China is officially promoting AI-powered “one-person companies” as a way to support entrepreneurship, but the policy is drawing skepticism as most such businesses struggle to survive and consumer demand remains weak.
The Chinese Communist Party’s (CCP’s) Ministry of Industry and Information Technology on Sept. 4 included one-person companies (OPCs) in a national entrepreneurship support program for small and medium-sized companies covering 2026 to 2028.
The move follows a rapid expansion of OPC entrepreneurship programs across China. However, industry data cited by Chinese media indicate that the vast majority of OPCs fail within their first year, raising questions about whether the policy can create sustainable businesses—or simply push more unemployed people into self-employment.
According to figures from Zhuanzhi Think Tank OPC Research Institute, which tracked more than 500 OPCs, 80 percent of them fail within a year of being established, leaving a survival rate of less than 10 percent.
Two China-based tech industry insiders spoke to The Epoch Times regarding the issue on condition of anonymity out of fear of reprisal.
A former Chinese VPN operator said that AI has lowered the barrier to starting a business, but not the barrier to keeping one alive.
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“What determines whether a company can survive has never been whether it has smart tools, but whether there is real demand in the market to support it,” he said.
AI Creates Oversupply
The rapid development of generative AI has made it possible for an individual equipped with a computer and a suite of AI tools to perform work that previously required a larger team. China has consequently seen a surge in OPCs, particularly in consulting, content production, and other digital services.
By the end of 2025, China had more than 16 million OPCs, according to Chinese state media Xinhua News Agency. Several local governments have incorporated support for OPCs into government policy, while entrepreneurship communities promoting the model have spread nationwide.
However, the lower cost of producing content and services can also create an oversupply of businesses competing for the same customers.
A former engineer at a Chinese internet company told The Epoch Times that a successful business model involves more than producing content. It also requires distribution, marketing, operations, and access to customers, which are fields of expertise that AI cannot simply replace.
“When AI helps reduce the cost of content creation, there will be extreme oversupply on the supply side,” the engineer said. “At that point, the distribution channels and the operational side become the key.”
He said the regime’s promotion of OPCs could encourage inexperienced entrepreneurs to enter already crowded industries, invest their own money, and then struggle to generate enough revenue to recover their costs.
Sun Kuo-hsiang, a professor of international affairs and business at Nanhua University in Taiwan, told The Epoch Times the same dynamic could make AI entrepreneurship less profitable for individuals despite making production cheaper.
“When everyone can produce at low cost, the market instead becomes oversupplied rapidly,” Sun said.
“In the end, the platforms, training institutions, tool providers, and a small number of leading players make money, while most entrepreneurs simply lose money faster.”
The rapid growth of AI-generated online short dramas illustrates the risks of flooding a weak market with low-cost products.
China’s AI short-drama industry has attracted large numbers of entrepreneurs because production costs are less than one-fifth those of productions using human actors, according to an article on Chinese news portal Sina Finance.
The low production costs have contributed to an explosion in output. During the first half of this year, 221,900 AI-generated short dramas were uploaded to Douyin, China’s version of TikTok, generating a combined 515.7 billion views, according to Chinese media outlet The Paper. Yet only one out of every 77 AI short dramas recouped its production costs.
For entrepreneurs, however, the industry’s rapid expansion has already demonstrated the limits of lowering production costs when consumer spending remains limited.
Entrepreneurs Bear the Risk
The former engineer attributed China’s current combination of excess production capacity and weak consumption partly to what he described as decades of state-directed industrial policy.
He said the regime has a “deep-rooted” planned-economy mindset and “always believes it is smarter than the market,” leading it to promote industries through government policies that can ultimately produce unintended consequences.
He warned that young entrepreneurs with limited financial resources could be particularly vulnerable when government-supported industries move from rapid expansion to oversupply and decline.
“The government will certainly bear responsibility for initially pushing the industry forward,” he said.
Cheng Wen and Yi Ru contributed to this report.
