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Where Are Beijing's Getihu Going?
Summary:Efforts to rein in Beijing's population growth have put pressure on many getihu. The employees working in low-end industries are the main target of population controls. A large proportion of the drop in the number of getihu comes from the low-end service sector.


By Xie Liangbin (谢良兵)
Issue 609, Mar 4, 2013
News, page 5
Translated by Zhu Na
Original article: [Chinese]
 
When classifying small privately-owned businesses in China, the term getihu (个体户) can refer to everything from tiny street stalls and restuarants to small industrial factories. These small businesses usually don't employ many people, they are owned by private individuals or households and they are not officially considered enterprises.

The number of getihu operating in Beijing fell by close to 10 percent last year, with 140,000 such businesses withdrawing from the capital, according to a report issued by the Beijing Administration for Industry and Commerce (BAIC) on Feb 20.

Kuang Xu (况旭), director of the business registration office at BAIC said this is the first time since 2000 that the number of enterprises operating in Beijing has surpassed the number of getihu.

Mr Kuang said one of the main reasons for this shift is that starting from end of 2011, Beijing has implemented measures aimed at encouraging getihu to register as formal enterprises and many are now registered as very small businesses. Last year in Beijing, 6,400 getihu altered their papers and registered as enterprises.

Beijing began to encourage getihu to register as enterprises in 2011, according to the regulations, they could apply to register their business as either a sole proprietorship, a partnership or a limited liability company.
 
BAIC said that getihu were simply being given this option but that the government wouldn't force them to change the way their business was registered.

Some districts in Beijing offered subsides to encourage getihu to make the change. For example, the Fengtai District government spent 3 million yuan on providing a 1,000 yuan payment to any that registered their business as an enterprise.

The Beijing city government is currently drafting legislation aimed at supporting the development of small and medium-sized enterprises (SME) in the capital.

One of the regulations included in these draft regulations is that government departments should not set restrictive conditions which are not conducive to SMEs when it comes to applying for government contracts. Indeed, the rules go further and say that when it comes to government procurement, Beijing authorities should give priority to purchasing products and services from smaller companies.

This is another incentive for getihu to make the shift to becoming fully-fledged private enterprises.

Changing City and Population Controls

Another important reason for the decline in the number of getihu operating in Beijing is that some of them have been unable to keep up with the rapid pace of change that is sweeping through the city. Official attempts to improve the kind of industries operating in the capital has further added to that pressure.

Mr Kuang revealed that most of the getihu that are no longer in business were people who once ran tiny restaurants and grocery stores.

There is one other factor that has helped lead to the fall in the number of getihu, though it doesn't get much of a mention from officials.

Efforts to rein in Beijing's population growth have put pressure on many getihu.

The employees working in low-end industries are the main target of population controls. A large proportion of the drop in the number of getihu comes from the low-end service sector.

An expert with Anbound Consulting (安邦咨询) said that if employees from outside Beijing are no longer willing to work in industries like catering, construction, housekeeping, entertainment, environmental sanitation and retail, then this could cause problems for Beijing.

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