China: Fear of Failure

As the city hosting one of China's best-known incentive programs to encourage Chinese entrepreneurs and scientists to come home, Wuxi, near Shanghai, seemed a natural place for me to visit.

The people who run the "Wuxi 530" program said they were happy enough to show me around and talk about their work, but they needed permission from the city's (Communist party controlled) Foreign Affairs Office.

And that, strangely, was not forthcoming. The Foreign Affairs Office, which oversees city officials' contacts with foreigners, told my would-be hosts that "it is not suggested to arrange this planned visit in a sensitive moment." It was "strongly recommended" that I change my schedule.

The "sensitive moment" could only refer to the ruling Communist party's 18th Party Congress, even though that meeting was not due to be held for at least a month after my planned visit, and in Beijing, 1,000 kilometers away from Wuxi. But I knew from experience that this was not the sort of ruling that you bother to challenge, even if it made no apparent sense.

I went to Wuxi anyway, of course. If a reporter in China did only what the authorities suggested he do he would never write anything. I could not meet the people running the returnee program – they would have got into trouble if they had seen me – but I could talk to independent businessmen who had benefited from it.

And it was while I was talking to them that I got an inkling of why, perhaps, city government officials had wanted to keep me out of Wuxi.

Because it transpired that a large proportion of the companies that returnees have set up in Wuxi have failed. And if there is one thing that Chinese officials hate to acknowledge, it is failure.

No matter that large proportions of start-up companies all over the world fail. As many as 40 percent of startups in the United States quickly go bankrupt, according to Harvard Business School research.

The big difference is that in America this is not a cause for shame, but regarded as a natural result of the risks that small entrepreneurs take. In China it is seen as a reflection – and a poor one – on the officials who sponsored the entrepreneurs.

I could not find out exactly how many of the businesses launched through the Wuxi incentive program had gone bust. The program managers were not allowed to talk to me, and the city government refused to do so. The businessmen with whom I talked suggested, anecdotally, that around half of their peers had given up within a year or two.

This is not surprising to anyone anywhere in the world familiar with the pitfalls of starting a small business. But the official Chinese attitude is indicative of a deeper mindset that may prove an obstacle in the long term to the country's ambitions to boost innovation by tempting home people with experience abroad.

Cutting-edge scientists and hi-tech entrepreneurs in the U.S. and Europe are accustomed to taking risks, and accustomed to shrugging off initial failure as par for the course. Their funders and their investors share that outlook.

In China, failure implies a shameful loss of face; only in rare circumstances will an official risk it. And that may explain why the very best Chinese scientists, and the very brightest entrepreneurs, are not coming home.