Tài liệu PRIVATE ENTREPRENEURS IN CHINA AND VIETNAM PART 2-1 ppt

The rapidly developing Southeast and East of China exist in sharp contrast to less developed Central China and the still less developed North-West, whereas in Vietnam the urban centers H

PART TWO: THE EMPIRICAL WORK: THE PROFILE OF THE

STRATEGIC GROUP ENTREPRENEURS

In this part of the work we are concerned with a profile of the character of the entrepreneurial strata This requires that at some points we have to go into some detail in order to elucidate this profile, and work through spatial and structural differences Only in this way can we obtain a differentiated picture of the en-trepreneurial strata

1 Choice of the research localities, methodological procedures and

frame-works in the regions studied 1.1 Choice of areas to be surveyed and methodological procedures

The set of questions described in the introductory chapter cannot be answered for the whole of either China or Vietnam Apart from the size of China, in the case of both countries an analysis of the entire country would be made more difficult by a significant regional diversification and unequal development The choice of an area that is representative for the entire country appears to us to be almost impossible The rapidly developing Southeast and East of China exist in sharp contrast to less developed Central China and the still less developed North-West, whereas in Vietnam the urban centers Ho Chi Minh City and Ha-noi constitute the main centers of development There are at times considerable contrasts between on the one hand the level of appearances or official state-ments as criteria for selection, and on the other hand the true state of affairs or reality, and these would have made the search for a representative region more questionable in addition As a result we chose for the survey regions, in each case one which had played a role as forerunner, since in those areas the pro-gress of privatization and the formation of an entrepreneurial strata was at the most advanced stage, and that region may at the same time have played the role

of a trendsetter In order to make a comparison more feasible, our study was also carried out in a rather backwards region as well as one with a “middling” level of development However one area should not be all too backwards since

in such regions only very few private companies exist It is precisely in poorer areas that entrepreneurial potential, capital and markets are in short supply

In order to reduce the number of private companies that are the subject of study to a realistic number, we limited them in each case to an urban segment and a township in a rural area Beyond that the large number of companies as well as forms of companies compelled a limitation to a partial area As bearers

of privatization, private entrepreneurs stood in the middle of our field work Since within the private sector the percentage share of industrial companies is the highest, we concentrated on this partial segment (industrial entrepreneurs)

Measured by the stated goals of the reforms, the industrial sector has anyway increased in importance The industrial entrepreneurs can be divided into large and small entrepreneurs In China we took over the criteria used by the Com-mission for the Reform of the Structure of the Economy, which in 1996 classi-fied companies with an annual turnover of over five million Yuan (about

$500,000) as “large companies” 50 out of 178 companies examined fulfilled these criteria In Vietnam in contrast there were only a few large companies in this sense, namely only 21 (10.4%) Due to this low proportion, I refrained in the latter case from this differentiation

Data was collected and ascertained at the macro-, meso- and micro-levels during which the main focus was on the micro-level At the macro- (central) and the meso-level (provinces), the data that we ourselves ascertained, served the primary function of assisting us in embedding the information gathered in at the micro-level into a larger, superordinated context At the macro- and meso-levels we obtained new data in each case in a similar way Through the evalua-tion of statistics and documents as well by means of interviews, data was gath-ered in about the state of the privatization process in both national and regional contexts, about the role of the private sector of the national/regional section of the economy, and about local development strategies Considering the statisti-cal inexactitude, this data collection reflected mostly the state of knowledge of the institution that was in each case asked As well as what has just been men-tioned, legal stipulations and administrative regulations for the private sector were also collected in order to be able to determine the differing regional and local emphases

The survey of entrepreneurs was completed by interviews with 203 officials (ranging from the lower right up to the ministerial level) at the Central Party School in Beijing in 1996 Since the data from the survey of the Vietnamese officials was not at this author's disposal, no comparison of the answers was possible between the two countries Not least because of reasons of balance, as

a result only selected results of the survey of officials have been included Of the 203 officials interviewed who gave their answers to a standardized ques-tionnaire, 86% of them were people who had first joined the Party after 1984 Only 2.5% were members at the beginning (1979) of the process of reform Readers might derive the impression that the information about China in our study is more complete than that concerning Vietnam This may be due to the development of the private sector being further advanced and more accepted there Regular, random survey surveys have been carried out by social scientists there, and the results of those have gone into this study In Vietnam in contrast, the private sector represents still a rather sensitive area, and this made it more difficult to research into that sector and collect information about it Conse-quently the amount of knowledge about the private sector is significantly larger, and more material and information was at our disposal Beyond this certain questions could not be asked in Vietnam

As far as the statistical data is concerned, there was in both countries a variety

of data principally because the quality of the statistics has improved cantly in the last 15 years But reports at the lower levels of administration are not always reliable, and in addition there is a certain lack of clarity in the ter-minological definition and categories of the non-state sector and of the private sector; as a result unambiguous classifications become difficult Above all, in Vietnam for political reasons data is distorted or covered up An example of this is that foreign investment is classified as going into the state sector so as to imply a faster level of growth in it as compared to the private sector As a result

signifi-we treated official statistical data as trend indicators, and do not expect that they represent reality in a detailed way

1.1.1 The survey in China

The first phase of fieldwork was concentrated on Beijing (survey of tion at the central level) and in the East Chinese coastal province of Zhejiang

administra-In the middle of the 1990s, the province was in first place concerning the growth rate in the private economy and the value of the GDP of that sector So Zhejiang represents in our study the more developed region The high level of development achieved manifested itself too in relatively modern company management as well as in the equipping of the companies Some firms there already possess total capital of more than 100 m Yuan

Within the province itself, we chose as our urban region the province capital Hangzhou, since here the largest number of registered private companies are based, and the highest growth rate in the private sector has been recorded Hangzhou consists of 5 urban districts In both of the central city districts Shangcheng and Xiacheng, private companies predominate in the areas of ser-vice industries and trade In three others the secondary sector dominates As a result we concentrated on two of those three districts namely Gongshu and Jianggan As a rural region we chose Fuyang county some 50 km southwest of Hangzhou; in Fuyang in recent years, the private sector has likewise developed well both quantitatively and qualitatively

The second phase of fieldwork was carried out in the province of Henan gion of middling development) and Gansu (less developed region) Within Henan we concentrated on the city of Luohe in the southern part of the prov-ince At the time of our survey Luohe consisted of one urban district and three counties Our survey took place in the inner city and in a county approx 40 km away (Yancheng)

(re-Within the north-west region of China, Gansu, our partner institution had chosen the city of Baiyin as the urban zone, and Jingtai County some 60 km away which is administered by Baiyin; this was to be our rural region Baiyin is

a newly created city dating from 1956 some 80 km from Lanzhou, the capital of the province It consists of two urban districts and three counties, and owes its creation to a large state sector company (called Baiyin) working with non-ferrous metal, of which it is the largest producer in the whole of China About

90% of the inhabitants came – in the course of the company’s development – from outside the province

The choice of private entrepreneurs was made using our specifications dustrial firms of different sizes) by the local administrative officials for industry and trade When visiting the companies, an employee of the local administra-tive office to which the company was subject accompanied us The task of those officials consisted of making the appointment and a short introduction In each case we carried out a qualitative interview lasting about two hours using guidelines, then followed questions using a standardized questionnaire The individual questions had been explained to the respondents beforehand so as to avoid misunderstandings The quantitative statements about the economic state

(in-of the company were generally written into a special form by accountants, then checked by the entrepreneur, and in some cases also corrected After that fol-lowed a tour of the company with a concluding round of questions

In total, we spoke with 178 entrepreneurs, of whom 169 were men and 9 women; 69 in Zheijang, 60 in Henan and 49 in Gansu of whom 108 were in urban areas and 70 in rural

1.1.2 The survey in Vietnam

In Vietnam we concentrated in the phase of the field work on the capital Hanoi

As far as the number of registered private companies is concerned, it lied in national terms in second place behind Ho Chi Minh City A further reason for the choice of Hanoi was of a practical research nature: both our partner insti-tutes were situated in Hanoi, and had not only their best contacts in that area but also the most experience there in empirical research

Since according to our partner institutions in Hanoi, there were no trative urban districts that one could term purely industrial areas, we chose Hai

adminis-Ba Trung a district that possesses a comparatively large number of private companies in the productive domain From the local administrative office re-sponsible for industry there, we obtained a list of private companies in the sec-ondary sector In the course of our research, it became clear that the list was unreliable since numerous companies had become insolvent, moved, or despite the details contained in the address could not be located, indications of a high degree of fluctuation in the private sector The lack of telephone numbers or the existence of wrong phone numbers on the list of companies, forced us to seek out the private entrepreneurs using a map of the city and without having previ-ously made contact Nevertheless this type of surveying was successful in all cases

Following that, we continued the study in the neighboring district Dong Da There we were able to note down from an up-to-date list of about 80 registered firms, some 40 addresses and phone numbers Our visits were usually an-nounced by phone

Some 25 km north of Hanoi there is Tien Son county in Ha Bac province.1 We chose this county as our rural area in a highly developed area In Tien Son our work was more strongly checked by the local authorities than it had been in Hanoi An employee of the industry department there, arranged for us in each case one day in advance, 3-4 appointments that were all kept with one excep-tion When visiting, there was first a short introduction made by the official, we explained the questionnaire, and then followed the questions The visit was concluded with a tour of the company and a final round of questions

The questions using the question form lasted some 1.5 – 2.5 hours This was followed by a qualitative interview that took 1 – 1.5 hours in which particular points raised during the questionnaire section were once again explored, and the respondent asked for clarification During that digressive answers could well be offered in response to sensitive questions The written answers understandably were throughout more reserved than the oral ones Only in one case, did a respondent make a fully-blown airing of his grievances in his writ-ten answers insofar as he expressed himself critically about the government and the administration, and then personally signed his statements with large strokes The quantitative answers about the enterprise were partly made by the entre-preneurs themselves, partly by the accountants In no case did we obtain a view

of the company’s balance sheets Moreover their reliability should not be estimated In a short conversation that we had during the temporary absence of the official from the local authorities in Tien Son, the interviewed entrepreneur made it known to us that he had a number of balance sheets: one for internal company uses, and for the local authorities A young, university graduate did the accounts

over-All in all 202 interviews were carried out with entrepreneurs, of whom 164 were men and 38 women In the course of the first phase of the research in North Vietnam, 51 entrepreneurs were spoken with in Hanoi, and 31 in Tien Son county During the second phase of fieldwork, we interviewed 51 entrepre-neurs in Ho Chi Minh City in South Vietnam, 30 in the village Thu Duc about

25 km away to the east, 22 in the central Vietnamese city Danang and 10 in the village Duy Xuyen administered by Danang As our main emphasis we carried out interviews in the Ho Chi Minh City districts 1, 3, 5 and 10 Districts 5 and

10 belong to that area of the city, Cholon, which the Chinese community had earlier dominated, and that in the course of an administrative reform was split into three.2 Carrying out the survey in the four city districts made it possible for

us to visit not only Vietnamese but also Chinese companies The inclusion of Chinese companies turned out to be necessary since the ethnic Chinese have once again attained a dominant role in the economy of the city These firms have already attracted significant amounts foreign capital (we assume a number

of billion US $) But that was often unregistered capital from ethnic Chinese in

1 In 1997 Ha Bac was divided into two new provinces Bac Ninh and Bac Giang

2 Interview with the director of the Office for Industry in Ho Chi Minh City 26 November 1996

other countries, in many cases relatives of Viet Hoa (Vietnamese Chinese) in

Ho Chi Minh City Vietnamese studies in 1997 suggest that already 2,000 panies owned by ethnic Chinese had been recipients of such investment, and about 30,000 jobs created thereby The reason for the non-registration is for one thing the tortuous and long-lasting application procedure, secondly in the po-litically conditioned fear of ethnic Chinese entrepreneurs of declaring invest-ments made by Chinese living abroad.3

com-We sought the entrepreneurs by making use of a publicly available list of dustrial companies in Ho Chi Minh City, and visited without any previous announcement whereas in Thu Duc appointments were made in advance Chi-nese entrepreneurs reacted in a considerably more reserved and cautious way than their Vietnamese colleagues The reserve shown by the ethnic Chinese made clear the complicated relationship – weighed down by the past – between the economically, extraordinarily successful Chinese minority and the Viet-namese majority, in which one could detect amongst other things a certain note

in-of envy A Vietnamese entrepreneur stated that the Chinese products were in-of better quality, and complained at the same time that the Chinese only share their company secrets amongst themselves, and keep them hidden from the Vietnamese Apart from two exceptions, all the entrepreneurs that we encoun-tered were available for interviews and to complete the questionnaire After that

a tour of the factories took place that helped us to a better assessment of the respondents and their abilities

In Danang there were two organizations cooperating with us, the DACSME (Advisory Center for Cooperatives, Medium and Small Enterprises of Quang Nam Danang Province), and the training center linked to them They put to-

gether a list corresponding to the criteria that we had stipulated containing 36 companies of which we interviewed 22 after previously making contact Of all the places where we conducted research, the conversational atmosphere in Danang was the most open both on the part of the entrepreneurs and the au-thorities At that juncture when we were present, an administrative re-organization of the province’s administration in Quang Nam Danang was going

on, and there was a major burden to the workload of the local government as a result; however they willingly agreed to an appointment for the conversation with us

The choice of research location in Vietnam had to take into account that vate industry has been concentrated in particular places, and is above all located

pri-in urban areas Comparable rural pri-industries as pri-in Chpri-ina do not exist – apart from the traditional craft villages The two poles of development, Hanoi and Ho Chi Minh City have significantly shaped the Vietnamese developments, whereby the development conditions in the two cities are not identical Foreign observers have suggested that the northern and southern parts of the country might develop in different directions Insofar the choice of these two places

3 Cf Vietnam Economic Times, February 1998: 18/19

appears to have been justified In addition to that the number of registered vate companies is extremely small in the poorer provinces so that research there would hardly have been worthwhile Thus according to the ‘Statistical Year-book 1995’ in the 12 northern provinces of Bac Bo (with the exception of Ha Bac which was studied), in 1994 there were merely 96 industrial companies i.e

pri-an average of 8 per province! So we chose Hpri-anoi pri-and Ho Chi Minh City as two highly developed regions, and Danang as a region of middling development

1.1.3 Practical research problems

We have already mentioned the general set of problems associated with tics and official data on which however, native and foreign researchers are dependent, and that should be understood primarily as statements about trends Whereas in China there were only a few objections made to our questionnaire,

statis-in Vietnam a whole range of questions had to be reformulated or deleted The latter applied particularly to those areas that could be classified as politically sensitive because they referred to the party or political assessments For par-ticular questions as a result, comparisons in some cases cannot be made Unlike

in China, we were not allowed to take the questionnaires home with us to many They had to remain in the partner institutions in Vietnam, and we were only allowed to make copies

Ger-There were less weighty problems resulting from particular groups of tions whose sensitivity was already known from previous research investiga-tions, and resultantly were no surprise:

ques-• Private entrepreneurs understandably spoke unwillingly about their income, profits and taxes They were also not very forthcoming about the origins of the starting capital for their companies; this could be explained by some of the starting capital having been obtained illegally from community assets likewise governmental/collective assets To some extent, false answers were given about the number of employees since these figures might be seized on by the fiscal authorities in order to set the amount of tax due; (the tax authorities justified this method with the alleged inexactitude of the book-keeping by private companies from which they could not derive the real turnover of the company)

• The real state of relations with the local cadres was only spoken about freely and openly to a limited extent The state of such relationships could

be estimated, however, through our own personal observations

• Political attitudes were not expressed freely and openly especially during those interviews where an employee of the local authorities was present

But in total, the restrictions were far fewer than had been feared before the start

of the research

1.1.4 Cooperation partners and institutional surveys

The main partnership organization in China was the Institute for Management which is an offshoot of the State Commission for the Reform of Economic Structure, in Vietnam the National Political Academy Ho Chi Minh (Institute of Sociology) and the Institute of Sociology in Hanoi In the provinces, counties

and cities of China the local departments of the above mentioned State mission were responsible, in Vietnam varying additional partners

Com-In addition we visited the Central Council of Cooperative Union and Small and Medium Enterprises of Vietnam (VICOOPSME), a non-state organization

for the private Sector; the Business Club, in which around 500 state and

non-state sector companies were organized, and the Center of Economic Training, Advice and Information (Cetai) which was linked to it, as well as the Hanoi Union Association of Industry and Commerce; in Ho Chi Minh City the Union Association of Industry and Commerce UAIC, which with 1,700 members was

the largest and most influential association representing private industry in

South Vietnam; the Management Training Center MTC; in Danang VICOOPSME Quang Nam Danang likewise the DACSME (see above.) and the

training centers connected with them

We made contact too with German institutions in Vietnam that in their work over many years have collected important practical experience and built up good contacts with the Vietnamese Amongst those can be included both the Friedrich-Ebert- and Konrad-Adenauer-Foundation, the Deutsche Entwick-lungsdienst (DED) (German Development Service), the office for small and middle-sized companies of the Handwerkskammer (Chamber of Handicrafts) of Koblenz city and last but not least the resident experts of the Gesellschaft für Technische Zusammenarbeit (Association of Technical Cooperation, GTZ) all

of whom willingly exchanged experiences with us and provided valuable aid and assistance

1.2 The framework conditions in the research areas

Generally speaking the economic level of development in a region forms the basis for the development of private companies The level of income influences the sales possibilities, level and extent of industrial development, determines the technical opportunities, the qualifications of the workforce as well as the circle of customers The infrastructure (such as transport connections, water and energy supply) provides the basic preconditions for production and trans-port For a better understanding of the regional development, a short, compara-tive profile of each of the regions researched into will now be provided, one tailored to our theme, whereby we refer to data which was available at the time

of our research

1.2.1 Framework conditions in the research areas of China

At the time of our research (1996/97), the areas where we carried out study had the following populations:4

A comparison between important development indicators in the researched provinces shows that Zheijiang lay clearly above the national average values for all factors, Henan a little and Gansu clearly under An exception (in the contrast Henan/Gansu) were the average wages in the public sector because the state and large collective industries were concentrated in a few central places in which higher wages were paid In Henan on the other hand the companies were considerably more widely scattered with for the most part lower wages outside

of the urban centers

Table 12: Development indicators of the provinces researched into in comparison (China, 1995, in Yuan)

China Zhejiang Henan Gansu

GDP per capita (1996) 5,634 9,455 4,032 2,901

GO Agri per capita 1,679 2,065 1,433 1,187

GO Ind per capita 7,587 18,726 5,181 3,383 Urban income p capita 3,893 5,718 3,029 2,894 Rural income p capita 1,578 2,966 1,232 880 Average wage public

sector per capita 5,500 6,619 4,344 5,493

Source: Zhongguo tongji nianjian 1996 and 1997

(NB: GO= gross output; GDP=gross domestic product; Agri=agriculture; Ind.=Industry)

In a contrast of the area researched into (cf also Table 13-15), in tal terms the superiority of Hangzhou as opposed to Luohe and Baiyin was confirmed Within Zheijiang province, Hangzhou with a quarter of the non-agricultural population, 13.7% of the population of the province and 22% of the gross output had a leading position Hangzhou represented without a doubt the most highly developed region of urban areas in China One could state the same about Fuyang whereby in both cities the non-agrarian sector was already of more importance than the agrarian which is shown too by a comparison with the province an under-average per capita of population share of the agricultural production value But in 1994 in the area Greater Hangzhou, already 31.6% of the working population (in the urban districts 83.9%) were working in the sec-ondary or tertiary sector, in Fuyang only 15.2% On the other hand in 1998 already 62.5% of the non-agrarian workforce were in the private sector, whereby these created over 50% of the industrial gross output and more than a quarter of the financial income of Fuyang

4 The dates refer to the end of 1995

Luohe is situated on the north-south, traffic axis that connects Henan by means

of a railway line and a highway with the north and south of China The cities on the north-south and east-west traffic axes of the province have experienced rapid development in recent years due to their better infrastructure At the same time the population of Luohe had an agrarian population of 83%, in Yancheng County over 90% All the same in 1994 about 40% of the workforce were al-ready employed outside the primary sector But the total indicators for Luohe were only slightly above the average in the province whereas Yancheng only seldom reached the average value So Luohe can be classified as a place of middling development in Henan, and lower-middle development in contrast to the national standard

Table 13: Development indicators in the researched cities and counties: Zhejiang (1994, in Yuan)

Zhejiang Hangzhou Fuyang

Gross output Agri per capita 1,629 841 1,200 Gross output Ind per capita 13,326 18,270 16,313

Average wage public

Sources: Zhejiang tongji nianjian 1995 and Hangzhou tongji nianjian 1995

(NB: Agri = Agricultural; Ind.= Industry; Income)

For a large number of the indicators, Baiyin was above the average in Gansu but under the average for the whole of China as well as for that of Luohe The pay in the public sector was an exception to that; it was relatively high due to the large subsidies for the heavy industrial sector was distant regions Jingtai did not reach the average in the province very often so that Baiyin/Jingtai may

be classified as under-developed regions even if the city has a special role cause of the concentration of the state sector there The urban sector is to be found in markedly agrarian surroundings (in 1995 about 80% agricultural popu-lation, 58.5% of the workforce were working in the agrarian sector) Apart from the two centers of the province, Lanzhou (capital of the province) and Tianshui, Baiyin plays an important role amongst the 14 cities and administrative districts (of which five were urban) Calculated in absolute numbers it had the third largest gross output (industrial place two, agricultural place ten), and the sixth highest per capita GDP Concerning the per capita income of the peasantry, the city only reached place ten Re-calculated on a per capita basis the leading positions change somewhat

be-Table 14: Development indicators in the researched cities and counties:

Henan (1995, in Yuan)

Henan Luohe Yancheng

Gross output Agri per capita 1,433 1,927 2,329

Gross output Ind per capita 5,181 6,617 2,051

Urban income p cap (1994) 2,398 2,438 no data

Average wage public

Sources: Henan tongji nianjian 1996 and Luohe tongji nianjian 1995

Table 15: Development indicators in the researched cities and counties:

Gansu (1995, in Yuan)

Gross output Agri per capita 1,187 1,147 1,858

Gross output Ind per capita 3,383 5,331 1,147

Urban income per capita (1994) 2,894 3,020 no data

Average wage public

Sources: Gansu nianjian 1996 and Baiyin tongji nianjian 1995

1.2.2 Framework conditions in the research areas of Vietnam

The statistical volumes that were made available to us in Vietnam had fewer

indicators than the Chinese equivalents Figures for per capita income divided

into urban or rural areas, or GDP per capita were not available Only the

fol-lowing statistics were available for the purpose of comparisons:

Table 16: Output per capita in the regions surveyed (Vietnam, 1996, in m

Sources: Nien Giam Thong Ke 1998

[NB.: *Ha Bac in 1997 was divided into the new provinces Bac Giang and Bac Ninh ]

Table 17: Per capita income according to regions* (Vietnam, 1996, in m

Dong)

Northern South-East (Ho Chi Minh City) 3,781

Source: Nien Giam Thong Ke 1998

[NB:*refers to the large regions; in brackets the corresponding research location]

The superiority of Ho Chi Minh City is shown by the industrial gross output per

capita and the per capita income Its economic power (one exception is

agricul-ture) leaves all other areas and provinces far behind it even the second

metropo-lis Hanoi So Ho Chi Minh City represents the most advanced level, Hanoi

where our research in urban areas was carried out likewise shows an exalted

level, Danang a middling one Measured by the national average, all three areas

had a relatively low amount of agricultural population: Ho Chi Minh City

27.5%; Danang 30.5%; Hanoi 46.2% (Vietnam in total: 79.2%) The levels of

agricultural gross output were correspondingly low Ha Bac in contrast is

strongly stamped by agriculture In 1997 the agricultural population made up

94.7% of the population Tien Son county was the largest one in the province

and counted in economic terms amongst the most developed of the province of

Ha Bac Only 47.5% of the gross output stemmed from agriculture and already

30% from the industrial sector As a result there was a greater concentration of

private firms there In comparison with the three urban areas examined, Tien

Son represented the lower middle

5 11, 000 Dong in 1996 equalled about one (US) $

1.2.3 Framework conditions for the development of the private sector

1.2.3.1 China

Zheijiang displays a number of unusual features A low level of cultivable land per capita combined with a high rate of population growth traditionally had the effect that the province inevitably lost migrants in the shape of traders and craftspeople This restriction of agricultural activity formed an important precondition for the rapid revitalization of the private sector However, the registration of larger companies which had been permitted once again from

1987 onwards at first proceeded rather slowly Between 1988 and 1992 merely 9,000 enterprises were registered as “private companies” Uncertainties in the political treatment at the central and provincial levels played a role here It was only in 1993 that the provincial leadership first formulated a specific policy of aid for this sector which among other things envisaged: (1) Expansion of the population groups (up till then pensioners from state institutions could not be active as entrepreneurs); (2) lifting of restrictions on specific branches; (3) at least nominally equal treatment of private, collective and state institutions in giving credit, the use of real estate, taxation as well as supply with water and energy; (4) non-discriminatory political treatment of private entrepreneurs In

1998 the provincial leadership confirmed that the quantitative und qualitative development of the private sectors cannot have barriers put in its way The entrepreneurial strata, they went on, had to be protected, their social status raised and politically they had to be marked out from all others.6 In principle it was being indicated there that Zheijiang would soon declare private industry to

be the most important business sector

In 1993 in Hangzhou a special business zone for the sector was established where local government set up the required infrastructure (road building, water and electricity supply) Private entrepreneurs could there purchase or lease commercial premises, and they obtained tax benefits (such as a two-year tax exemption, and three further years with tax advantages) City hall declared at the same time the growth rate of the private sector to be an important indicator for the assessment of the achievement of the administrative department respon-sible (such as the Bureau for Administration of Industry and Commerce) and local governments These measures encouraged the development of the private sector, and in 1995 there were already 71,000 private enterprises officially registered In the same year the local governmental administration of Fuyang county introduced similar measures for assisting the growth of the private sec-tors so that the number of private companies which had earlier gone down from

514 (1988) to 400 (1989) and then stagnated up until 1992, nearly tripled tween 1993 and 1995 the number growing from 589 (1993) to 1,519 (1995) After a catastrophic drop in the number of private companies 1989 and 1990 (due to the suppression of the urban protest movement with the corresponding political consequences), in 1992 the provincial leadership in Henan took meas-

6 Zhongguo Gongshang Bao, 17 September 1999