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The cutting edge of capitalism: The Entrepreneur

IN CHINESE slang, it is known as xia hai, literally 'going down to the sea', the colloquial euphemism for leaping into the rising tide of private business.

In early 1990, Chen Xiaozhang and a former classmate broke out of China's state sector and set up South China Marketing Research (SCMR), a private market research company in Canton catering to the needs of foreign joint venture companies keen to sell their products into China's vast market. SCMR employs nearly 100 full-time staff, makes annual profits of about pounds 50,000 and offers a range of services unheard of a decade ago in China - from market-testing new products to studying advertising impact.

While government offices still tend to be dirty places blighted with regulation green paint, the SCMR premises are bright, white and clean. Everything is geared towards efficiency; Mr Chen shuns an office car in favour of his motorbike, which beats the Canton traffic more effectively.

Mr Chen, born in 1958, and an early graduate of the Business College of Canton, is one of China's new-style private entrepreneurs. His original cash investment of 100,000 yuan (pounds 8,400) came from savings and money borrowed from friends and relatives. The two founders own 80 per cent of the company, the staff owns the rest.

He talks cautiously about the benefits of going private: 'After we make profits, we can own or dispose of the assets. And I can pay the employees as I like; in the state-owned company I could not pay good people well or sack bad people.' His own salary has jumped from 500 yuan (pounds 42) a month to 2,000 yuan 'but there is no time to spend the money.' The average monthly staff salary is 1,000 yuan, well above the level in the state sector.

A serious man, the only time he appears irritated is when asked what he enjoys most about being an entrepreneur. 'We just feel very happy when we see the company succeed. We don't have feelings like Western people - like wanting to be called 'boss' or own a house, for instance.'

(Photograph omitted)