Society
Urban Optimism
A new generation with entrepreneurial ambitions is shaping China's future
by Rajesh Srinivasan and Nicole Naurath
Rapid economic development and trade expansion have markedly increased the overall standard of living throughout China, igniting a dramatic cultural revolution. For more than two decades, rural workers have flocked to Chinese cities in search of industrial jobs, seeking individual fulfillment and enrichment and shedding old communist ideals and traditional agrarian customs along the way. Nowhere in China is this fundamental shift more evident than in three of its largest cities—Beijing, Shanghai, and Guangzhou—where enterprising young urban dwellers are radically redefining their cultural identity on their own terms.
Since 1994, Gallup has been measuring the effects of the societal transformation unfolding in China with an unprecedented consumer survey administered to a representative sample of the entire country over six waves of data collection. Data from the October 2007 survey reveal key insights into the attitudes and aspirations of this dynamic population, including a boundless optimism for the future, a propensity toward entrepreneurialism, and an inclination to leverage credit to obtain consumer goods--especially among China's urban youth.
The October 2007 survey was nationally representative with 4,238 respondents aged 15 years and up, from both urban and rural areas. Of these, 1,400 cases were collected in the top three cities. In this article, the "top three cities" refers to Beijing, Shanghai, and Guangzhou, and "youth" is defined as people aged 15-34.
Optimistic outlook on life
When Gallup asked Chinese respondents to reflect on their lives five years ago, evaluate the present, and predict their future in five years, respondents generally expressed an amazingly positive outlook on the present and the future. This positive outlook was especially pronounced in the top three cities. Gallup asked respondents to think of their lives in terms of a ladder scale where zero represented the worst possible life (bottom tier) and 10 represented the best possible life (top tier). Nearly half of all residents in China's top three cities placed their lives five years ago in the middle tier of the ladder (rungs 4-6), showing slightly more optimism than respondents nationwide, who were more likely to place themselves on the bottom tier of the ladder than in the middle or top tier. Responses from the second- tier cities are similar to those from the top three cities, but responses from third-tier cities are more similar to the nationwide responses. That is because third-tier cities represent about 25-30 percent of the total population, and their residents' views are more similar to rural views than those of big-city residents.
As might be expected, many Chinese respondents believe they have moved out of the bottom and shifted upward toward the middle and top tiers, and nowhere is this more evident than in the top three cities. In these cities, more people place themselves on the middle rungs, fewer think of themselves at the bottom, and slightly more say their lives are on the top tier than respondents in second- and third-tier cities. The picture is slightly less positive nationwide, with a higher percentage of residents seeing themselves on the bottom rungs than on the top rungs, and the vast majority placing themselves on the middle rungs.
The future looks especially bright for China's urban dwellers, particularly youth. Less than 8 percent of all urban residents in each of the top three cities predict that their lives will be on the bottom rungs of the ladder in five years, roughly 30 percent place themselves on the middle rungs, and nearly 60 percent expect to be living life on the top rungs, up from the 24 percent who put themselves on the top rungs today. These percentages are generally reflected across China as a whole, but China's young urban dwellers are even more positive about the future. Perhaps as a by- product of youthful optimism or an expectation of even greater prosperity to come, Chinese youth in the top three cities express incredible confidence about the next five years, with nearly 65 percent of youth in Guangzhou and nearly 80 percent in Beijing and Shanghai predicting that their lives will be at the highest possible positions on the ladder.
For comparison, youth in India are just as optimistic as their Chinese counterparts about their present circumstances. Five years ago, however, nearly half of Chinese respondents said they were on the bottom rungs, compared to less than a third of Indian respondents. But the Chinese are more optimistic about their future. Nationwide, 70 percent predict that they will be on the top tier of the ladder, compared to 55 percent of Indian youth. Among youth in the top three cities of India, 18 percent say they are in the top rungs today and 55 percent expect to be in the top rungs in the future.
Entrepreneurial ambitions
Such optimism about the future can be attributed to an atmosphere of change and the hope for an even better standard of living. Urban youth understand that following in the footsteps of their parents will not lead them to the material wealth they have come to enjoy. This may explain why the employment ambitions of Chinese workers are evolving. Governmental departments and state-owned companies, which were once a staple of Chinese employment and are still popular among workers over 35 years of age, are falling out of favor with urban Chinese youth. In 2007, 30 percent of all respondents from the top three cities agreed that government departments or institutions, such as the military, schools, hospitals, and research institutes, are where they would most like to work—the highest percentage of all workplace types. Urban Chinese youth, however, disagreed. Only 19 percent of youth in the top three cities wanted to work for the government, while roughly 30 percent described their ideal workplace as a company that they would own and run themselves.
Roughly 30 percent of youth in the top three cities described their ideal workplace as a company that they would own and run themselves.
Although stable government employment might garner the highest ratings among Chinese 35 years of age and older, data show that entrepreneurialism is a popular alternative with them as well. Gallup asked Chinese respondents who said they might apply for a commercial loan in the future whether they had been thinking about starting their own business and whether they had taken any action on those plans. Nearly two-thirds of all Chinese who were asked this question say that they have thought about opening their own business, and of those, 43 percent say that they plan to open it in the next year. Among residents of the top three cities, entrepreneurial sentiments are slightly weaker in Beijing and Shanghai, with residents of Guangzhou showing the greatest desire to be their own bosses. And once again, the trend is stronger among China's urban youth. In the top three cities, two-thirds of 15- to 34-year-olds who plan to take out a loan have thought about opening their own business, and roughly 4 in 10 plan to open one within the next year. Chinese youth are far more risk-loving than their risk-averse parents who subsisted on the iron rice bowl; they have enjoyed much more prosperity in their young lives and have no desire to return to the past. Taking risks might lead to even greater payoffs, and Chinese urban youth are comfortable with that gamble.
Furthermore, Chinese urban youth have grown up under circumstances very different from those of their parents. As a generation of "only" children, they are widely considered to have been excessively doted upon by their families, and they have enjoyed continually increasing material wealth. They are accustomed to getting their way and, upon entering the workforce, do not relish being subordinate to a supervisor whom they might consider to be outmoded in his or her management practices.
Given this profile, it is unsurprising that many urban Chinese youth are drawn to the prospect of entrepreneurship, especially considering that they are the least likely to believe that their opinions count at work. These feelings could change with longer tenure in their chosen careers, but it is clear why urban youth in Beijing, Shanghai, and Guangzhou are eager to attain success by forging their own path and not following the hierarchical lines of seniority that their predecessors followed. Not even the lure of a well-paying job in a multinational company is more attractive to urban Chinese youth than being their own boss. Overall, only 10 percent of residents of the top three cities would want to work for a foreign company, while roughly 20 percent of youth in those cities feel the same.
* Beijing, Shanghai, and Guangzhou
Note: These figures indicate the percentage of respondents from each group that place themselves on the top tier of the ladder (rungs 7-10). The rungs of the ladder are 0 (worst possible) through 10 (best possible).
Source: Gallup, Inc.
Living the Chinese dream
To fund their new consumption-driven lifestyles, urban Chinese work, save, and even borrow to pay for major purchases such as a home or a car, education, or a much-needed vacation—just as their counterparts in any other developed city would do. Slightly less than half of all Beijing residents have credit cards, as do more than one-third of Shanghai and Guangzhou residents. Big-city residents also take out loans from banks, though this is not nearly as common as having a credit card. The most common reason to borrow in each of China's top three cities is to finance the purchase of a home.
While the youngest urban Chinese report that they are much less likely than people in older age brackets to have a commercial loan, they are at least as likely to think they will apply for a commercial loan in the future. Urban youth also plan to use money from loans differently than older urban Chinese. They are less likely to use money from loans to purchase a home, more likely to buy a car (except in Shanghai, where that is an equally popular option for all age groups), and most likely to use that money to start their own businesses.
Generation gap
China's young adults have opinions that diverge quite markedly from their elders on topics such as jobs, attitudes toward risk, consumption, and general outlook on life. As foreign companies do business in China, they must be keenly aware of the changes that are occurring in that country, both as an employer and as a provider of goods and services. It is not always easy for foreign companies to attract and retain talent and loyal customers in China. If they can get to know the thoughts, desires, and aspirations of their potential employees and customers, they will be better suited to forge long-lasting relationships with them.
Rajesh Srinivasan, based in Princeton, NJ, is regional director, World Poll Asia, and Nicole Naurath, based in Washington, DC, is research analyst, World Poll Asia, at Gallup, Inc.
Copyright 2008 US-China Business Council
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