How Urban Migration Helped Drive Entrepreneurship in China

As of 2020, the number of rural migrant workers reached 286 million — more than a third of the entire working population in China.

While the majority of migrants provide low-cost labour at factories in industrialised centres like Shenzhen and Dongguan, we have also witnessed a rapid increase in entrepreneurial activities among migrants.

“Our study found that rural migrants who studied in big urban universities are more willing to take risks than their urban counterparts.”

Prof. Willow Wu You

In fact, some of the most famous Chinese entrepreneurs, such as Liu Qiandong, founder of JD.com, and Pony Ma, founder of multinational conglomerate Tencent, hail from rural areas.

The emergence of these “business celebrities” has sparked our interest in how the country’s great urban migration has propelled entrepreneurism to such a high level we witness today.

We decided to look into the factors at play by using the same survey on university alumni from Tsinghua University, Beijing, as in the study reported above. Our second study entitled Regional Migration, Entrepreneurship and University Alumni revealed that Of the 283 business founders in this group, two interesting factors that link urban migration to the rise of entrepreneurism in recent years.

First, we found that urban universities play an important role. Not only do they make higher education accessible to rural migrants, they also provide social support. The university environment nurtures a safe space for migrant students to build new connections in their new homes and reinvent themselves.

We also found that, compared with their urban-born counterparts, rural migrants who attended university in big cities are more likely to set up businesses that were larger. In particular, those who took advantage of science parks and incentive programs tended to create some of the more prominent tech startups in China.

Second, we found that rural migrants who studied in big urban universities are more willing to take risks than their urban counterparts.

Among the non-entrepreneurs of the alumni we surveyed, only 36.1 percent of rural migrants considered entrepreneurship too risky, whereas 45.8 percent of urban dwellers thought it too risky. Among the entrepreneurs, the percentage is 7.4 percent for rural migrants and 19 percent for urban dwellers.

The stronger risk-taking attitude among rural migrants can be explained by the sense of “anonymity” and the resulting freedom they experienced after moving to the big cities. As they find themselves unknown in their new urban community, they are more prone to think outside the box. When they become entrepreneurs, our study finds that they are more willing to take risks as they worry less about the stigma of “losing face” in case of failure than if they were to start a business in their hometown.