After years of growing governmental support, entrepreneurial spirit in China has now reached a fever pitch. Opportunities are everywhere but diligent research, the right strategy  – plus passion and luck – are the factors determining boom from bust.

If you need proof that China is now one of the most capitalistic countries on the planet, consider the dramatic shift away from giant state-owned enterprises (SOEs) toward small and medium enterprises (SMEs) over the past 30 years. In 1978, SOEs contributed 78 percent of China's total industrial output, a figure that dropped to 26 percent just ten years ago. Today, according to a 2006 report commissioned by the National Development and Reform Commission (NDRC) and the Ministry of Commerce, SMEs in China now make up 99.6 percent of total enterprises in China, and fuel nearly 60 percent of the country's GDP.

Although private businesses began their emergence in the mid 1980s (such as the government's experimental approval of private business ownership in Wenzhou, which later spread to other cities), they were not officially granted legal status until the 1988 Amendments to the PRC Constitution. Today, private business ownership is actively encouraged by the Chinese government. While international entrepreneurs generally do not enjoy these new government perks, growing numbers are still entering the China market. They say the main challenge in launching a start-up in China now is simply to be on the right side of the risk-versus-reward equation.

For Shanghai native Dilong Zhao, entrepreneurial opportunity came on the coattails of the large foreign investment inflows entering China. After noting the void of direct assistance for the many foreigners moving to Shanghai, Zhao last March started Black Card Life. The company provides foreigners in Shanghai with one-on-one "instant secretaries" who are trained to handle anything from registering a company to securing a dog license. Clients can purchase annual memberships and are then assigned a designated personal assistant so that each request is handled by the same person and a partnership can develop.

Just one year after opening, Black Card Life now serves 20 major clients including corporations such as Sony BMG and LVMH in addition to fellow entrepreneurs establishing themselves in China. "We are the only company providing this service in Shanghai now," Zhao says.

Zhao is only one of millions of entrepreneurs in China with a success story to share. He spotted an opportunity and capitalized, which according Lloyd Shefsky, clinical professor of entrepreneurship at Northwestern University's Kellogg School of Management, is a key trait. (Shefsky met with Insight during a January trip to Shanghai.) All entrepreneurs, especially those who are very successful, "have a knack for spotting opportunity, not just once, but many times over."

While such a definition is true for entrepreneurs worldwide, the difference in China right now is that there are so many opportunities to spot: the GDP is growing at double-digit rates; 1.3 billion consumers have money to spend; and most major industry sectors are open to foreign investment. Such a business climate is giving entrepreneurs myriad reasons to invest. They have the spirit and belief that they're on the ground floor of something that will rise up, says Shefsky. "They almost feel as though they could roll the dice in China and whatever they hit, it's going to work, because everything is growing so fast."

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