Returning to their rural hometowns for startups is an important way that youth groups are responding to the nation’s call for them to participate in rural vitalization. It is also an important arrangement, made by the Central Committee of the Communist Party of China (CPC) and the State Council, that governments at all levels should support youth as they return to rural hometowns for startups. According to data released by the Ministry of Agriculture and Rural Affairs on March 15, 2021, the number of people nationwide who return to hometowns to start businesses reached 10.10 million in 2020. Returning groups have initially formed in the following categories: rural migrant workers, university students, veterans, and women. While startups created by youth groups have bright development prospects which invigorate social innovation, several problems still exist.

Problems such as inferior startup levels and short startup lifecycles remain. On January 19, 2020, 19 ministries in China including the National Development and Reform Commission jointly enacted Opinions on Advancing the High-Quality Development for Startups by People returning to Rural Areas. Later on, provinces and municipalities around China successively released more detailed policies including opinions on the implementation of startups.

Dilemmas faced

Startups created by youth returning to their hometowns are usually low-tech endeavors, as high-tech species, management, and processing have not been commonly adopted in these startup processes. Instead, traditional agricultural businesses engaged in planting and breeding still dominate as the main forms of startups.

Youth still struggle with low-tech businesses for the following reasons.

The first obstacle has to do with startup policies. Though policies for startup innovation have been issued in many places, certain deficiencies still exist in terms of collaborative mechanisms for these policies. Policy focus is often limited to land transfer and loan procedures, with little attention paid to technology. Limited technical training is offered, but it is not highly targeted and remains ineffective.

Finance sources are the next limiting factor. For many young people who come back to their rural hometowns to start businesses, financing mainly comes from individual investments, while a few people adopt a joint-stock cooperative system. Most investors, whether they are individual or cooperative in terms of stockholding, usually pour all the capital they have into the initial startup stage. But due to the small scale of the capital itself, the funding isn’t continually invested, and there are not sufficient amounts remaining for later stages. This background makes entrepreneurs reluctant to undertake high-tech startup industries.

In terms of marketing strategies, many young entrepreneurs have weak and even no marketing abilities. Their startups are limited to primary agricultural production processes. The high entry fees and costs for entering digital economic platforms are too heavy for many youth. In the transactions, some marketers lower the purchasing prices for products offered by individual entrepreneurs. Low technology content, weak marketing abilities, coupled with other negative factors lead to low market competitiveness and limited space to gain profits. As a result, failed startups are common.

In terms of social networks, we have found that many youth are burdened with a heavy family load. Older family members often hold traditional beliefs on their children’s startups, and only wish them success and advise caution. This leads to conservative thinking among family members, as they believe a smooth and steady startup path is more secure. Such concepts make those who start businesses afraid of investing in a bold way, and instead they prefer relatively common products or target traditional sectors—such as the stable and predictable agricultural sector. This results in simple and repetitive startups with low-technology content in low-risk industries.

Advice and solutions

To advance the quality of startups among youth who return to their rural hometowns, local governments can introduce new plant species, new operation methods, and new management measures to rural areas. Through systematic policies and incentive programs, local governments can encourage a team of skilled farmland and farming experts to adopt new crops and bring in new technologies.

Local governments should also actively assist with networking, fostering information communication between entrepreneurs and multi-market forces, such as people offering proprietary rights for science and technology patents. In addition, industrial-educational integration needs to be promoted. In cities, educational integration is underway in a sound manner, but blending industrial reinvigoration, educational resources, and skill sets in the process of implementing rural vitalization strategies needs to be further deepened.

We are also calling for a social system that is in line with innovation and startup culture, both of which are social actions with uncertain risks in their development processes. In publicizing startup knowledge, the two-sided effects of success and failure, which are intertwined, should be fully considered. The risk factors, controllable elements, and all potential startup paths should be made known to the public. While letting courageous youth make investments, these entrepreneurs should be trained in risk response. At the same time, to keep pace with entrepreneurship, a culture that is risk conscious and that tolerates failure needs to be cultivated across society.

Liu Chengbin is a professor from School of Sociology at Huazhong University of Science and Technology.