What is a social enterprise? How does it differ from an NGO? What is its place in the world, particularly in China? If you’re confused as to how a social enterprise works, and about its positive impact so far on solving social problems in this country, then rip out this cheat sheet that Phoenix Tso has written to get you up to speed.
The Definition Many people confuse social enterprises with NGOs, or other non-profit organizations. Social enterprises adopt an altruistic business model, just like any not-for-profit group. However, they don’t depend mainly on do- nations or government funding, but generate profit by offering goods and services, much like a for profit business. Their profits however usually go towards promoting a social good, such as paying laborers a fair wage, or investing in alternative energy. Think of social enterprises there- fore as a hybrid between an NGO and a traditional business, with the bottom line going towards making positive change.
How social enterprises are recognized in China Similar to NGOs that want to operate in China, it’s very difficult for any local and foreign social enterprise to register with the Chinese government, who fears that letting civil society organizations have too much support will undermine its authority. Social enterprises that do want to register here have to go through years of red tape in order to succeed in this respect. Many local social enterprises register as small businesses with their local district, while many foreign social enterprises who wish to head- quarter themselves here register with their home country, or with a nearby location like Hong Kong. In the future though, registration on the mainland might get easier. At the 17th National Congress, Hu Jintao called for a policy that was more inclusive of “social organizations,” in order to help China solve some of its recent social problems.
Popular social enterprise topics
Migrant Children/Education With millions of former Chinese peasants migrating to major cities every year, urban resources have become strained, and migrant workers struggle to find adequate housing, healthcare, and schools for their children, and other basic necessities. Many social enterprises in cities like Beijing focus on migrant children education, since they don’t have the hukou necessary to enroll in local public schools, or the money to afford a private education. A great example of this is the Dandelion School, the only officially recognized high school for migrant children. Along with teaching the State-mandated curriculum to its 650 students, the Dandelion School has emphasized arts education, with children creating gift products that help the school sustain itself.
Environment In addition, social entrepreneurs like focusing on environmental issues, namely on developing products that generate or run on clean, alternative energy, and selling them at a discounted prices to poorer households. DLight, a Hong Kong-based enterprise, designs kerosene lanterns as a safe, clean, and cheap source of electricity for poor households. Similarly, Kunming Rongxia manufactures safe cooking stoves for use by rural peasants in Yunnan, while DLLD sells hydropower micro- generators to villages in Guangdong that provide electricity for cooking, heating, powering a television or radio, and providing nighttime lighting.
Loans/Microfinance You might have already heard about Wokai, an online platform that allows people from all over the world to support small business owners in rural China. Since its founding in 2007, Wokai has supported farmers in Sichuan and Inner Mongolia, with a repayment rate of 99.5 percent. Taking another tack, Chinese-American Calvin Chin’s business, Qifang, provides a peer-to-peer student loan community for Chinese students who want to attend university, but otherwise can’t afford it.
Where social enterprises in China get their funding and support
Venture Philanthropy Funds Much like a venture capitalist searches for the next big for- profit entrepreneur and idea to fund, venture philanthropists look for promising social enterprises, and give their organizations the start up capital necessary for them to become self-sustaining, if not profitable. One such fund in Beijing to know about is LGT Venture Philanthropy, which has so far poured its resources into Driptech, a social enterprise that provides sustainable irrigation solutions to Chinese farmers.
Narada Foundation The Narada Foundation provides “seed money” to promising public welfare projects in China. They were established under the supervision of the Ministry of Civil Affairs in China, a sign that the Chinese government wants to make good on their pledge to support civil society and social organizations. In addition, to their incubation of non-profit organizations, the Narada Foundation provides start- up grants to social enterprises that seek to provide essential services to China’s disadvantaged.
Ventures in Development Founded by Carol Chyau and Marie So, Ventures in Development is a social enterprise network and incubator, and aims to nurture sustainable business ideas that will also bring social and economic development to China. So far, Ventures in Development supports Shokay, an enterprise also run by Chyau; So, which sells knitwear made from Tibetan yak fur; and the Mei Xiang Cheese Farm, run by a Tibetan family from Yunnan. Ventures in Development also runs monthly Social Innovation Salons in Hong Kong and Shanghai, where people brainstorm innovative solutions to social problems.
Famous Chinese social entrepreneurs
Jet Li In addition to launching the One Foundation, one of China’s biggest philanthropic organizations, Jet Li can also add social entrepreneur to his impressive resume. This year he officially launched Taiji Zen International with Alibaba’s Jack Ma. Taiji Zen’s aim is to promote well being through the practice of Taijiquan, and to preserve this art form’s practice and philosophy.
Jian Yi This director founded the IFChina Studio in June 2009 to train locals from Ji’an in Jiangxi province to produce and make documentary films about the people and places in the surrounding region, and to develop the filmmaking and arts infrastructure in Ji’an.
Zheng Hong Zheng Hong gave up a 20-year career in academia in order to found the Dandelion School, the migrant children educational institution that we mentioned before in this article. As headmistress of this high school, Zheng is taking on the enormously difficult task of giving marginalized children the education they need to better their lives for themselves and for future generations.