Business startups setting a hot pace

Connections in their hometowns pay off for vocational students

While in school, Yang Jingfei used to top her class with her good grades.

She went on to attend the elite Fudan University in Shanghai and snared a job at a "big four" accounting firm in the Chinese financial center, with a yearly income of about 150,000 yuan ($24,100).

But Yang, 27, now finds herself lagging behind her former classmates who achieved only average grades.

After graduating from vocational schools in 2009, these former classmates returned to their hometown of Nantong in Jiangsu province and started their own businesses.

One of them, Fan Yi, has been running an advertising company since he graduated.

"I started by using my parents' connections to get orders," he said. "Then business found its way to me."

Five years later, Fan and others like him are clinching 200,000-yuan contracts through connections in their hometown.

Yang said, "They seem to have more business ideas than I do and are in a better position to make money."

Her experience is in line with the findings of a survey on higher education by consulting firm Mycos, which showed that last year 2.19 percent of graduates with vocational degrees chose to start their own businesses. That figure was much higher than for college diploma holders, of whom only 1.2 percent chose to become entrepreneurs.

The survey showed that the average income of entrepreneurs was one-third higher than that of salaried workers.

Yu Ping, a program officer at the Zhongguancun students entrepreneurship and employment research center, said university students rely more on fixed career paths, while vocational training leads students to be more practical in making money and setting up businesses.

"In general, the cost for those who go to universities is more than for those who are less educated, thus they are more focused on safer choices," Yu said. "It is also easier for university graduates to find a decent job than for vocational students to do so."

Many vocational school students, on the other hand, are more down to earth, she said.

Yu has observed many such students start small businesses in school, which helps them gain experience.

Xiong Bingqi, deputy head of the 21st Century Education Research Institute, said the current education system is focused on gaining diplomas rather than acquiring skills.

"Many students go to college only aiming to earn a diploma that they believe will take them to anywhere they want," he said, "while skills, innovation and creativity are neglected in their pursuits."

The report also said that about 60 percent of the funding for the entrepreneurs comes from families and friends. Loans make up 25 percent, while government subsidies and preferential loans make up only 1 percent.

Although the government gives incentives every year to encourage student entrepreneurship, access to those resources and their allocation is less than ideal, said Zhu Hongyan, a senior careers consultant at employment website Zhaopin.com.

"Most of the business startups by inexperienced students still rely on connections, which explains why many return to their hometowns for business, and that seems a better way than staying in the major cities," she said.

These moves have created a dilemma for many like Yang who were born in the 1980s, come from second- or third-tier cities or towns and made their way into big cities through fierce competition, only to find themselves in a less competitive position than their less-educated peers.

"It can seem like an unfair situation to those who lose out," Yang said.