Asia's young entrepreneurs need help with the hustle.
By Haoliang Xu, Assistant Secretary General, United Nations, and director of the Regional Bureau for Asia and the Pacific at the United Nations Development Programme.
China witnesses the world’s largest migration every year. When the moon is full, in January or February, people leave behind their tower blocks and subway commutes to trek across the country to be reunited with their kin. Roughly 385 million people head to their home towns and villages to celebrate Chinese New Year, and the same ritual is repeated year after year.
This mass movement underlies, in part, the incredible transformation that the Chinese economy has undergone in the past 40 years. China, like much of Asia Pacific, is the poster child of how transforming economies from farm to factory reduces poverty. The World Bank and the WTO report that in 1990, 58% of Chinese people lived on less than $1.25 per day, while in 2015 only 4.1% live below that level. Roughly 800 million have been lifted out of poverty.
While only four out of 42 Asia-Pacific countries are still classified as low income, a disturbingly large number of 450 million extreme poor live in what are technically middle-income countries.
For those left behind by Asia’s fairytale growth story, farm to factory economics may no longer be a reliable conveyor belt to prosperity. While China’s factories still hum, our research indicates growth engines such as India’s business-process outsourcing boom, and automotive and electronics industries that unleashed the Asian tiger economies are all at risk of automation.
To complicate matters further, Asia’s 700 million young people are reaching working age faster than their economies can create industrial jobs for them.
While the official youth unemployment rate is relatively low, at under 10%, 220.5 million young people are neither in education or employment (NEETs).
Completing the development conundrum, the region is also ageing fast, presenting a risk that the region will get old before it gets rich.
Institutionalising the hustle
Findings from a new United Nations Development Programme (UNDP) report, to be launched with the Global Entrepreneurship Monitor next month, strongly suggest that entrepreneurship must become a mainstay of government policy if Asia’s youth bulge is to bring collective benefit to the region.
While young entrepreneurs face serious headwinds setting up their businesses, particularly in scaling, Asia’s 18-34-year-olds have one of the highest start-up rates in the world, with around 40% creating jobs for others.
But contrary to popular images of nascent Jack Mas and Zuckerbergs, the tech revolution is still just a glimmer on the horizon for many businesses in the region: only 1.3% of entrepreneurs (of all ages) said that their nascent firm was hi-tech or medium-tech. Young people in the region are still more likely to be starting small firms that are akin to plumbing or street-vending than building the next WeChat or Grab.
Asia’s youth cannot be expected to succeed alone. Entrepreneurship skills need to be built across age groups to deal with creeping automation and high levels of competition. In order to help them, we believe that we must institutionalise the “hustle”.
Our research suggests that the most successful firms in Asia are led by people over 35, typically by those with the most education. To support the hustle, then, is to help the left behind leap over the obstacle of poor skills, to help them build entrepreneurship, but also make sure they acquire a variety of new soft and hard skills needed for a labour market in flux.
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