His team encountered resistance from local tax authorities, and ended up receiving a big-ticket fine.
“Small and medium-sized business starters are like orphaned children, completely on their own,” Huang said. “They have to struggle for survival in the early stages, and it’s only when they achieve certain results that they gain recognition at the national policy level.
“Following the conventional path can often result in being crushed by large corporations due to resource monopolies and franchising,” he said, echoing a sentiment shared by many entrepreneurs in China. “If you have a stable job, it’s best not to start a business now.”
Leo Zhou, another internet tutoring entrepreneur who courted investment at the 2017 conference, has transitioned to the Internet of Things, a “safer” arena that still has the blessing of the authorities.
Through that transition, he has noticed a palpable deflation in zeal for starting new businesses.
“In the past, maybe eight or nine out of 10 entrepreneurs carried great enthusiasm,” Zhou said. “Now, maybe only three out of 10.
“In this challenging environment, the number of projects is on the decline, leading to a drop in project profits as well. It’s essentially a state of neijuan (‘involution’, a feeling of hopelessness driven by unfulfilled expectations), and the competition you face is quite intense.”
China’s third-quarter investments in the internet sector plunged by 36.4 per cent year on year to US$1.36 billion after a steep drop of 70 per cent year on year in the second quarter, according to the China Academy of Information and Communications Technology, a state-backed think tank in Beijing.
The number of investment deals dropped 54 per cent to 210, following a 60.9 per cent fall from the second quarter.