A Quarter of Chinese Startups Are Founded by Overseas Returnees; Is That a Problem?

China’s startup scene is booming, and its heart — the Zhongguancun area of Beijing — has more startups than ever before. But I came across an interesting headline today from a study conducted by the Zhongguancun management committee: a full 25 percent of the area’s startup founders are Chinese people who’ve studied or worked overseas. That’s an interesting statistic, especially when you consider that Beijing’s startup also includes more than a few foreigners. Given the small percentage of Chinese who study or work overseas and the even-smaller percentage of foreigners in the country, it’s interesting to see those groups playing such a big role in the startup scene.

So is something wrong? Why aren’t domestically-educated Chinese people founding more startups? The Chinese people who can afford to study or work overseas tend to be better off than the average Chinese citizen, and that economic foundation also means that it’s often a bit easier for them to take the risk of doing a startup. That’s probably one of the biggest reasons Chinese returnees found so many startups. But I believe the domestic education system and cultural pressures also play a role in keeping domestically-educated students from founding as many startups as you might expect.

There are many good things about China’s education system, but it is rarely accused of fostering creative thinking. The focus on rote memorization and test-taking doesn’t lend itself well to producing artists — something that China’s creatives have been grumbling about for a long time — but it doesn’t lend itself well to producing entrepreneurs, either. An entrepreneur needs to be independent and creative, and while there are many independent and creative Chinese people, it’s generally not something they got from their formal schooling.

But many of the returning Chinese now founding startups went to school overseas, and while they may not have as solid a foundation of technical knowledge as the top Chinese students, it seems that a higher percentage of them have the creativity and independence it takes to found a startup. As an added bonus, their time overseas has likely removed them a bit from the risk-averse culture that’s pervasive among Chinese parents. Chinese students who’ve been educated at home have also been hearing from their relatives that they should find a stable job and start earning money as soon as they graduate so that they can buy a house and car and then find a wife. Chinese who study or work overseas likely hear some of the same things, of course, but they go home for holidays less often, and many of them study and work in places where risk taking is encouraged — or even practically worshipped — so the constant refrains from family to avoid risk are probably offset somewhat.

People have already been wondering for some time whether China needs to make some changes to its education system if it wants to churn out entrepreneurs the way it churns out engineers. Heck, even Kaifu Lee brought up the education system in a speech a few years ago explaining why China doesn’t have its own Steve Jobs. The Zhongguancun numbers are the latest evidence that while China’s startup scene may be booming, it may owe some of that success to overseas education systems and business culture. If China really wants its startup scene to take off, it may need to start by reexamining the education system.