What makes Chinese rural migrants self-employed: a qualitative perspective
The Journal of Chinese Sociology volume 9, Article number: 15 (2022)
This study scrutinizes the causes, configuration, and consequences of rural migrants’ motivations for becoming self-employed. It aims to solve two main problems in the current literature. The first is that previous studies primarily explain migrants’ self-employment through economic variables when other factors (e.g., autonomy, meaningfulness, and work environment) might be more important. Second, no study has been conducted to qualitatively understand migrants’ self-employment outcomes. By drawing on in-depth qualitative interviews with rural-to-urban migrant workers conducted in four regions of China, this article provides insights into the pecuniary and nonpecuniary motivations of rural migrants’ employment decisions. Notably, it finds that most rural migrant workers in wage employment sectors are not in a position to exercise free choice regarding their working arrangements. In contrast, the prospect of achieving a higher level of income, greater autonomy, and more flexibility and freedom is important and attractive aspects of self-employment, with apparent gender differences. Nevertheless, migrants’ self-employment often involves self-sacrifice and economic and social marginalization. Therefore, it is unlikely that migrants select self-employment as an effective means for status acquisition.
Rural-to-urban migration has characterized China’s rapid economic development and urbanization over the past decades. Hundreds of millions of rural-to-urban migrants come to cities searching for job opportunities, many of whom become self-employed. Tracing the course of migrants’ self-employment is an uncertain exercise made difficult by inadequate demographic and labor market assessment-counting schemes. Although there are no official statistics on all self-employed migrant workers throughout China, scholars have used different datasets to create some rough estimates. Approximately 25% to 35% of the rural migrant workforce in China is self-employed, whereas the figure for urban locals is only approximately 10–15%.Footnote 1 Some common features that characterize self-employed migrants have been identified. Compared to their counterparts in paid employment, migrants running their own businesses are typically male, older, married, less educated, and less likely to have received nonagricultural training (Gagnon et al. 2009; Giulietti et al. 2012; Huang 2014; Ning 2012; Wan 2008).
The self-employed businesses that migrants operate are quite distinctive. The industries self-employed migrant workers choose to engage in are low-cost retail, hospitality (e.g., hostels and food stalls), or other service industries that typically require little upfront capital investment (Giulietti et al. 2012; Wang et al. 2016; Zhu and Yang 2017). This feature suggests that migrants’ businesses focus on the lower tiers of the distribution hierarchy. Consequently, migrants’ self-owned businesses usually do not grow substantially. Dong and Gao (2018) found that most self-employed migrant workers were own-account workers without employees.
The study of why many migrants are self-employed is important because of their substantial number. Moreover, the Chinese government has endorsed self-employment to broaden rural migrants’ labor market alternatives. Self-employment can be framed as risky but also liberating. If self-employment improves the living standards of migrant workers, pro-self-employment policies seem appropriate, at least in principle. They would allow individuals to improve their quality of life and experience self-realization. However, if many migrants are forced to select self-employment, then a public policy that speaks highly of it may encourage some to start a business for which they are unprepared and underresourced.
The current research has revealed some key push and pull factors in rural migrants’ occupational choice models. Push factors include institutional discrimination and low educational and skill levels of migrant workers. Rural migrants are institutionally vulnerable in China’s urban labor market due to the socialist legacy of the rural‒urban divide. This divide is institutionalized by hukou—a household registration system that registers all Chinese households in the locale where they reside and categorizes them using either an agricultural or nonagricultural (synonymously rural or urban) status. People’s rural or urban hukou categorization determines their access to different social welfare and social security programs. Rural laborers were denied the right to allocate their labor in the most profitable ways.
Meanwhile, the urban population received superior welfare benefits, health and education services, and pensions. As a result, the system splits China into two societies (Cheng and Selden 1994), creating a spatial stratification and a hierarchical division in the Chinese population (Wu and Treiman 2007; Fan 2008; Chan 2018). Despite many reforms and adjustments, Chinese citizens’ access to public goods and services is still based on their hukou status received at their place of household registration (Chan 2019). Because of their rural hukou status, rural migrants receive lower salaries, and joining social insurance schemes is considerably less common for them than their urban counterparts (Qin et al. 2016; Park et al. 2012). In addition to their institutional vulnerability, rural migrants have lower levels of education and fewer skills than their urban counterparts, which further positions them in a disadvantaged status in the urban labor market. Consequently, it is believed that many rural migrants select self-employment as a strategy to avoid unemployment or low-wage jobs.
An important pull factor identified for migrants’ self-employment is the economic incentive. Despite the small scale of their business, the self-employed are widely found to receive a significantly higher income than their wage-earning counterparts (Cao et al. 2015; Zhu and Yang 2017). For example, Ning (2012) discovered that starting one’s own business generated 40% more mean monthly income than wage jobs. Even though the former required 20 more working hours per week, the hourly income of the self-employed was still 19% higher than that of wage workers.
Existing studies on why rural migrants become self-employed have mixed results and are mainly quantitative. Thus, exploring the ground-level situation may lead us to re-evaluate our preconceptions about self-employment and provide insights into the multifaceted determinants that should be considered. This article aims to qualitatively explore rural migrants’ motivation for self-employment. Qualitative studies can facilitate our understanding by providing the noneconomic considerations of individuals engaged in self-employment. Apart from different resources, structural limitations, and opportunities, self-employment outcomes also inevitably involve various compromises that often reflect personal preferences, such as the unwillingness to work for others or a flexible and autonomous work schedule. While these reasons may be critical to one’s decision to work for themselves, such considerations are difficult to identify when using large datasets to study the influence of structural factors.
The article is arranged as follows. Section II provides a general picture of self-employed rural migrants and a review of the literature explaining the high rate of self-employment among rural migrants. Section III presents the methods adopted in this study, followed by section IV analyses rural migrants’ self-employment motivations and evaluates their self-owned businesses. The article ends with a conclusion.
Explaining self-employment among migrant workers
There is no consensus regarding whether the high self-employment rates of migrant workers are a consequence of institutional constraints such as labor market barriers or are determined by comparative advantages. Instead, two main individual-level theories exist. The first is constraint theory, which states that labor market discrimination pushes migrants to start businesses. The second is the choice theory, which emphasizes that the advantages of running a self-owned business attract migrants to become self-employed.
Constraint theory emphasizes that self-employment only serves as a stepover or coping mechanism for migrant workers in reaction to labor market obstacles. These obstacles reduce the opportunity cost of self-employment for rural migrant workers and thus, result in a higher propensity for becoming self-employed among discriminated individuals. Previous research has indicated that due to discrimination and prejudice resulting from the hukou system, rural migrant workers were disproportionately found in low-level service and manual labor occupations or had become self-employed (Feng et al. 2002; Gu and Liu 2002; Li and Siu 1997). Although hukou status per se has gradually lost its decisive power in determining employment qualifications (Chan 2019; Wu and Zheng 2018), the distorted and segregated urban labor market is an outcome of the state’s regulation of resident status and access to various resources. Zhang and Wu (2017) analyzed data from the 2005 Population Mini-census of China and found that after controlling for education and other characteristics, occupational segregation by hukou status and the consequent earning disadvantages of rural migrants still existed.
Migrant workers’ choice of self-employment also depends on their average skill level, which is lower than their counterparts in the wage employment sector. Many researchers have discovered that migrants with lower levels of education are more likely to be self-employed (e.g., Gagnon et al. 2009; Huang 2012; Ning 2012; Wang et al. 2010). This may be related to the fact that the education return on self-employment is much lower than wage/salary jobs. Huang’s (2014) income equation—after correcting for sample selection bias using Heckman correction based on CHIP 2007 data—showed that each additional year of education only brought a 2.8% gain in annual income for self-employed migrants. This income level was much lower than their wage/salary-earning counterparts (5.5%). The outcome indicates that self-employment is not necessarily a better choice for migrants with a relatively higher level of education. Her findings are consistent with Gagnon et al. (2009) and Wang et al. (2010). They evaluated the return to schooling among migrant workers with different employment statuses using different datasets and considered the heterogeneity of the self-employed migrants.
Other researchers have argued that self-employment is a voluntary choice driven by monetary motivations. Unlike Huang (2014), who believed that the higher income in the self-employment sector shows that wage discrimination in the paid work sector pushes migrants to start businesses, Giulietti et al. (2012) argued that migrants select self-employment based on positive motivation. Upon analyzing a sample of migrant heads of household from the 2008 RUMiCI survey, Giulietti et al. (2012) found that the income of self-employed migrants is, on average, 15% higher than what they would have obtained had they chosen paid work. Their finding is supported by a complementary survey, showing that most self-employed migrants are willing to pursue a business opportunity and are satisfied with their current employment. Thus, Giulietti et al. (2012) claimed that economic incentives—instead of institutional constraints and labor market barriers—are the fundamental drivers of migrant workers’ self-employment outcomes.
Additionally, some scholars argue that self-employment is far from a dead end for rural migrants since they are more satisfied, have a larger network, and possess a stronger inclination to settle in cities. A much greater share of self-employed migrants was satisfied with their current situation than those in paid employment (Meng 2001). They also have more extensive social family networks and are more willing to settle in cities (Cao et al. 2015; Zhang and Zhao 2015). Furthermore, Cao et al. (2015) examined the relationship between migrants’ employment status and settlement intentions using an instrumental variables approach based on survey data conducted across 12 cities in China. They found that self-employed migrants integrate more actively into urban economies and societies. The self-employed earn a significantly higher income and are more likely to migrate with their spouse, live with family members, and purchase houses in cities. Cao et al. (2015) argued that self-employment is not a temporary coping mechanism for migrants but rather a strategy to move up the development ladder. Their finding is empirically supported by Li et al.’s (2014) analysis of Migrant Population Dynamic Monitoring Survey data from 2012.
These debates highlight the complex reasons for migrants’ employment choices. Some studies have shown that marital status and family structure significantly influence migrants’ employment outcomes (e.g., Cao et al. 2015; Huang 2014; Wang et al. 2010); however, there are no explanations regarding how and why. Additionally, existing research on self-employed migrant workers mainly adopts quantitative analyses of large datasets, and no qualitative study has been conducted to understand their self-employment choices. More insights into the advantages and disadvantages of self-employment should be added to these debates. Another drawback of the literature is that current studies primarily explain self-employment through economic variables when other factors (e.g., autonomy, meaningfulness, and work environment) might be more critical. The narratives of self-employed migrant workers may help us understand the motivations for starting businesses instead of finding wage jobs in cities.
This article addresses two research questions that probe the nature of rural migrants’ self-employment. First, it asks why migrants decide to become self-employed: this allows a reflection on the motivations and the degree to which binary models of occupational choice might usefully characterize migrants’ path to self-employment. Second, it investigates how migrant workers experience self-employment and the degree to which the risk of self-employment is rewarded with financial returns or the experience of precarity. The subsequent section outlines the methods employed in the study.
The data were from in-depth interviews with rural-to-urban migrant workers between February and July 2019 across four areas of China: the northeastern, eastern, central, and western regions of China. Different areas were chosen because there are large regional differences in economic structures in China, which may influence self-employment patterns. These regional variations counter the assumption that particular features of the processes observed through fieldwork in different areas of China (and different levels of cities) are universal and allow generalizations to be made about the incidence of self-employment. One typical city in each region was selected: Changchun in the northeastern region, Guangzhou in the eastern region, Wuhan in the central region, and Chongqing in the western region. These four cities have a significant proportion of migrant workers.
The interviews focused on why and how self-employed migrant workers started their businesses in cities. Notably, a critical limitation of the data presented in this article is the selection of rural migrants for self-employment. On the one hand, those who did well in the wage/salary sector might not exit to become self-employed. On the other hand, the self-employed migrants included in the analysis may not have advanced as employees for various reasons.
A dynamic snowball sampling process was adopted. It means that the inclusion criteria were revised frequently to better suit the demographic characteristics of those who had previously been interviewed. Thus, the sample size was not determined in advance. Instead, the sampling proceeded until a point of saturation was reached. Consequently, the interviews continued until no new or important information could be gathered. The sample comprised 50 self-employed rural-to-urban migrant workers, with 16 in Guangzhou, 14 in Changchun, 11 in Chongqing, and 9 in Wuhan. Table 1 presents some summary statistics of the respondents and their businesses. Half of the participants interviewed were women. Ages ranged from 22 to 53 years, with 31 participants in their mid-30s to late 40s. The respondents had varying levels of educational attainment, with 18 having a secondary-level education. The majority of the interviewees (42) were married, with only eight single. Most of the married respondents had children. The sizes of their businesses were primarily solo self-employed, with two of them hiring less than five employees either formally or informally. The specific businesses of these men and women included stores selling consumer and industrial products and personal services, eateries and restaurants, hotels, and beauty salons. They were made aware of the consequences of the information divulged and asked to provide informed consent after being assured of confidentiality.
The empirical approach used in this research was the biographical method, which is derived from grounded theory and widely adopted in qualitative studies. The grounded theory focuses on theories that emerge naturally from the data instead of adopting preconceived ideas. Thus, the biographical method gives interviewees more control in telling their stories. The interviews with self-employed migrants were semistructured; they started with basic questions about their business and livelihoods, and the conversation was then allowed to evolve. All interviewees were asked questions from the same set of topics covering motivations and the purpose and process of self-employment, experiences involved in previous work, issues related to their self-employed business, and their plans. However, questions were tailored according to their specific businesses and experiences. Each new informant offered the opportunity to test the validity and relevance of the information already obtained while permitting the addition of new elements. All interviews were recorded on the phone with the interviewees’ knowledge and consent. Each interview lasted approximately one hour. They were transcribed word-for-word. The data were analyzed with NVivo software.
Thematic analysis was used to extract themes at multiple levels. First, themes were produced through sentence-by-sentence analysis of the interview text by sorting items of interest into proto-themes and organizing them in relation to common thematic elements (i.e., interview categories). Then, the themes were collected through multiple examinations, and a storyline was developed by formulating thematic statements. Eventually, the storyline, composed of several themes, revealed the entire condition of self-employed migrant workers. In this manner, themes were differentiated into three levels depending on specificity: their previous labor market experience, self-employed business, and future work plan. For example, ‘difficulties in wage-earning sectors,’ ‘building wealth through self-employment,’ and ‘current business status’ belong to the second level of themes. The third level involved the statements below the second level of themes based on the storyline. The analysis sought to examine the push and pull factors that affected rural migrants’ decision to become self-employed and the outcomes of their endeavors. In the next sections, I will draw upon the life experiences of these individuals by examining their motivations to seek self-employment and the outcomes. All the names used are pseudonyms.
Rural migrants’ experiences with precarious labor markets
A common phenomenon observed in the narratives of most of my interviewees is that migrants adopted self-employment following some precarious employment experiences in the labor market. Such precarious work is insecure and unstable (Hardgrove et al. 2015). Jobs are temporary, and many do not have formal contracts. They are also characterized by irregular or unpredictable hours; in many instances, the jobs can be terminated at any time. The jobs available to rural migrant workers in this research were primarily low-skill/low-wage with long working hours, labor-intensive workloads, and low pay. These are typical features of precarious labor.
The precarious work that migrant workers are involved in requires high stamina. Ms. Wu (age 30) tried many jobs after working in a garment factory in Zhejiang. She worked in barbershops and beauty salons and as a salesperson in a beer company before starting her business in 2018. She changed her job each time because she could not tolerate the precarious working conditions. She described her jobs in barbershops as follows:
I felt so tired every day working in the barbershop. Very tired. We worked ten hours a day and took four days off every month. My job was to wash the customers’ hair. It was a poor job. To save money, the owner bought the cheapest shampoo with various chemicals in it. Now people are smart enough to wear gloves, but we used our hands directly. In winter, my hands became very dry and cracked. It was useless to put some Vaseline on them. When you put your hands in a warm duvet, you feel like a thousand needles are pricking your hand repeatedly. I even woke up at night because of the pain. I was so tired of that job, so I left.
In addition to poor job quality, the migrants I interviewed also faced severe age discrimination in the urban labor market. Wang Qimei, a 48-year-old oil and flour store owner in Changchun, commented on her self-employment in the following words:
Which company would hire someone like us?... Young women can stand at the counter as a salesperson. I am old. How poor am I?
It has been found that older migrants and married female migrants find it extremely difficult to find a wage/salary job (Cao et al. 2015). A survey conducted by Wan (2008) in 2006 showed that, in addition to low education and skills, most migrants aged between 35 and 55 are listed as ‘old’ and find it hard to secure a wage/salary job. Wan (2008) explained that there is always an age requirement when recruiting rural migrant workers, whether in factories or other private companies. Age discrimination can also be seen in the age distribution of migrant workers in the formal and informal sectors. Wan’s (2008) survey data indicate that the median age of migrants working in registered enterprises was 25 years, while their counterparts working in the informal sector, which was overwhelmingly dominated by self-employment, were 36.5 years. Dirty or lower-paid jobs that older migrant workers refused to do when they were young (e.g., housemaid, cleaner, rubbish collector, and gatekeeper) became the few remaining options as they grew older.
In addition to age discrimination, low-wage jobs provided little opportunity for career advancement, which produced a sense of shame in middle age due to their subordination within the urban workplace. For example, Mr. Wang Jun (age 45) operated a drink stall in the city center of Wuhan, and he would no longer work in regular employment because he felt embarrassed being supervised by young people. Research shows that rural migrant workers frequently change jobs but seldom achieve upward mobility in occupational status. Xu’s (2010) analysis of the occupational mobility of first- and second-generation rural migrant workers indicates that most of both generations remained at the same status after changing jobs, while only approximately 20% moved upward and 10% moved downward.
Facing such a constrained labor market, the overwhelming consensus among the self-employed migrants I interviewed was, ‘I cannot work for others for a lifetime.’ This statement relates to restrained job opportunities in the labor market and individuals’ negative work experiences.
From wage employment to self-employment: a career pathway
Rural migrants have been found to follow a career pathway from wage employment to a self-owned business. While the monetary incentive is a principal factor that drives migrants to start their own businesses, rural migrants’ narratives show that there are also other important considerations.
One of the primary reasons for self-employment among the men and women I interviewed was to seek more pecuniary benefits. The majority of the migrant workers in this research expressed their strong desire to generate more income through self-employment. Giulietti et al. (2012) noted that the own-account migrants believed that their income would be lower if they had a wage-earning job. For example, Mr. Zhao Xiaobo (age 33) said, ‘It’s just for making more money. No other reason. I just want to make more money.’
Their desire to boost their economic gains is because employed jobs cannot give them a decent income. Migrant workers face two aspects of a ‘glass ceiling’ for wages in the urban labor market. Qu and Zhao (2017) argued, based on data from national household surveys in 2002 and 2007, that the first aspect is lower wage growth compared to their urban counterparts. Notably, they observed a more significant earnings differential in the top wage distribution between migrants and their urban counterparts. The second aspect is a lower wage ceiling. Institutional barriers do not favor migrants at the upper end of the wage distribution. These findings suggest that significant obstacles prevent migrants from obtaining lucrative positions, consistent with what the interviewed migrants experienced in the labor market. For instance, Meimei (age 41), a women’s clothing shop owner, shared why she began her own business in Chongqing:
I came to Chongqing after graduating from a technical secondary school. I had an internship at a factory my school allocated before graduation, but the salary was too low. It was only 200 or 300 yuan a month. I could not even feed myself with such a low wage… I learned from a friend’s relative who had a business in Chongqing that doing business was profitable. Sometimes they earned several hundred a day. It was quite a good income. I thought the salary would be too low if I worked for others, so I started my own business.
Moreover, migrant workers’ accumulated experiences did not transform into higher income levels. For example, Ms. Wang Haiqing, a 40-year-old furniture shop owner, came to Huizhou (Guangdong province) to work in a factory with her fellow villagers from Hubei province in the late 1990s. She worked in factories for 12 years. At first, she was an assembly line worker and was later appointed as a material manager. Half a year later, she was promoted to line manager. After that, her position did not change for the next ten years. A managerial position is the best that a low-skilled migrant worker can achieve; however, they do not see much growth in earnings. It was also why Mr. Liao Ke (age 40) started a lighting business even though he had become a manager in a factory in Guangdong province. In his words:
I was already a manager in the factory. However, I left. Employed jobs do not earn you more money. That’s it. You cannot work for others all the time. When you reach a certain age, you do not have the right to make a choice.
Mr. Liao Ke stated that his stagnant wage was a key push factor. However, another aspect is ‘no right to choose at a certain age.’ Migrants’ financial burdens increase with age, especially after getting married and having children. Many migrants expressed concerns about paying for their children’s tuition fees or purchasing properties in cities where education resources and job opportunities are concentrated. The family structure has a major impact on migrants’ probability of being self-employed. Notably, marital status significantly influences migrant workers’ employment choices. Wang et al. (2010) analyzed data from the Urban Employment and Social Security in China survey for 2005 and found that being married lowered the probability of becoming a wage earner by 14.8%. Huang (2014) found that for every additional child in a family, the probability of self-employment increased by 20.5%. Additionally, for every additional elder in a family, the probability of self-employment increased by 26.7%.
Some young people acknowledge the financial constraints after getting married and consider self-employment the only alternative for achieving a better life. For example, Mr. Li Peng (age 27) started his vegetable business in Changchun in 2018. Before this business, he worked as an automotive mechanic for five years and worked many other part-time jobs, such as a designated driver and truck driver. After purchasing a property and a car in Changchun with the help of his parents, Li felt especially short of money. He refused his father’s invitation to expand his vegetable business in his home village several years ago because he thought it was dirty and tiresome work. However, his employment experiences and his father’s business made him believe that he could only fulfill his growing financial needs through self-employment. Li states his story as follows:
I quit my job last year. I felt pressured. Although I am not married, I am still stressed. My previous salary barely made ends meet after paying the mortgage every month. I have a car as well. It also costs some money. So I decided to do something by myself instead…
It’s better to have a self-owned business. Working for others does not work because you earn a fixed amount of money. I may earn 100 yuan today but 500 yuan tomorrow. The income is unstable, but it is better than wage jobs.
On many occasions, financial success is not immediate; there is also the chance of failure. However, a self-owned business represents potential success in the future, which becomes a beacon of hope for migrants. Additionally, seeking self-employment means that they are fighting for themselves. The self-employed migrants embraced a narrative of a low income as an individual failing to meet the challenge of seizing market opportunities. Starting their own business is a sign of taking a risk, fulfilling their responsibilities, and striving for betterment. As Mrs. Liu Juan (age 47), a stall owner in Wuhan, puts it:
I worked for a stall owner in the shopping mall for two or three years, and then I thought of starting my business. At least it’s better than working for others. It’s freer, and I feel more comfortable… However, I was in my thirties. How can I work for others all the time at that age? However, big or small, I wanted to have a try.
Self-employment motivates people
Research on self-employment in various economic contexts has suggested that pecuniary reasons alone do not fully capture the utility gained from the types of jobs people have. It is also the case for my interviewees. In addition to monetary incentives, self-employment motivates them to develop and learn new skills, giving them a sense of fulfillment. Moreover, they value the opportunity to engage in self-employment. For Mr. Wang Lei (age 30), self-employment encourages him to improve himself in terms of both his ability and network. He states:
I don’t want to work for others anymore. My previous jobs were to accumulate a network and money. When it is time, I will come out and do some business. This is my plan. If this business fails, I will find a job. Then, when it’s time, I will start another business…
You learn more this way. When your shop gets better, you’ll know more people as well. The more people you know, the better. This is what we say that people always go to higher places.
Mr. Jiang Zhicheng (age 39) expressed a similar thought:
I’ve never thought of working for others after starting my own business. The performance of the business is related to you. You also get to know various people. It’s different.
Zou and Ao (2011) empirically examined the social capital differential between the self-employed and the employed using survey data from Guangzhou. They found that the self-employed more actively invest in and possess social capital than their wage-earning counterparts. Moreover, as the primary actors in their businesses, self-employed people are more utilitarian than those with an employer. At the same time, the self-employed are more inclined to build and develop an instrumental network (Zou and Ao 2011).
Additionally, being their own boss gives them motivation and a sense of achievement and fulfillment. Ms. Wu Yan (age 31) said:
At least I work for myself, and I am motivated. If I work for others, I just stay there for several hours, waiting for my next task. However, it’s different when doing my own business. I am working for myself, and I have to think hard about how to make more money and how to sell things.
Ms. Dang Lihong (age 30), the owner of a home renovation store, said that it was her dream to be an entrepreneur when she was young:
I feel passionate about running my own business. I truly put my heart and soul into it. It’s different from working for others. If you work for others, you’ll develop a sense of dependence. You feel tired of working. However, you won’t feel the same working for yourself.
The self-realization gained through self-employment indicates that it is regarded as reputable within the migrant group since it implies success. Many people take temporary employment positions to gather work experience and prepare for later self-employment. Cao et al. (2015) found that among most migrants, a vital prerequisite for becoming self-employed was accumulating enough wealth and the necessary social networks. Mr. Liao Ke (No. 311, age 30), a restaurant owner in Chongqing, noted:
Being employed is only temporary, giving you some accumulation in the early stage. However, ultimately, you have to do something on your own. It’s better to run a business. There is an enormous potential for development. If you are working for others, you have no future.
Self-employment provides autonomy, flexibility, and freedom
Certain characteristics of self-employment, such as autonomy and independence, are also important for understanding why some people start their businesses (Miao 2015). The narratives of the self-employed migrant workers indicate that the autonomy, freedom, and flexibility brought by self-employment are universally valued attributes. Autonomy means they are not doing what they have been told, do not have a manager, and can make their own decisions. Many interviewees expressed that self-employment empowers them with a greater sense of control. For example, Ms. Wu Yan started her flower and plant shop in Guangzhou in 2018. When asked whether she would work for others if her business failed, she said:
Although it is more difficult to open a store myself and it is not very profitable, I’ve never thought about finding a wage job again. I’d rather work as a street vendor than work for others. I don’t want to do what I am told at all. If you work for others, you must follow their orders. This is how things work. Anyway, there is not much freedom in opening a store, but I am in charge of everything myself. I can do whatever I want.
Mr. Gu (age 41) recounted:
A self-employed business is free. I like freedom, and I don’t want to be told to do anything.
In addition to the autonomy of making business-related decisions, self-employed migrants enjoy the freedom to manage their time. Being their boss means that they can decide their schedules. For example, Ms. Li Li (No. 407, age 45) opened a nail salon in Wuhan several years ago. She enjoyed the freedom of managing her time while running her own business. She narrated:
It’s free doing my own business. If I feel tired today, I will go home early. If it’s rainy and I don’t have the spirit to work, I may take a day off.
When asked how long she worked every day, her reply was:
It’s flexible. Sometimes I come quite early, sometimes late. Today, I came slightly earlier than yesterday. Normally, there is not much business in the morning.
Although both men and women value the flexibility and freedom provided by self-employment in terms of time management and business operations, there are apparent gender differences in other aspects that they value. For example, in the study sample, there appears to be a tendency for self-employed male migrants to emphasize flexibility in business operations and network expansion to maximize profits or opportunities. In contrast, females were more likely to use self-employment to meet family demands.
Men value the flexibility of running their businesses to maximize profits. Before opening his budget restaurant in Shenzhen, Mr. Jiang (age 39) ran several businesses in his hometown and nearby villages. He valued not only the flexibility of his work schedule but also the flexibility of running his business to make the most of his financial and human capital. In his view:
Since I started my business, I’ve never thought about working for others anymore… Doing business gives you freedom. I don’t know whether things have changed or not. When I worked in factories, it was piece-rate pay. The more you work, the more you earn. Alternatively, it gives you a fixed salary, say 2000 yuan/month, and you will get extra pay for extra work. If you work for yourself, like you do your own business, for example, I can buy more to sell if I have more money. If I don’t have much money, I will buy less. Additionally, if I do not feel well or it is raining heavily today, I can stay at home and take a rest. The other thing is that I can make more money. If I did not sell things out at this place, I would go somewhere else to sell. This may generate more money.
In addition to a flexible timetable, Mr. Jiang’s orientation toward self-employment centered on how he could make the most of his resources for monetary gains, shown through his use of money, business arrangements, and physical mobility. The volume of his business depended on how much money he could invest and the profitability of that business. He started to sell vegetables in his village and nearby towns in 2009. During the Spring Festival, he also sold saplings with his brother-in-law, who did this business in a nearby city. Since saplings require more investment, he only sold them during the Spring Festival when there was a high demand. He was mobile as well. Instead of selling vegetables in a fixed location, he traveled from one place to another until his vegetables sold out. This type of schedule gave him the flexibility to maximize his income. When the vegetable business was not as profitable as before, he opened a barbecue restaurant in a nearby town. However, it did not have many customers because most young people went out to work. Then, he opened a restaurant in Shenzhen with his cousin’s friend, who was also planning to open a restaurant. He still runs his barbecue business during the Spring Festival in the town nearest to his village when young people return home for the festival reunion. His flexibility in managing his time and choosing his business and mobility were mainly centered on income maximization.
In women’s narratives, self-employment makes balancing work and family obligations possible. Some married women with children returned to the jobs they performed when they were single because their parents or parents-in-law could help them with childcare. However, many mothers turned to self-employment as their children grew up and their parents became too old to take full responsibility. Ms. Wang Haiqing (age 45) is a typical example. She quit factory work in Guangzhou when she returned home to get married. Soon, she had her first son. Her husband returned to Guangzhou to work in factories, while Wang stayed in the village at her husband’s home to take care of their son. When her son was two years old, she left him with her in-laws and returned to the factory where she had previously worked in Guangzhou. Two years later, her in-laws could not take care of their son due to declining health conditions. Wang and her husband believed that they should bring their son with them. Partly to make more money and partly for their son, they went to the capital city of their home province, Wuhan, to start their first business and run it for three years. Then, they started a joint business with Wang’s brother in Guangzhou. Wang Haiqing decided to quit and stopped working after she had a daughter. When her daughter was old enough to attend nursery school, she opened a women’s clothing business near the nursery school for the convenience of taking care of her children. She believed that it was her responsibility to take care of the children and all the housework to relieve her husband of the burden of raising the family.
The lack of employer-sponsored childcare and supervision and inflexible schedule of wage jobs pushed married migrant female workers into self-employment. I asked Ms. Xie (age 34), a mother of three, whether she would find a wage job if she decided to close her declining phone accessory business in a shopping center in Guangzhou. She said ‘no’ for the following reasons:
If this business fails, I think it’s unlikely that I will find an employed job. To be honest, children will prevent you from doing that. I may come slightly late sometimes because my son is too young. However, if I worked for others, I wouldn’t have such freedom. So I will probably start another business if this one fails. After all, you need to follow their timetable if you work for others.
Zhang and Pan (2012) found that women’s family obligations powerfully constrain their job choices in China, and my data confirmed their findings. Although the self-employed women were relatively satisfied with their current situation, most of them would have preferred a stable wage job with comparable earnings. Ms. Han Jing (No. 203, age 29), who had a two-year-old son, also claimed that her inability to find a job that could let her take care of her son was one of the main factors driving her to be self-employed:
‘I cannot find a job that runs from 8 am to 4 pm with a two-day weekend unless it’s an office job. However, such jobs require a college degree. I don’t have one.
Labor market constraints make self-employment an ideal alternative for improving income, escaping from dead-end wages and jobs, and enjoying more autonomy, flexibility and freedom. Self-employment also motivates migrants to improve themselves and makes them feel fulfilled. Therefore, although self-employed migrants considered themselves to have the lowest standing in society, they believed they were better off than their wage-earning counterparts. For example, Mr. Zhao Xiaobo (No. 205) started his restaurant with his wife in 2018. Although Mr. Zhao regarded himself as someone from a low social status in the city, he believed that self-employment was better. He said:
Like foreign countries, China is also stratified. Rural-to-urban migrants come to cities to work and then start their businesses. We are not businesspeople. Maybe we are slightly better than street vendors because we have a rented locale.
It is very difficult to raise a child in an ordinary working-class family in cities. The couple has to ask their elders for help. People like us open some type of small business and make some money. However, those who work in the nearby automotive factory in our community don’t even have enough money to raise one child. So it is slightly better if they have property. Otherwise, they would be like poor farmers after repaying the mortgage every month.
This type of observation echoes the findings of Li (1996). Based on survey data from Jinan, Shandong Province, in 1995, his analysis of rural migrant workers’ social networks and social statuses revealed that self-employed migrants believed they ranked higher on the social ladder than their wage-earning counterparts in cities. Due to better incomes and nonpecuniary returns, self-employed migrant workers actively helped their relatives from similar backgrounds start their businesses. They believed that a self-owned business was the best employment option for people without much education and skill. After the initial success of his vet pharmacy store in Guangzhou, Mr. Gu (age 41) influenced many of his relatives to start their stores in nearby towns. He was very proud of this achievement:
My biggest achievement is not how much money I make. Actually, I did not make much money. What makes me most proud is that I introduced many relatives to this business, and some are doing better than I am…These relatives do not have any skills or much education; they can only do some casual jobs here and there. I feel so happy to see that they are living a better life.
Evaluating rural migrants’ self-employment
Some of the interviewed migrants achieved a better life economically. Ms. Wang Haiqing (age 45) and her husband were among those who were more successful. Growing up as the children of impoverished, rural farmers, Ms. Wang and her husband started working in a shoe factory at 18. After ten years of working in factories in Dongguan, Guangdong Province, they opened a barbecue restaurant in Wuhan that did not require much skill or investment to increase their income. Three years of hard work allowed them to accumulate some money, with which they started a furniture factory with Wang’s younger brother in Guangzhou. Later, they bought their first property with a mortgage in Guangzhou in 2018—a flat worth 2 million yuan. They also invested approximately 1 million yuan in a pig farm in their home village.
The earnings differential between salaried jobs and self-employment was the main attraction for Wang Haiqing and her husband to start their business and help relieve some of the financial burdens of living in a city. However, their monetary gains were achieved mainly through self-sacrifice, as the relationship between hours worked and income often suggests. Ms. Wang Haiqing spoke about their night market barbecue business in Wuhan:
We worked by ourselves and did not hire anyone because we could not earn much. It was truly hard-earned money. We worked from the late afternoon until dawn to serve those who worked night shifts or got off work late. My husband had to go to the market to buy groceries early in the morning. When he came back, we would prepare for the night together. How pitiful were we? Fortunately, we were young. My husband only slept four hours each day. We were too poor and could only work harder to make more.
The study data include many more statements about long work hours and the intensive workload. Many rural migrant businesses involve a heavy burden. For example, Mr. Zheng Jun (age 28), his wife, and his brother-in-law worked three shifts a day to keep their convenience store in Chongqing open 24 h a day, seven days a week, to maximize their profits. Working on weekends and having limited vacation time are common examples of self-sacrifice, which is widely due to high competition (Schmiz 2013). It pertains especially to the low-skill sector. Limited by education, rural migrants can only become involved in low-cost and low-skill businesses, such as grocery stores. Such businesses are highly competitive because of their easy access. As a result, they can only make more money through self-sacrifice or the sacrifice of family members.
Economic and spatial marginalization
Working on their own also means that they bear direct responsibility for their businesses and face more unpredictable income than wage workers. Thus, migrant workers do not feel secure and face great financial pressure. Jiang Zhicheng (age 39) said:
I don’t feel tired, but I am under a lot of pressure. I feel very stressed. Except for rent, expenses are approximately 1,000 yuan every day. The pressure is heavy. I haven’t made much money yet, and I have a family to care for. My three kids need to go to school, and I have elderly parents. If they got sick, it would cost a lot.
Their financial burdens are twofold. The first burden is insecurity and even less revenue due to economic downturns and the growing popularity of online shopping in recent years. Mr. Zhao Xiaobo in Changchun told me that eight out of ten self-employed businesses that used to operate on the same street closed within one year. Mr. Zhao was not alone in these observations. Mrs. Xia Yue (age 40) in Chongqing said that there used to be several women’s clothing stores nearby, but only hers stayed because of the relatively smaller space and lower rent. Nevertheless, she could barely make ends meet. Since the second decade of the twenty-first century, China’s slow-motion economic deceleration has attracted much attention. The GDP growth rate dropped from 10.3% to 6.1% (National Bureau of Statistics 2020). Withering household incomes have caused families to reduce their spending.
Online shopping also makes their businesses more difficult. As a rising leader in e-commerce, China has witnessed rapid growth in e-commerce sales since 2011, with an increase of 28.7 trillion yuan in transactions from 2011 to 2019; online retail sales of physical goods accounted for 20.7% of the total retail sales of consumer goods in China in 2019 (Qian et al. 2019). The massive growth of the e-commerce market and the platform economy affects many traditional retailers, sellers, and other business owners. Mrs. Han Jing (No. 203) told me that her grocery store was heavily affected by e-commerce (e.g., the purchasing cost of some goods was even higher than the online selling price). Some business owners tried to use online platforms to increase exposure to their business. For example, they would put their business onto Meituan-Dianping, a Chinese online on-demand delivery platform. However, many self-employed migrants I interviewed did not think their businesses would benefit much from it. There are three reasons for this belief. First, the online platform normally charges a service fee that would lower their marginal profits, sometimes equating to zero. Second, many self-employed individuals do not have the necessary technical and online marketing skills to make their business more attractive online. Third, the goods and services that self-employed people provide are not competitive compared to those provided by large companies. Some people tried new platforms, such as Zheng Yan, who attempted to sell women’s clothing through live-stream shopping, a rapidly growing industry in China. However, her attempt failed. She gave the following reason:
I bought all the equipment needed. It did not work. We can’t compete with the manufacturers. Our clothes are bought from them so our price cannot be lower than theirs.
The second financial burden stemmed from the high cost of living and doing business in cities. The respondents suggested that the rental fees for business premises had increased across all cities. Some rural migrants live and work under the same roof to minimize their expenses, such as Mr. Jiang and his wife. At the time of our interview, Mr. Jiang was selling their restaurant and looking for somewhere less expensive to start a barbecue restaurant. Moving to a less desirable district is a common strategy to cope with high costs. Ms. Lili Wu’s first business attempt was in a flower shop in one of the most prosperous districts in Guangzhou. She anticipated that the volume of people would bring her more orders. However, sales were not as expected, and revenue could not even pay the rent. She then moved to a remote district in Guangzhou. Others planned to go back home to see what they could do there. Mr. Li Yong (age 44) started a candy shop in Chongqing in 2015. However, the business did not work out. Therefore, he decided to return to his home village to see what he could do after the lease had expired.
In addition to economic vulnerability, self-employed rural migrants are also among those with the least amount of bargaining power in cities. In Shenzhen, Mr. Huang Chuangwei said that tenants were required to pay a large ‘entrance fee’ to their landlords in addition to regular rent. He described self-employed migrants as the most vulnerable group of people in the city. Ms. Xia Yue (age 45) opened a food store near a school in Chongqing. Due to the large number of students, her business was quite good. However, her landlords doubled the rent since they wanted to take the premises back to run the business themselves. As a result, Ms. Xia had to give up her profitable store and move somewhere further out but less expensive.
City policies often target suburban areas, industrial enterprises, old districts, and large rental compounds where migrants’ businesses are concentrated, making them victims of city management measures. Gu Jianbiao’s vet pharmacy store moved twice because of policy changes in Guangzhou. The city’s expansion forced livestock farming to move to suburban regions, and Gu Jianbiao decided to move with them to maintain his regular customers. He said that his business declined because livestock is strictly regulated for environmental reasons. He wanted to change but did not know what to do and had no plan for the future.
I asked the interviewees whether they would like their children to do their job after growing up as a way to cope with adaptive preferences. Although the self-employed believed that running a business is better than working for others, most wished their children would be better educated to have more job options. Many expressed that they worked hard for their children to attend college and get decent jobs. These claims imply that the virtues of self-employment were overrated, if not illusory.
The work on rural migrants’ employment outcomes has made significant strides in understanding the economic structural complexities faced by rural migrants. Much of that work has focused on the economic aspects of migrants’ motivations to become wage-employed or self-employed. My work contributes to this body of literature by attending to the importance of noneconomic factors and evaluating the quality and consequences. The analysis demonstrates multiple pathways into self-employment as opportunities and constraints coalesce in individuals’ lives. The research data suggest that when rural migrants face the insecurity and uncertainty of a precarious labor market, self-employment becomes a common aspiration to achieve a better life. Specifically, the study found that (1) most rural migrant workers in wage employment sectors cannot ‘freely’ decide their working arrangements, and insufficient formal education and skill are the primary reasons for this restriction. (2) The prospect of receiving more financial rewards is a critical contributor to the high self-employment rates among rural migrants in urban China. For rural migrants, the transition from wage employment to self-employment represents a status enhancement. (3) Greater autonomy, flexibility, and freedom are important and attractive aspects of self-employment; however, these also have apparent gender differences.
Many studies regard self-employment as a voluntary choice to gain greater utility from income, autonomy, flexibility, and other benefits in the self-employment literature. In the case of low ability, the self-employed would eventually drop out. By investigating migrants’ self-employed business, the findings highlight a security-precarity continuum in immediate and long-term outcomes and demonstrate a type of self-employed associated with what has been called ‘involuntary,’ ‘dependent,’ and ‘precarious’ self-employment (Conen and Schippers 2019). Among rural migrant entrepreneurs, self-employment tends to come along with a high tendency for self-sacrifice. Although they claimed to enjoy greater control over their work, they paid the price of longer work hours, greater emotional constraints, increased job instability, and greater income insecurity. This indicates the precarious nature of self-employed businesses. Their necessity-driven businesses, the marginalization of their social status, and their vulnerability in the face of economic downturns and market transformations further highlight the coping nature of rural migrants’ self-employment.
This study also has significant political implications. Self-employed individuals are usually viewed as creative, competent people who have given up the comforts of wage jobs to develop new goods, manufacturing processes, and distribution techniques. Therefore, one may view self-employment as a pressure release valve that protects some people from exploitation by low-wage jobs. However, it remains uncertain whether encouraging self-employment will provide a solution to poor access to work. The findings from this study indicate that the ability of self-employment to create more quality jobs for rural migrants in China is doubtful. Therefore, policy programs should shift from encouraging self-employment to eliminating barriers in the labor market that would effectively allow this vulnerable group to acquire decent jobs.
Availability of data and materials
The data that support the findings of this study are available on request from the corresponding author, Shuting Xia. The data are not publicly available due to their containing information that could compromise the privacy of research participants.
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The fieldwork of this study was funded by the Department of Sociology, University of Cambridge.
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Xia, S. What makes Chinese rural migrants self-employed: a qualitative perspective. J. Chin. Sociol. 9, 15 (2022). https://doi.org/10.1186/s40711-022-00175-0