"Why should the business owner give him or herself a salary and consider the salary as part of his costs?" asked a man in a corner of the classroom.
The teacher approached him: "Well, if a business owner does not have a salary that is included in the cost, the money used for daily life will be mixed up with that used for operating the business."
"How can the owner correctly evaluate the performance of his business?" she said, smiling.
It sounds like a common conversation in a class on finance or economics.
But this is different. It's a class for a group of middle-aged students laid-off workers between 35 and 45 mostly with junior high school-level educational background.
Sitting in a U-shaped arrangement, the students were attending a special course provided by the Tianjin Business Creation Center.
The course is part of the training on Start and Improve Your Business, an international program that provides both professional training and small-loan credit guarantees to help jobless people, especially laid-off workers, establish their own businesses.
There are other similarly named courses: Generate Your Business, Expand Your Business, and Improve Your Business. All the programs were initiated in 2001 in three pilot cities under the joint efforts of the Ministry of Labor and Social Security and the International Labor Organization.
Within four years, the employment promotion project has penetrated 34 Chinese cities, such as Tianjin, Chengdu, Nanchang and Qingdao, and attracted more than 14,000 laid-off and unemployed workers by the end of last year. After the training, nearly 5,000 such workers had started up entrepreneurial ventures of their own.
Li Qiyong is one of the beneficiaries.
A trainee of two of the programme classes, Li is now the boss of a 120-square-metre restaurant famous for delicious baozi or steamed stuffed buns on Limin Road in Tianjin, earning himself a monthly income of about 10,000 yuan (US$1,200).
However, the 49-year-old man, who is planning to expand his business, had been hanging on with a salary of about 400 yuan (US$48) after he was laid off from a local chemical factory in Tianjin in 2000.
He tried different jobs, such as delivering drinking water and nailing big wood boxes, but was knackered out by both manual stress and increasing family disputes.
In 2001, things became worse for his family of four when Li's wife lost her job, too.
"With a small monthly income of 1,000 yuan (US$120) then, we had to dig into our savings to cover the tuition of my child and feed the elders," said Li, whose child was then 16.
The couple thought of doing small businesses themselves towards the end of that year. Without any skills or experiences, they opened their first shop selling steamed buns after borrowing a sum of money from friends and relatives. The business turned out to be a failure eventually, bringing little cash for all the hard work they put into it. A year later, the shop was forced to shut down due to a government resettlement project.
"Even without the project, my shop would not have lasted long because I chose a bad place to open it," reflected Li.
Li's first shop was so small and had such an unstable flow of customers that it could not develop properly, he said.
The 10-day Start Your Own Business training in 2003 helped him get a new perspective. When he started his second shop on Shaoxing Road, things improved dramatically.
"It was my first encounter with enterprise management theories. During the training I learnt a lot of practical knowledge covering financial control, sales and marketing. The training was so illuminating that I was suddenly filled with confidence," Li said.
He was especially impressed by the "Four P" theory, namely Place, Price, Promotion and Product.
"Referring to the theory, I selected the current place for my third restaurant, which is situated beside a wide, two-way road and has a number of office buildings, residential areas and supermarkets nearby," he said.
"And I began keeping neat accounts of daily expenses and hiring more staffers, to achieve sustainable growth."
In addition to theoretical training, Li received a timely two-year small loan of 20,000 yuan (US$2,400) from the project.
Within half a year after the training, Li's restaurant witnessed an upturn in its daily sales from 1,000 yuan (US$120) to 3,000 yuan (US$360).
"Almost all my classmates at the program have successfully established their businesses after the training," said Li, who, with his classmates, has established an association of entrepreneurs to help other laid-off people who dream of starting up their own businesses.
And still savouring the benefits of the program, he again registered for the Improve Your Business class in 2005.
Special benefits of training
Tianjin has trained more than 10,000 laid-off and unemployed people since 2003 when it introduced business education program, with an average success rate of 50 percent, said Fu Muwen, director with the Tianjin Business Creation Guidance Centre.
According to labor standards, a "successful business" means a start-up occurs within half a year of the student completing training and the business operating for more than eight months.
Most of the "graduates" are engaged in businesses related to necessities, such as the beauty industry and housekeeping services.
The city currently boasts 52 program teachers and seven qualified trainers.
Li Ying, one of the only seven qualified trainers in Tianjin, said: "The International Labor Organization requires us to motivate trainees' zeal to participate. Teachers are asked to stand and tables are arranged in a U-shape to ensure a good communication with every student."
The textbooks are also tailored to Chinese students.
Li Ying contributes the training program's success mostly to a strict quality controls.
"We collect feedback after each class. And we confer graduation certificates only to those whose business creation plans are considered feasible," she said.
About nine out of 10 trainees get through the course and receive certificates.
Fu said the centre provides follow-up services in the first 18 months after their graduation.
Its unique small-loan credit guarantee fund is another key for the program's success.
The centre conducted a survey in 2003 of some 100 laid-off workers, whose results indicated more than 90 percent of interviewees blame their failure for establishing businesses to a lack of start-up money.
"An easy access to a small loan of 20,000 yuan (US$2,400) really helps. Different places can develop different guarantee systems according to practices. In Tianjin, about 80 percent of the applicants take loans through a third-party guarantee system," said Fu.
Last year, 30 percent of the applicants in Tianjin received the loans.
Having taught 40 sessions, Li Ying said the essence of the training is beyond instilling ideas and confidence to the unemployed.
"It has a magnifying effect on promoting employment because once a business is started up, more job vacancies are created simultaneously," she said.
In Li Qiyong's restaurant, four of the 13 workers he has hired were once laid-off workers.
Earlier this year, the ministry said it would expand the program to another 300,000 people throughout the country, mostly for college students and migrant workers.
"Reasoning from the equation that a small business can bring four job vacancies, about a million jobless people may find places through the program," said Zhang Xiaojian, vice-minister of labour and social security, in March.
Look to the future
Fu said the city plans to train another 5,000 people this year, helping to meet market needs.
"Our centre has to deal with 30 to 50 applicants each day for the training," he said, adding that the city currently has roughly 200,000 laid-off workers and unemployed people.
Global Entrepreneurship Monitor, a project launched by the United States and the United Kingdom to evaluate the global business creation situation, published a report about China last year. It stated that the country boasted an entrepreneurship index of 11.6 percent, ranking No 11 globally.
That means 11.6 out of every 100 Chinese aged between 18 and 64 participated in some form of entrepreneurship.
The training programs still need to develop and mature, with the teaching force far from enough to meet the need, the director pointed out.
"What's worse is that most of our teachers do not have any experience in business establishment."
Li Ying echoed that she is often baffled by the practical questions her students put forward, such as how to legally avoid taxes. "That's embarrassing," she said.
Now the centre plans to establish an interactive system between its successful trainees and teachers. "We will send our inexperienced teachers to work in the small businesses established by our trainees for a period of time to gain some experience," said Fu.
(China Daily June 22, 2005)