The Emergence of Social Entrepreneurship in China
China has also witnessed the introduction of social enterprise incubators and curricula in the past few years. In 2007, two organizations were established to promote social enterprise in China and provide resources to support the development of start-ups in the sector: the China Social Entrepreneur Foundation (友成企业家扶贫基金会) and Non-Profit Incubator (NPI). In 2008, the Foundation and the British council held a social entrepreneurship training workshop. A year later, Peking University launched an elective course titled “Social Entrepreneurship and the Practice of Social Innovation”.
What is the generally
accepted definition of social entrepreneurship in China?
In China, the terms社会创业 (social startup) and 公益创业 (startup for public good) are used most often to refer to
social enterprises. The literal translation of social enterprise (社会企业)
refers to businesses in the private sector, to distinguish them from businesses
with government affiliations. The Chinese see social startups (we will still
refer to them as social enterprises for the rest of this article to avoid
confusion) as independent organizations involved in commercial activities. This
could be a nonprofit using a revenue-generation model or a for-profit business
with a social focus, but the use of market forces is a definite prerequisite.
Why is social
entrepreneurship emerging now?
In an article published in the Stanford Innovation Review,
Meng Zhao attributes the lack of a strong social enterprise sector in China to
the obstacles embedded in the country’s political, institutional, and cultural
environment. The state’s tight regulation over the social sphere and suspicion
of independent non-state actors has not provided much space for the
experimental process of social enterprise development. For example, complex
registration laws constrict activity in the social sector. The dual
administration system requires grassroots groups to register both at the
Ministry of Civil Affairs or its local agency and at a professional supervisory
agency, a government office. The supervisory agency usually rejects requests
from nonprofits, especially those working in politically sensitive areas.
Because of the difficulties of registering as a non-profit, many organizations
register as a for-profit company but lack a sustainable business model. The
government also sets up its own NGOs, referred to as Government-Organized NGOs
(GONGOs). As Daryl Poon noted in his work, “The Emergence and Development of
Social Enterprise Sectors,” the Chinese government’s overbearing presence and
excessive regulation has hindered the natural process of experimentation,
failure, and improvement necessary for social enterprises to develop.
In recent years, as the government came to see that
independent actors pose little threat to political stability, political
institutions began opening up opportunities to allow for the growth of the
third sector. In 2009, the Non-Profit Incubator partnered with the Bureau of
Civil Affairs in Shanghai to organize the first Shanghai Community Venture
Philanthropy Contest. This was the first time the Chinese government publicly
supported grassroots social entrepreneurial initiatives. At the 12th
“Five-Year National Economic and Social Development Plan” released in 2012, the
Ministry for Civil Affairs (MCA) articulated its intentions to promote a more
favorable environment for social organizations. It aims to develop new rules to
lessen barriers to registration and make the sector more transparent and better
governed, among other initiatives. In addition, the minister and the vice
minister of the Ministry of Civil Affairs , and the vice mayor of Shanghai
advocated the nationwide adoption of NPI’s incubation model. The NPI has also
proposed a “New Privatization Movement” for China, likening this movement to
the privatization of businesses in the 1980s and emphasizing both as top-down
phenomena backed by the government, with social entrepreneurs as the primary
players in this new movement. The NPI has been asked by the Bureau of Finance
of Shanghai’s Pudong District to draft a “Guideline on Government’s Purchasing
Social Organization Services” to elaborate on its vision.
As the political and institutional changes provide more
opportunity for the growth of social enterprises, the cultural environment is
also becoming more conducive to fostering social entrepreneurs. Traditionally,
Chinese culture has emphasized self-interested pursuit of profit. Philanthropy
was rare, and non-profits were not well-trusted. However, China has begun to
witness the transplant of ideas from abroad.
Social problems are gaining priority in the eyes of the government and
the people, where the focus has historically been on economic development. News
and writings on the devastation caused by the Sichuan Earthquake in 2008 and
the challenges of the rural poor and rural migrants are shared with an ever
wider population online and have heightened the public’s awareness of social
issues. Ideas of social enterprise and philanthropy are being transferred to
China from abroad, through translations of foreign works, efforts by foreign
agencies, and individuals and university students who have studied abroad. Incubators
and university curricula are also beginning to reflect the growing
consciousness of the roles social enterprises can play in China’s future.
What happens next?
Based on the observed
trends, it appears that social entrepreneurship will continue to blossom in
China. With a large population, a plethora of social ills to be addressed, waves
of young people with a business education, and the government’s increasing
openness to organizations in the civil society sector, China is primed for the
rise of socially-minded entrepreneurs. As the new crops of social enterprises
demonstrate their sustainability and profitability, others will come to realize
that a wealth of new opportunity is waiting to be explored and the existing institutions
will be further motivated to embrace the movement. The social enterprise sector
in China may be somewhat young compared to that of other countries, but will
likely catch up soon.
N. Trinh, Wharton '15
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