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Migrants look for business breaks

A survey by China's State Development Research Center shows increasing number of migrants are starting their own businesses. But the business of setting up a business can be problematic for some Forget the catchphrases "providing help for migrants-turned-startups" or "promoting self-employment among migrants." Migrant worker Tian Jin has found it almost impossible to benefit from well-intended phrases.

Tian's small business went bust in the financial crisis. He had returned home to Luodian County in Guizhou Province from the manufacturing hub of Yongkang in Zhejiang Province.

"I repaired tool machines in Yongkang in 2000. When I became skilled, I opened a small tool machine workshop myself. I ran it for six years and had eight workers at the peak," he says. "Business began to slump in 2007 and I lost 200,000 yuan (US$28,571) last year. So I closed it and sold the 150,000-yuan equipment for 10,000 yuan at the end of last year."

After returning home, Tian planned to build a factory to produce a local product, a kind of corn liquor, with his savings of 130,000 yuan.

"What else can I do here? I have asked others to take care of my farmland for free in the past and I'm not interested in ploughing any more," he says.

Tian spent most of his savings on building a three-story house which will be used as a factory.

Credit officers

With most of his savings spent, Tian had to apply for loans.

"I've been away from home for years and have little guanxi (connections) here. Most credit offices just told me they had no money to lend. Some refused, saying my building could not be mortgaged," he said. "All I need is 100,000 yuan to buy equipment."

The difficulties facing Tian are common for migrants who want to start a business.

A survey by the State Development Research Center shows increasing number of migrants are starting their own businesses. Before 1990, only 4 percent of migrant workers started businesses after returning home, the figure jumped to about 30 percent in the 1990s and then to about 65 percent from 2000 on.

The survey involved 3,026 migrant workers-turned-businessmen and was carried out in 99 counties in China and published in February.

The success rate for migrants starting businesses, however, is relatively low.

In southwestern China's Chongqing, a survey by the local labor department in Kaixian County showed about 8 percent of migrants succeeded in starting businesses - the highest rate among all the counties in Chongqing, a key provider of migrant workers.

Migrant-turned-businessman Wang Chuyuan, manager of Kaixian County Yingjin Wool Co Ltd, said he had difficulties getting loans to buy new equipment though they had sufficient production orders and valuable fixed assets.

"The banks are unwilling to lend us loans, saying our workshop buildings could not be mortgaged," Wang said.

Financial support

Wang believes most migrants failed in business because they cannot raise enough money.

The deputy mayor of Chongqing, Huang Qifan, said the difficulty that migrants have in raising money is common for small and medium businesses and though measures have been taken to provide financial support, these are hard to implement.

China has reported millions of job losses because of the world economic downturn. At least 20 million migrant workers have been made unemployed in the economic crisis, said Chen Xiwen, director of the Office of the Central Leading Group on Rural Work in early February.

Premier Wen Jiabao encouraged self-employment for migrant workers in an online chat with the public on February 28 and stressed the importance of training and preferential tax policies for migrant workers.

Governments at different levels have been pulling an array of policy levers, including offering new business loans, to keep people earning money.

In central China's Henan Province, the provincial government has set aside 1.5 billion yuan in small loans for peasants to start businesses.

In northern China's Inner Mongolia Autonomous Region, the government expanded the coverage of its small loans from those laid-off from the cities to the peasants. The small loans range from 50,000 yuan to 100,000 yuan.

In central China's Hunan Province and eastern China's Shandong Province, farmers who want to start businesses can enjoy tax or fee breaks for three years.

Other provinces that are home to large numbers of migrants, such as Sichuan and Anhui, have promised similar assistance.

Experts warn that the measures should be more practical. "Some may be too superficial and not meet the needs of migrants effectively, some are too complicated to be implemented," said Wang Chunguang, a researcher on migrants with the Chinese Academy of Social Sciences.

In southwestern China's Guizhou Province, a survey by the local labor department in Zunyi showed that 90 percent of the migrant workers who returned home and wanted to start a business failed to get loans from financial institutions.

Effective loans

This is the biggest impediment for farmers starting businesses, said Ju Hong, head of the labor department in Zunyi.

"Only loans can save me. With loans, I could launch my project and produce local corn wine as I planned. Without loans, I cannot invest in my business any further and it will be even harder for me to support my family of six," said Tian.

Many revenue-hungry governments not only fail to provide effective loans for peasants, but also impose heavy fees on them, said Ju.

"In some revenue-hungry counties, farmers who want to start businesses may have to get permits first, for land, capital, environmental protection, fire safety and so on. Every permit means they have to pay fees, adding another burden to those who want to start a business," Ju said.

Nie Xiuli, head of the countryside development institute at the Guizhou Provincial Academy of Social Sciences, said local governments need to implement policies that encourage migrant workers to start businesses. "They should focus on action rather than talking or promoting policies," she said.

As well as the financial crisis, a major force that drives migrants home to start businesses is the permanent residency system which prevents them from settling in cities.

The permanent residency system is the reason why about 41.9 percent of migrant workers choose to return home - another 33.4 percent said the reason they returned home was because of unstable employment, according to the survey by the State Development Research Center.

The permanent residency system, created to manage the population, prevents migrants from enjoying the same social security, education or other public services as those born in the cities.

Factory jobs

Wang Zhengxiu, 38, and her husband plan to return home to Chongqing from Guangzhou, capital of Guangdong Province.

The couple gave up their factory jobs in February when their boss could only pay minimum wages because of the financial crisis. It meant they could have a living, but they had no money to support any other family members.

"No factory will hire us in our 50s, so we have to plan for our future. Returning to our rural home is our ultimate choice. If we succeed in running a small business raising chickens or pigs, we may be able to earn some money when we are old," Wang said. "We are hesitating ... and want to get jobs first at chicken or pig farms to get experience. Anyway, we don't want to squander the money we earned through years of toiling in factories."

Though not easy, some migrants have fulfilled their rags to riches dreams.

"You have to venture," said bespectacled Lu Jialou as he walked through his family workshop with eight workers in Dongguan, Guangdong Province. He opened the business after six years of migrant work.

Talking about the global financial crisis, Lu feels the pressure: "I'd planned to turn my workshop into a real factory this year, but I have to put this off and wait for the worst times to pass."


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