Bridging the Finance Gap for Women Entrepreneurs

13. China: Policy insights on how culture influences access to finance

Dr. Dongling Zhang
Associate Professor of Criminal Justice, Rockhurst University

Dr. Wendy Wu
Enterprise Manager, Founder of Investing for Impact Hub, and Lecturer of Entrepreneurship and Innovation, Edinburgh Napier University

Background

In recent years, China’s “economic growth miracle” has begun to show symptoms of slowing. Women entrepreneurs, especially those in the high-growth online sector, have become a new engine driving economic development. In this sector, women are often considered more entrepreneurial than men and own approximately 55% of all online businesses in China (GEM, 2018[1]; Wang, 2022[2]). China’s economic policy making now prominently features the state-led “She Economy” initiative (Ren, 2019[3]).

First coined by the Education Ministry in 2017, the term “She Economy” initially stressed the importance of women consumers to the economy. It has since been expanded to acknowledge women’s significant potential to reshape the economy through self-employment and entrepreneurship. Lin Yi, Vice Chairwoman of the All-China Women’s Federation (ACWF) — China’s largest official, state-sponsored women’s organisation — emphasised the crucial role of women entrepreneurs in the post-COVID-19 economic recovery at the China-European Union side event titled “Fostering Women Entrepreneurship in the Technology and Digital Sectors” at the 67th Commission on the Status of Women (Yi, 2023[4]). Yi highlighted that women are not only consumers but also investors, creators and innovators in the digital economy, who are integral to the government’s commitment to harnessing advanced technology and innovation. This approach is aimed at driving economic growth in a manner that is robust and environmentally sustainable.

Policy issue: Social and cultural issues related to financial policies

Government policies, notably the national “@Her Entrepreneurship Plan” (@HEP), are instrumental in improving women entrepreneurs’ access to capital, networks and markets. The @HEP aims to provide women entrepreneurs with an online resource platform through which to mobilise new thinking, technology and public-private partnership mechanisms (@Her Entrepreneurship Plan, 2024[5]). These policies like the @HEP, however, often primarily focus on economic barriers, such as start-up capital, while overlooking social and cultural barriers, such as the persistent patriarchal norms in China (Zhang and Jurik, 2021[6]).

An increasing number of women are pursuing higher education and professional careers, enhancing their financial independence and decision-making power within households (Zhou, 2016[7]). Therefore, the “She Economy” represents a vital and growing segment of the economy. Spanning various sectors such as technology, healthcare, education and fashion, it has potential to significantly contribute to economic growth. While challenges persist, particularly about gender equality more broadly, the opportunities for women entrepreneurs to engage with this burgeoning market are substantial. A cultural shift has been observed in advertisement and marketing strategies that were tailored to appeal to women consumers, acknowledging their significance role in driving economic growth. Nevertheless, it is uncertain whether this consumer power can be leveraged to tackle societal issues, including “lying flat” (i.e. a term used to refer to youth disengagement) and the role of women in enhancing national well-being, especially given current mental health and youth unemployment concerns (The Economist, 2023[8]).

Key questions remain about how aware women entrepreneurs are of the challenges facing the “She Economy” and how effectively policies can enhance not only economic growth but also gender equality. Promotion of the “She Economy” has barely shifted Chinese traditional cultural views about the role of women in Chinese society, with women often regarded as secondary to men in the workforce. In Confucian culture, a woman in an ideal Chinese traditional family should obey her father as a child, her husband as a wife, and her grown son as a widow (Tu, 1998[9]). Consequently, women are typically seen as responsible for managing the household and supporting husbands as breadwinners (Zheng, 1997[10]). Women’s entry into entrepreneurship conflicts with these cultural views and therefore, they are frequently discouraged or discriminated against in the loan application process (Caglayan, Talavera and Xiong, 2022[11]). This obstacle is even more pronounced for women from rural areas, where the impact of traditional norms and culture is stronger (Evans, 2021[12]).

Also, limited access to resources and education, corruption, and the reliance on “Guanxi” (i.e. networks) intensify gender-specific obstacles. These factors disproportionately hinder women’s ability to start and grow businesses, navigate bureaucratic challenges, and build crucial professional networks, exacerbating economic disparities and limiting opportunities for women entrepreneurs (Huld, 2023[13]). Additionally, the focus on traditional business performance metrics over sustainability and social impact inhibits the adoption of green practices in women-led businesses. This issue is further compounded by a general lack of awareness about sustainability and significant barriers for women entrepreneurs – especially in under-developed areas – in securing financial and network support.

Conclusions

Government policies around the “She Economy” seek to address the obstacles to improving the economic well-being of women’s careers in entrepreneurship as well as offer enhanced life opportunities. Despite progress, there is a need for greater policy support to enable women to access opportunities to start and grow businesses, navigate bureaucratic hurdles, and build professional networks.

Boosted policy support would help expand access to educational, cultural and technological resources and strengthen market understanding and business acumen. These policies could include designing and implementing specific educational programmes and workshops aimed at women entrepreneurs, providing them with the tools that they need to thrive (Huld, 2023[13]). In addition, efforts to create build fair and transparent processes in the business environment would help women to explore the entrepreneurship landscape. Policies aimed at protecting women from gender discrimination in the workplace are also highly relevant (Zhou, 2016[7]). Furthermore, fostering inclusive networking opportunities can reduce reliance on “Guanxi” and thereby help women to build professional relationships necessary for business success. Establishing platforms and events where women can network and collaborate with peers and mentors can boost their business prospects and break down traditional barriers.

Women will play a pivotal role in shaping China’s social and economic life. Creating an enabling environment with adequate resources can help unlock the full potential of the “She Economy”, driving economic growth and fostering social inclusion.

References

[5] @Her Entrepreneurship Plan (2024), Guanyu women [About us], http://mqcy.cwdf.org.cn/lists/2.html#about (accessed on 1 February 2024).

[11] Caglayan, M., O. Talavera and L. Xiong (2022), “Female small business owners in China: Discouraged, not discriminated”, Journal of International Financial Markets, Institutions and Money, Vol. 80, p. 101649, https://doi.org/10.1016/j.intfin.2022.101649.

[12] Evans, H. (2021), ““Patchy Patriarchy” and the Shifting Fortunes of the CCP’s Promise of Gender Equality since 1921”, The China Quarterly, Vol. 248/S1, pp. 95-115, https://doi.org/10.1017/S0305741021000709.

[1] GEM (2018), Global report 2017/18, Global Entrepreneurship Monitor.

[13] Huld, A. (2023), China’s startup landscape—industries, investment, and incentive policies, https://www.china-briefing.com/news/china-startup-landscape-industries-investment-and-incentive-policies/ (accessed on 2 August 2024).

[3] Ren, X. (2019), “She economy” makes rapid strides”, China Daily Global Edition, http://www.chinadaily.com.cn/a/201903/08/WS5c81a82da3106c65c34ed6bf.html (accessed on 1 February 2024).

[8] The Economist (2023), Why are China’s young people so disillusioned?, https://link.gale.com/apps/doc/A761194965/GPS?u=napier&sid=bookmark-GPS&xid=ea7da3a6 (accessed on 27 February 2024).

[9] Tu, W. (1998), “Probing the three bonds and the five relationships in Confucian humanism”, in De Vox, G. and W. Slote (eds.), Confucianism and the Family, State University of New York Press, New York.

[2] Wang, D. (2022), “Business success achievable for women in digital economy”, China Daily Global Edition, https://global.chinadaily.com.cn/a/202203/08/WS62270473a310cdd39bc8b3aa.html (accessed on 1 February 2024).

[4] Yi, L. (2023), Guowuyuan fu’ergongwei fuzhuren linyi zai zhongguo oumeng “Shuzi he keji linyu de nvqiyejia jingshen” zhuti bianhuishang de jianghua [Vice Chairwoman of the All-China Women’s Federation Lin Yi’s speech at the China-EU Women’s Entrepreneurship Conference], Permanent Mission of the People’s Republic of China to the UN, http://un.china-mission.gov.cn/hyyfy/202303/t20230308_11037407.htm (accessed on 1 February 2024).

[6] Zhang, D. and N. Jurik (2021), “Mobilizing “she power”: Chinese women entrepreneurs negotiating cultural and neo-liberal contexts”, in Guelich, U. et al. (eds.), Women’s Entrepreneurship and Culture: Socio-cultural Context, Traditional Family Roles and Self-determination, Edward Elgar Publishing.

[10] Zheng, W. (1997), “Maoism, Feminism, and the UN Conference on Women: Women’s Studies Research in Contemporary China”, Journal of Women’s History, Vol. 8/4, pp. 126-152, https://doi.org/10.1353/jowh.2010.0239.

[7] Zhou, S. (2016), G(irls) 20 summit promotes female entrepreneurship, China Development Brief, https://chinadevelopmentbrief.org/reports/girls-20-summit-promotes-female-entrepreneurship/ (accessed on 2 August 2024).