The Emergence of Social Entrepreneurship in China
Social entrepreneurship is still a relatively young phenomenon on China and started to emerge in 2004, when the books The Rise of the Social Entrepreneur (Charles Leadbeater) and How to Change the World: Social Entrepreneurs and the Power of New Ideas (David Bornstein) were published and widely discussed.
In the same year, the Global Links Initiative was launched in China and was the first membership organisation that promotes social enterprises and social entrepreneurship in the country.
The following years were characterised by an increasing number of social enterprise related articles and research papers in academic journals, forums and magazines and in 2007, the first International Forum on Social Entrepreneurship was organised by the Global Entrepreneurship Research Center of Zhejiang University, the Skoll Centre for Social Entrepreneurship of Oxford University, and the Entrepreneurs School of Asia.
Since 2004, China has also witnessed the launch of social enterprise incubators that promote the concept of social entrepreneurship in China and provide vital resources to support the establishment and the growth of new ventures. The two first incubators entered the market in 2007 and are called China Social Entrepreneur Foundation and Non-Profit Incubator.
Political and Institutional Challenges
Just a few years ago, social entrepreneurs in China faced severe political, institutional and cultural obstacles. The social sector used to be tightly regulated by the state and the state was suspicious of independent non-state actors.
One example of the challenges that arose from this tight control are complex registration laws that significantly hampered activity in the social sector. The state imposed a dual administration system that required new ventures to register with both the Ministry of Civil Affairs and a supervisory agency, which was government run. This agency was known for rejecting requests from non-profit organisations. As a result, several organisations registered as for-profits instead but eventually failed because they were lacking sustainable business plans.
However, the government recently came to understand that non-profit actors pose very little threat to the country’s political stability. Political institutions opened up and allowed the third sector to flourish. In 2009 was the first time that the Chinese government publicly supported social venture initiatives when the Bureau of Civil Affairs partnered with the Non-Profit Incubator to organise the first Shanghai Community Venture Philanthropy Contest. Ever since, the Ministry of Civil Affairs articulated its intentions to further promote a favourable environment for social enterprises for example by reducing barriers to registration and increasing the transparency and governance of the sector.
But not only the political and institutional environment in China underwent significant changes, the cultural environment also became more favourable for social entrepreneurs. Philanthropy used to be very rare in China because the culture emphasised self-interested pursuit of profit. However, with the focus of the government slowly shifting from economic development towards social issues and with issues such as the Sichuan Earthquake (2008) and the challenges of rural migrants and poverty in rural areas rising, social entrepreneurship has become more widely accepted and understood.
China is likely to see social entrepreneurship rise significantly in the near future. This will be driven by the large population, a plethora of social issues, a large number of young people with a business education, and the government’s increasing acceptance and support of independent social businesses. Existing social ventures need to demonstrate their sustainability which will motivate new social enterprises to enter the market and explore opportunities to fight social illnesses.
While the social enterprise sector in China is still rather young compared to that of several other countries in the region, it is likely to catch up very soon.