China is going through a major metamorphosis as it emerges from a centrally controlled economy to an almost free-market enterprise. Driving this transformation is a new breed of entrepreneurs. Entrepreneurs like Liu Yonghao, chairman, New Hope Group, who has built up a business empire that has earned him the title of one of China's richest men.

But he is not alone, he told the audience during his keynote luncheon presentation at the China Business Conference 2002.

"In the transformation of the Chinese economy, everyone wants to set up their own business. They all want to go out and find their luck," he said.

The entrepreneurial spirit that is overflowing across China is proving to be a double edged sword. On the one hand it is encouraging workers to set up their own business, which is contributing to the Chinese economy and helping unemployment. But at the same time, many middle managers, who are highly qualified and have many years' of experience can't focus 100 per cent on their job because they are thinking about how they can hatch their ideas.

"This is not very conducive to the productivity of the company, because I know that if I were a middle manager, I wouldn't be able to focus on my job," he said.

Nonetheless, the same entrepreneurial spirit that helped build Hong Kong will no doubt benefit China, as small, family-run businesses mature into corporations.

Mr Liu estimates there are about 400,000 private Chinese enterprises in the Mainland. Usually funded by their families, these upstarts survive more on their flexibility, hard work and sheer determination, than on management expertise.

Private enterprises also don't qualify for bank loans in China or export licenses, which are solely for state-owned enterprises. As such, many entrepreneurs have grumbled that foreign investors in the country get a better deal than Chinese nationals.

But WTO accession is bringing some revolutionary changes and challenges for China's private sector.

"The greatest advantage is things that were constrained are now open, and a more level playing field is opening up," Mr Liu said.

If private enterprises want to compete at international level, Mr Liu said they will have to employ the experience and international expertise that they lack.

"Companies are still studying as if they are in kindergarten," he said. This is partly why some private businesses have been accused of improper business practices. "But we have to remember they are still learning the very basics," he added

Despite the short history of private enterprises in China, and the inadequacies that accompany inexperience, entrepreneurs are catching up fast by furthering their studies -- often overseas -- and working very long hours.

As China grapples with its growing unemployment, private enterprises are making a significant contribution to providing jobs. He estimates private firms have provided jobs for over 100 million people. This is more jobs than foreign enterprises provide, and it is also creating a stable government, because high employment creates instability in any nation.

Now that private enterprises have more access to capital and regulations start to be standardized, Mr Liu said he believes most businesses are not interested in making quick profits, but have long-term strategies. This includes arriving at a mutually beneficial arrangement for both state-owned and private enterprises.