Tainyi is a large wholesale market in Beijing.

UPON graduating from college last July, Huang Xiaoming leased a booth at Tianyi, one of Beijing's largest wholesale markets, thereby taking the plunge into private business. The enterprising 22-year-old's decision was based on experience in the trade learned from his father and his observations as a student. He recalls: "I was always looking around for novelties and gifts in Tianyi. Having seen what a large turnover stallholders there make, I see no reason why I shouldn't make money, as long as I keep a cool head."

Xiaoming's choice was backed by his father, Huang Zhilong, who was among the first group of individuals to start up their own private businesses in China in 1978. Huang Senior started by trading in commodities from Guangzhou, where prices are lower and the goods more fashionable and diverse than in Beijing. At that time the flow of products between cities was far less smooth than now, and there were frequent gaps between supply and demand. As any new influx goods was immediately snapped up, individually owned businesses such as Huang's did a roaring trade. "I've no idea how many 48-hour, hard-seat train journeys a month I made between Beijing and Guangzhou, but I was prepared to work hard and go without sleep because there was lots of money to be made," Huang Senior explains.

He now owns several stalls and has accumulated savings sufficient to sustain him for the rest of his life. But Huang has far higher aspirations for his son. "I left school early and don't know much about modern accounting or management methods. I mainly occupy myself with keeping my stalls in order. But I want Xiaoming to be a successful large-scale entrepreneur. Being self-employed is a means to earning a crust for me, but for him it's just the first stage of a far bigger plan."

Businesses that are individually owned are distinguishable from private businesses in having a workforce that is limited to eight. Their number has grown from 150,000 in 1978 to 24.64 million employing 49 million workers in 2005, according to statistics. But these figures fail to convey the high failure rate. During the decade from 1994 to 2004, 7.7 million individually owned businesses folded.

There are many reasons why such businesses collapse, but one of the most common, as cited by Zhou Tiangong, professor of economics at the Beijing University of Science and Technology, is that of institutional barriers. For instance, shoeblacks in other nations are not required to hold licenses, whereas in China they must either register with the relevant industrial and commercial administration or be deemed illegal. The government has promulgated a number of supportive policies for private economy, but not all of them are well implemented. Life for individual business owners is made difficult by the state-owned enterprises that monopolize resources and squeeze out private business. Monopoly sectors such as transportation and telecommunications that profit from breaching the rules of commercial fair play are currently a target of public criticism. But despite these challenges, the number of individually owned businesses in China continues to grow.

Huang Zhilong is one of the lucky individual traders to have survived fierce competition and expanded his business. But his success is hard-won. There are few days in the year when he can truly kick back, relax and forget about work. "Companies trading in similar goods compete by undercutting each other's prices. As a small business owner I have less financial 'padding' than private companies, and survive by hard graft and saving as much on overheads as possible," Huang explains.

Individually owned businesses first emerged in China during the nation's abrupt transition from a planned to a market economy. The first self-employed businessmen to set up shop after opening-up and reform were generally social mavericks who were unable to find conventional jobs within the planned economy, according to Prof. Mao Shoulong of the People's University of China.

This is certainly true of Huang Zhilong. He searched in vain for work in state-owned factories and other institutions until he saw no other option than to open his own small business. He has since never looked back.

Private business is the most direct means of turning individual savings into capital. It's possible to start with as little as a few hundred yuan, and with wise management to swiftly generate a profit that dwarfs the initial investment. A huge range of businesses can operate on the same ground and all, regardless of size and amount capital, stand to gain. This is where the charm of the market lies, as it provides a testing ground for both gumption and trading savvy.

In the 1980s, self-employed businessmen earned far more than their more conventionally employed peers and also enjoyed greater freedom. They nonetheless suffered social discrimination. At that time, jobs most sought after by the laobaixing, or rank and file, were within public employment because it offered a stable, if modest, income and social security from cradle to grave. "I envied the people that worked at state-owned factories and government departments because they had the full range of social welfare. That sense of security seemed priceless to me," Huang Zhilong confesses.

But the planned economy declined and, in the 1990s, many public office employees left to seek their fortune in the private sector. This turnabout in public attitude took Huang completely by surprise, to the extent that he still finds it hard to believe. As he says, "The tide has turned. I never dreamt that I would be an example that others would want to follow."

It was from these earliest private business owners that China's first crop of entrepreneurs arose. But the majority fails to progress from the level of just ticking over. Some self-owned businessmen get kicked out of play because they lack modern management know-how and are unaware of the latest economic modes, such as e-commerce. Others reach, and are content to stay on, a plateau because they are unwilling to risk the capital they have accumulated.

Huang Zhilong is fully aware of the difficulties that confront him. "We are currently in a buyer's market that threatens the survival of small players," he grimly confirms. In order to withstand competition from tightly knit, efficiently administered chain stores Huang constantly buys in new stock from sources unknown to his rivals.

Several of Huang Senior's friends have set up outlets in China's other metropolises but he acknowledges that their business management skills are superior to his. But he has high hopes for his son, who majored in corporate management at college and has a background in hands-on trading by virtue of Huang Senior. While Huang Xiaoming was still studying, the two worked together during school vacations, Huang Junior alternating between running the stall and laying in stock. "I won't be so easily contented as my father," declares Huang Xiaoming, "I'm prepared to work hard and suffer disappointments, but expect rich rewards for my efforts."