Young entrepreneur in Peking corners market on helmets

Liu Shang and his four friends had no permanent jobs until last year. They were all just a few years out of middle school (high school) and had no opportunity to go to college.

In the Chinese euphemism, they were ''job-waiting youths.''

Unlike many of their peers, however, they were not content to sit idly by hoping the government would assign them employment. Nor did they resort to black marketing or to other illicit activities which have been on the rise recently.

Rather, following the state's call to help themselves, Liu Shang went into business for himself making morotcycle helmets. He was so successful that within six months he was able to hire his friends to help him.

''We decided to try our own way for ourselves,'' Liu Shang said of his self-employment venture during a recent interview at his ''factory'' in western Peking.

The tale of Liu Shang's helmet factory is an example of how Chinese ingenuity and resourcefulness have been unleashed by the central government's recent policies supporting private enterprise - albeit on a very small scale.

Today, there are thousands of small, privately owned businesses in the greater Peking area - 33,482 to be exact, says the city's Industrial and Commercial Bureau. Each enterprise is licensed and none is permitted more than eight workers. Most of these enterprises have been licensed in the past two years. Almost all have appeared since Chinese leader Deng Xiaoping pushed through his reform policies in the third plenum of the Communist Party Central Committee in December 1978.

These cottage industries employ only about 49,000 workers, a tiny portion of the work force for metropolitan Peking, population 9.2 million as of 1982. But the government hopes that despite their small scale, such businesses will give a boost to China's socialist economy and reduce the number of those ''waiting'' for a job.

The experience of Liu Shang shows how this can happen.

Liu's factory is contained in three rustic rooms of a house once owned by a peasant - a house Liu and his principal partner in the Soar Helmet Company bought last October for 4,200 yuan (about $2,100). During the interview, the company's five employees sat on the bed in the largest room where they both live and work. They described themselves as good friends and seemed to treat each other as equals.

But as founder of the enterprise, Liu clearly was first among equals. He recalled how, in 1980, he began making helmets on the roof of his parents house and gave them away to his friends in a motorcycle club.

Liu knew there was a demand for well-designed helmets. He had been a motorcyclist since his early teens. During his middle-school years, he had an accident. The Chinese army tank helmet he was wearing at the time did little to protect him from injury.

In 1982 Liu persuaded his family - most importantly his father, an engineer in a local optical instruments factory - to loan 8,000 yuan ($4,000) to set up a private business. He received a state license for the business in January 1983.

Soar's helmets look as sturdy and as stylish as those manufactured by major companies in Japan and the United States. Prices range from 35 yuan for a bicycle helmet to 86 yuan for a motorcycle helmet with visor and chin protector. They are all handmade.

The company sold 3,000 helmets of all types during 1983 for a total value of 170,000 yuan ($85,000). It paid the state a 50 percent tax on profits, or 30,000 yuan for the last half of 1983. (The company was not required to pay taxes in the first half of 1983 since it was newly established.)

Soar's wages are high by Chinese standards. Each employee receives 100 yuan per month, says Liu. The costs of food, entertainment, and other living expenses are paid by the company. The company also has the use of a small car on loan from Liu Shang's father.

Today the demand for Soar helmets far exceeds supply. The five youths are rushing to meet a deadline to produce 500 bicycle helmets for the State Physical Culture and Sports Commission. They also have produced helmets under contract to the local armed police and have found commercial outlets in a Peking deptartment store and in stores in other provinces.

The company's success, Liu Shang says, is largely because the quality and style of Soar helmets is better than those produced by a nearby state-run factory.

''After a few months, no one would buy helmets from the state-run factory, but customers wanted only ours,'' he said. ''Now the other factory can sell their products only in other parts of China.''

Would Liu share the secrets of good helmetmaking with the state?

''We'd welcome them to come, because we think by exchanging experiences we can improve our own work,'' he said confidently.

Business for Liu and his friends is so brisk and profitable that a major expansion is planned this summer. The company just purchased an eight-room house with a courtyard for 6,000 yuan in another district of Peking. The house it now owns will be converted to storage. After the move, Liu says they will try to ''regularize'' the company's operations and perhaps hire more workers.

Liu Shang's helmet factory is a modest enterprise. In many other parts of the world, it would not be so remarkable.

But in China - where for three decades the state tightly controlled the availability of materials, the means of production, and distribution of all goods and services - the blossoming of such private industry may have a revolutionay impact. The state officially encourages free enterprise now, and the mayor of Peking has given Liu Shang his personal encouragement. But the Soar helmet factory is very much on its own.

Is Liu concerned that the state's policy will change and his business be taken away from him or forced to close?

''Im not afraid the policy will change,'' he said. ''It has been consistent since the third plenum. What we want is to make a contribution to the country.''

Does he expect to get rich?

''Well, why not?'' he said with a grin.