firms today is literally in the millions. And just kind of orders of magnitude are just really important. So if we could go back to the mid 1990s and every year there were approximately a hundred thousand new private sector firms that were being established. If we move forward and go to 2015, there were over a million new private sector firms that were established in 2015.

05:41 - So the numbers here are really rather remarkable, both in terms of the numbers and so that every year the percentage of new firms that are being established is about 20%. Now, clearly not all of them survive. A lot of them are gonna go out of business. But this has Been a very kind of dynamic environment where opportunities for individuals, again, who have ideas, who perceive opportunities out there, have been able to go ahead and to enter the market.

06:09 - What's absolutely essential, you know, for us to be able to kind of look at entrepreneurship in serial entrepreneurship in China is our ability to be able to measure it. And what's key to that is our ability to be able to leverage and to take advantage of what's known as the business registry in China. You know, the business registry in China, this is a registry that is continually, again, being updated. It is a registry that includes information on all firms

06:34 - that have ever been established in China since 1949. And so if I was to go ahead and if I was to access that business registry today, that I would have information on all the firms that had ever been established since 1949 to today that were established, I would have information on who those firms were, where they were located, in what industry that they were in. But I would also have information again, on the individuals who happened to have originally invested in those firms.

07:04 - In other words, that I would be able to use that information to identify who established the firm, who started the firm. But moreover, that registry also provides us information with respect to those firms of those firms that happen to be operating today. So for any firm that was established over the last 70 or 75 years, I would know when that they were established. And if I was to look at that registry today, I would know which of those firms are still operating today, or those that may have gone out of business.

07:34 - And so it's this information that is going to allow us for any individual to identify those firms that they established, and to be able to identify other firms that they will have established over their lifetime. I'll know where they establish those firms. I'll know the sectors that they establish those firms in. I'll know if those firms happen to be operating today. And then their supplementary information, that's often provided as part of the business registry that is providing us information on the sales of the firm,

08:04 - their assets, their liabilities, their profits, that are gonna also allow us to say a bit more, again, about these firms and about how well these firms happen to be performing relative to other firms. So the registry is just absolutely critical to our ability to be able to say again, some things about China, about all of China in this regard. So what we're interested in doing here is that to try to, we first, we wanna be able to take a look at these serial entrepreneurs

08:31 - and the firms that are ran by serial entrepreneurs, and we want to be able to say something again about how good these firms happen to be relative to what I'm gonna call a nons serial firm. So I have entrepreneurs who are opera, who have over their lifetimes, have established and ran more than one firm, but there's a majority of the firms that are non serial. Again, in that regard, what can we say about these firms in terms of their size?

08:55 - What can we say about their productivity? What can we say about their profitability? Well, if we go ahead, at least, you know, using the data that we happen to have access to from the registry, and we can make some comparisons between these firms that are being ran by serial entrepreneurs versus those that are being ran by non serial entrepreneurs. We're able to go ahead and we're able to take a look at the first firm that's being ran by the serial entrepreneur, the second firm

09:19 - that happens to be ran by the serial entrepreneur, and then what we're observing. And that what we learn is that firms that are ran by serial entrepreneurs in China, that they are both bigger and better, and firms that are being ran by non serial entrepreneurs. So they're better in the sense that they are more productive. And so in that regard, our findings, our kind of initial findings for China we're very similar to

09:43 - what we find for other countries. So that in other countries is that we're finding that on average, that these serial entrepreneurs, they're better, they're bigger, that they're more productive. And so what that is suggesting that inso forth, that they're bigger, they're better, they're more productive, perhaps they're even more profitable, is that what that is suggesting is

10:01 - that there's something again about the ability, again, of these entrepreneurs that's underlying the fact that they are serial, the fact that they are now successfully, you know, running, starting more than one firm, two firms, three firms, and successfully running those firms. So it's something, again, about those firms, about the ability of those firms and that the entire kind of economic kind of system is kind of encouraging that kind of behavior.

10:28 - Again, on the part of these entrepreneurs, I start a firm, I'm successful, I learn, I accumulate capital, I can use some of that capital that I've accumulated, some of those profits, I can use it to invest in the firm that I'm currently running. But maybe in the course of all this, I identify new opportunities. And so as I identify and I learn about new opportunities that I use, some of those resources that I've gone ahead

10:52 - and that I've accumulated, maybe I combine those with resources that I'm able to access from the financial markets and I start a second firm. But that what we see is that these serial entrepreneurs are successful in their first firm, they're successful in their second firm, and that that second firm often happens to be even more successful than the first suggesting that there's learning that's going on on the

11:14 - part of these entrepreneurs. So kind of on average, China looks like the rest of the world, but when we began to dig a little bit deeper again into these serial entrepreneurs, is that we found that there were important differences, that there was heterogeneity amongst these serial entrepreneurs, and that a lot of these differences that we were observing, you know, were in fact related to the industry

11:37 - or the sector choices that these serial entrepreneurs were making. And so one of the critical decisions that any entrepreneur has to make is, well, what sector do I go into? Do I go into textile? Do I go into apparel? Do I go into solar panels? Do I go into mining? Do I go into hospitality? So that kind of choice ends up being kind extremely important on the part of an entrepreneur.

12:00 - Well, for a serial entrepreneur, this is gonna be a choice that you're gonna be making again and again and again. Every time you start a firm, you have to make a decision, okay, well, what sector am I going to go ahead? Am I, am I going to start that firmin? Well, that what we found is that much of the, the kind of the success, again, of serial entrepreneurs in China is in fact limited to those entrepreneurs who are starting their second or their third firms in sectors that are in fact,

12:26 - highly related to the first sector in which they happen to establish their firm in. On the other hand, if you look at those entrepreneurs who happen to be starting their second or third firms in sectors that are very much unrelated to the lines of business that they were originally in, that what we find that when we compare those entrepreneurs to these non serial entrepreneurs, they don't look so good. So imagine that I'm a entrepreneur, I start a firm in apparel, kind of a labor kind

12:54 - of intensive kind of industry that China has been extremely successful in. Well, now imagine that I see an entrepreneur who was originally in apparel and now all of a sudden they're moving into solar panels, or maybe that they're moving into EVs. Is that what we find is that these serial entrepreneurs who are moving into very different industries, well, it turns out that in that first industry that they were operating in, they weren't so good.

13:20 - Also turns out that in that second industry or third industry that they're operating in, they're not so good as well. So that in terms of their productivity, it's much, much lower than those serial entrepreneurs who happen to be moving into related lines of business. And it also turns out to the big ca case that these serial entrepreneurs who are moving again into unrelated lines of business, that their performance is even poorer than these non

13:45 - serial entrepreneurs. So their performance ispor poorer, but actually turns out that they're bigger in terms of their capital, in terms of their assets. So what that is suggesting, again, to us is that these entrepreneurs are in some way favored that in fact, that the reason why these entrepreneurs are getting these opportunities to enter into and start businesses, it's not necessarily because they're good, they're wise, they're resourceful,

14:12 - but it may have much more to do with these entrepreneurs are able to access some kind of critical input or resource like capital that they're able either from local banks, local financial institutions, that they're able to access the credit and the finance, or maybe some other kind of critical input that they need. So it's not so much that they're good, but rather that it's favored. And that what we find, again, across these firms, again,

14:38 - that they operate first firm, second firm, we see a repeat that they're not good, that they are bigger, that they're favored, you know, in some kind of way. And so kind of the, the picture that emerges from China is, yes, you know, on average serial entrepreneurs are better, but that what that does is it conceals just an enormous amount of heterogeneity because some of them are clearly better, and those that are better, that are in related lines of business, their productivity is 50,

15:09 - 60% higher than it is for non serial entrepreneurs. And it's even higher compared to those serial entrepreneurs who are moving into unrelated lines of business. So that there is some mechanism in China where ability is extremely important and entrepreneurs with lots of ability or able to leverage that to be successful in their first firm, in their second firm. But at the same time, there's also environments is where it's not so much about how good you are, about

15:37 - what your ability is, about how rapidly you can learn and identify opportunities, but rather maybe how connected you are, the fact that you're able to access finance or other things or land that may be extremely important to establishing a business, you may still be in some sense successful, you may make some money of it, but in a larger picture, you're just not very good. So what we've been able to do is to kind of identify

16:03 - that yes, serial entrepreneurs on average are better, but for simplicity, there's two kinds, and that in some kinds of environments that serial entrepreneurs, they're not good. So this just raises the question, what is it about the environments that they happen to be in operating in that are kind of giving rise in some environments? These serial entrepreneurs, they're great, and others they're not so great.

16:26 - And so that what that tells us is that perhaps, again, in some localities, that kind of the institutions, again, relating to your ability to start a business, to be able to access finance, to be able to access other kinds of inputs again, that are absolutely critical to starting and running a successful business. Well, maybe in some environments things like connections are gonna be much more important than what ability has. But we also know that as we kind of take a look in terms of the policy environment in China, that we also know today

16:57 - that there's often certain kinds of sectors that for policy purposes are being favored, certain sectors are being identified as strategically important that are being identified as important for policy purposes. And so for these sectors that are often identified as being strategically important, there may often be access to finance, access to land, access to other kinds of benefits, to encourage entrepreneurs to go ahead and to enter those firms.

17:26 - So entrepreneurs may be entering sectors, right? They may be entering sectors, not because they know very much about those sectors, not because they may have ability to be able to successfully run and grow firms in those sectors, but rather because the policy environment is actually encouraging them to enter those kinds of sectors. And if there's lots of subsidies and support out there that are encouraging entrepreneurs to enter those sectors, I just don't have to be as good

17:54 - to enter that sector and to be profitable and as successful as I would be if there were no subsidies or if there was no kind of support that was coming either from the local government or from above. So clearly there's an enormous amount of heterogeneity that is going on here. There's differences, again at the local government, at the local level in terms of how these local governments have and behave

18:15 - and these business environments. But we also know that over the course of the last 10 or 15 years that the government has identified certain kinds of sectors as being priority sectors and associated, again, with those priorities are all kinds of benefits, both from local governments, but also top down that may be influencing the choices that of the sectors that entrepreneurs may be entering. But it may also mean that in order to be able to access those kinds of benefits, that kind of support

18:43 - from local governments and from above, it may not be how good I am, but rather it may be who do I know how connected am I? And that in itself would also kind of distort this kind of decision about entry again into, you know, entrepreneurship. And in turn then would be influencing serial entrepreneurship more generally. I.

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