Social Entrepreneurship in China

Modern face of a new challenge


Diploma Thesis, 2013
56 Pages

Excerpt

Table of content

1.1 Overview
1.1.1 Background and spirit of entrepreneurship in China
1.1.2 Boosting youth employment
1.2 Social entrepreneurship in China, a recent concept
1.2.1 Legal framework & structures to help
1.2.2 Corporate Social Responsibility, a model for entrepreneurs
1.3 Scope of research

2.1 Start-ups, small structures, and government implication, the new face of China
2.1.1 Backgrounds and actual challenges
2.1.2.Reform and political system, how china has adapted itself to entrepreneurship?
2.1.3 Influence of the government
2.1.4 A new model of Porter
2.2. Positive for Chinese employment
2.2.1 Boosting youth employment
2.2.2. Education about entrepreneurship in China
2.2.3. The Raise of foreign entrepreneurs

3.1. Social entrepreneurship, a recent concept, plenty of definitions
3.1.1 What is a social entrepreneur? – The point of view of experts
3.1.2 Social Enterprise versus NGO’s
3.2. Main particularities of social companies in China
3.2.1 Legal aspect & Governance
3.2.2 What about tax exemption?
3.2.3 Financial Performances
3.2.4 Funding
3.3 Who are we talking about?
3.3.1 Beijing and Shanghai, in the heart of the phenomenon
3.3.2 Social enterprises in China are young
3.3.3 Lack of organization
3.4 Supportive actors and the modern face of social entrepreneurship
3.4.1 Ashoka, Innovators for the public
3.4.2 Make sense- Challenging people for social business
3.4.3 Social media in China- 100 million blogs

4. Projects of leading companies linked to social purposes
4.1. How does CSR take place in Chinese companies and how is it perceived
4.1.1 China get formed by American methods
4.1.2 what is CSR in China? Examples of good practices
4.1.3. A comparison with international companies implemented in China, can they help and be an example in terms of CSR in China?
4.2 Encourage Youth

Conclusion

7.1 Conclusion
7.2 Next step work

Acknowledgment

Reference

Appendices

1. Introduction

1.1 Overview

Entrepreneurship in China is booming those last years. The Chinese market is changing and becomes open to new forms of Business. Since the seventies and the moves that China has experienced, entrepreneurs are trying to develop new forms of company but they have to face the Chinese government that is still bureaucratic and administrative. It is also complicated to have access to funding for young entrepreneurs who often rely on family.

1.1.1 Background and spirit of entrepreneurship in China

Regulations concerning entrepreneurship in China are quite important. Many authors have been written about it, underlying the fact that China does not have the same influences as in France. Their model and references author is not Porter or other major thinkers of Europe, but they invented their own business model to deal with their own particularities. In the eighties, independent forms of business were still misunderstood. Globalization has been part of the change and developed exchanged and markets. China is now facing some challenges in adapting itself to this change. How to have access to funding, or qualified employees?

1.1.2 Boosting youth employment

The Chinese government has finally found its advantages in the fact that those new forms of business are helping to create employment and particularly youth employment. What we will see in the study I have been going throw is that entrepreneurs are often having a diploma abroad, and China is still facing difficulties to keep talents inside the country. Young entrepreneurs are then coming back after having studying abroad, or are foreigners.

1.2 Social entrepreneurship in China, a recent concept

Social entrepreneurship in then a particular way of doing entrepreneurialism. It consists in setting up businesses that bring a value to the society. In China this new kind of business is more in developed cities such as Shanghai and Beijing, but entrepreneurs are facing some challenges such as access to funding and definition of status of their company (registration and so on).

1.2.1 Legal framework & structures to help

Legal framework is the most challenging aspect for those young entrepreneurs. Even if they have the idea, and even money, dealing with the government is still complicated. They face challenges such as determining which structure they want to be. We will see the contrast between a social business and a Non Governmental Organization and advantages of both.

Those last years China has experienced the development of structures to help young entrepreneurs and it exists some business support office of special organization for social business. Networking events are also part of this new trend, particularly in Shanghai.

1.2.2 Corporate Social Responsibility, a model for entrepreneurs

Finally we will see that China already has some important actors having a responsible strategy and dealing with new norms of social responsibility. This is the case of China Mobile or State Gride, Major companies in the country.

We will see that instead of acting on their own, they also provide help in order to build new projects.

1.3 Scope of research

We will try to give an overview of entrepreneurship today in China. This thesis has no aim in explaining everything that happen those past thirty years and why China is at that point of development today. The aim of this thesis is to give a modern overview of what is currently happening, and particularly in big cities. In giving the examples of companies such as L’Oreal, or with interviews of young entrepreneurs, CEO of companies and networking event, we will define where does China comes from and in which way it influences their way of doing business today.

Then, in the second part we will see what is social entrepreneurship exactly, which forms it takes and who are the main actors.

Finally we will see that good practices already exist, and that international groups can help China to have new social oriented projects. In a country where poverty is still a major problem, it seems obvious at least, to try.

2. Entrepreneurship in China

2.1 Start-ups, small structures, and government implication, the new face of China

2.1.1 Backgrounds and actual challenges

Perception of entrepreneurs in China has changed dramatically in recent years. After deregulation in 1979, they were first misunderstood, and rejected. The society could not understand what those independent were looking for. They were out of rules. The majority of companies were so devoted exclusively to the survival of their owners, in order to fight against a possible closure. Additionally, globalization has improved business exchanges and developed markets. Friedman (2000) defines globalization has the inexorable integration of markets, nation-states and technologies, never achieved before.

It is only in the last decade that government incentives have greatly helped popularize entrepreneurship among university students and the society. If businesses survival persists, more and more young people are attracted by entrepreneurship for other reasons. Including the attraction of success, the freedom that provides the profession or simply an interest in the business. Several choices of companies are available and anyway they will have to face the Chinese business environment.

Several elements of it worth mentioning, starting with human resources.

The Chinese population is very large; it seems simple enough to recruit resources. However, it is more difficult to recruit skilled resources. Many workers are called migrant workers. From more remote areas, they do not necessarily have access to a complete education. Corporate training is a necessity. The rapid evolution of labour laws, in recent years, also complicates the task of the entrepreneurs.

At market level, it is, by its size, a gold mine of opportunities. However, the lack of institutions to guide business and legal environment still complicates operation. In financial terms, most of the funds needed to start businesses in China are private funds. It remains difficult for young entrepreneurs to get loans at the bank. They usually rely on their families and friends raise their initial capital. (graph appendice 1.1 Capital Resources 2009 for four-years college graduate entrepreneurs)

However, the government has introduced several measures to help start-up companies. They offer insurance on small loans from financial institutions, facilitating access to credit. Other government initiatives are tax credits, exemptions and administrative costs subsidized training in entrepreneurship.

Despite all this, the most important aspect of the Chinese business environment remains the cultural aspect. A Chinese phrase summarizes it, it is the 关系 (Guan Xi). This term refers to human relationships. It means than while doing business in China, you have to create your environment and relationships and build your network. Then you will be able to rely on those people to help you for business.

2.1.2.Reform and political system, how china has adapted itself to entrepreneurship?

As said before, in order to support the raise of small and medium sized companies, the Chinese government has adapted his policy and has launched a series of initiatives to provide a friendly environment to potential entrepreneurs.

Majors’ steps were taken to legalize business ownership and to institutionalize the business environment so that it would enable small firms to survive and grow. The major developments of law enactment included the Partnership Law (1997) and the Sole Proprietorship Law (1999). Even the “Amendment to the Constitution” is the most important (1999). The private property law is one of the big changes that China faces.

New policies and regulations were also part of the change. The most influential of these was “several policy recommendations on the encouragement and promotion of small businesses” (State Economic Commission of the State Council in July 2000). This was the first comprehensive policy that China has had in this area of business development. It provides a wide range of issues concerning small run businesses including technological side, financial, innovation or strategy.

Finance: As seen before the access to private loans has been reformed in order to give an easy access to financial support. Several initiatives have been set up.

First, a special fund that was designated to support small high-tech firms (set up by the central government in May 1999, with an initial funding of $3 billion)

Second, the Chinese government launched a pilot loan, in order to reassure on the efficiency of this kind of initiatives. By the end of the same year more than eighty cities reported to have launched those kinds of loans.

2.1.3 Influence of the government

The government in China has been playing an important role since 1970 to promote activities in China. The Communist Party has faced a lot of pressure in the last decades because it had to sustain its political power in promoting the economy.

If we study entrepreneurship in China we have to consider two aspects. First an entrepreneur in China will be as every entrepreneur around the world: He will have to consider the market and be very innovative to develop new products that will have a potential. But then, in addition to this common rule, being entrepreneur in Europe or in China can be quite different because of the sociopolitical dimension.

To become a successful entrepreneur, there is no point in neglecting institutional rules; they must be integrated to the whole project. Considering that entering a market just consist in developing a new product or service is risky, entrepreneurs must consider dealing with government rule. Deal with customers or suppliers are part of the job, but the most important is to make the business acceptable to the government, mass media or just ordinary people.

Chinese entrepreneurs have to deal with party policies and government officials because they provide licensing and evaluate, in other words, support. Corporate registration and good corporate governance are major blocks for enterprises in China. We will see after that it is even more complicated for social companies, as they have no real status for the government.

2.1.4 A new model of Porter

Has China some influence from Europe and the model of Porter to deal with new businesses? If not, on what does it rely on?

Just to remind some key points about Porter, this author considers that when setting up a business it is important considering five aspects of the environment.

- The bargaining power of customers,
- The bargaining power of suppliers,
- The threat of substitute products or services,
- The potential threat of entrants in the market,
- The intensity of rivalry among competitors.

In China, it seems that influences are not the same and more focus on three aspects:

People (ren), Project (shi ) and Penny (qian).

People: Throughout entrepreneurial and business activity, it seems that companies face the challenge of communicating with people, from government officials, to customers, business partners, suppliers. One main challenge in doing business in China always seems to be communication with people and arrive to lead them.

Project: This is about the fact that when setting up a business in China, one difficult aspect to deal with in to have a project management in itself. It seems that the spirit of business in China is sometimes more individual and the way of acting is more about working independently in each step. It is important to consider all aspects of the environment around you when starting a project, and this is still to improve in the mindset of Chinese people. Work together, means work better.

Penny: “Penny” is used here to describe the spirit of Chinese business, which often is that with money you can do everything. It is important to plan funding, expenses and possible revenue and profit. It is enhance that with a good amount of money a project can never stop in the middle of the business plan.

Those aspects about first, origins of business but also references authors are important to understand. This is also part of the business mindset in China as in France entrepreneurs can have influence with Porter but also for example Ford.

Additionally to this three forces model, a new “five forces” model is supposed to lead to success.

It consists in five-business orientation: (Appendice 1.2)

1. Business Purpose: Do you only have a money- making purpose or do you want to succeed? In that case considering the environment and partners.
2. Business Climate: What is going on in the place you are trying to setting up? What is the Industry structure, the competition, the consumers and the values of the society?
3.Business location: It determines access to suppliers, targeted market, quality and cost of labor, cost of land, accessibility to infrastructures and facilities, logistic.
4. Business organization: It is very hard to find a good definition of business organization in China, well this model find its sources in Mc Kinsey consulting firm model of 7 forces.
5. Business leader: Every good organization has a good leader. This last business orientation has some influence of Sun Tzu who wrote about the art of doing war and the influence of a good leader. This characteristic also took some inspiration in Warren Buffet thoughts (considered as the world greatest investor) and Jim Collins and Stuttard.

2.2. Positive for Chinese employment

More than 10 million entrepreneurs appeared in 90 cities in China between 2008 and the beginning of the end of 2010, with an average increase of 15% per year. The employment pressure in China, amplified by its huge population and social structure, has led the government to implement policies to encourage and support entrepreneurship in recent years.

China has eleven companies for one thousand people; the average number for emerging countries is from twenty to thirty, and forty to fifty for developed countries.

The employment pressure in China, amplified by its huge population and social structure has led the government to implement policies to encourage and support entrepreneurship in recent years. One of the concrete examples of those help is the recent access to small loan, which represented in 2010, twenty-seven million Yuan.

2.2.1 Boosting youth employment

Since the economic crisis of 2008 China is facing an important problem concerning graduated employment. One of the solutions to go trough this phenomenon has been to boost and encourage entrepreneurship. In the report to the 17th National Congress of the Communist Party of China, it writes, “Implement a development strategy that promotes job creation and encourage entrepreneurship to create more employment opportunities”. This initiative is one of the best initiatives that China took among its reforms plan. However, it is not that easy. Let’s discuss why.

First, additionally to financial capacities, graduated need experience to be able to target a market. After graduating they most of the time have part-time job experienced or internship, but still creating a business imply a market study.

Then, the ability to operate and manage a business is important. As post graduated, most of young entrepreneurs have no idea of how to manage a team (if their major is not management). Even though they studied it, in reality they lack of adaptability to deal with particular cases. It results in difficulties to manage the team, and consequently, the business.

Vast social resources, is another aspects to consider. It means that when starting a business, young entrepreneurs need social support to deal with all the start-up process, especially concerning collection of capital, raw materials, or sailing product or service. When students spend there all time on campus before graduating, they don’t really have the time to develop their network, as they would like, which can be a difficulty.

An innovative spirit is another aspect to consider. Starting a business: Yes, but for what? Many students and even in Europe are dreaming of starting their own business but when you ask them what, most of them are still looking for the big idea. That is the difference between entrepreneurs and others. Being Entrepreneur requires a lot a bravery to ask for funds and take the risk to fail. The government also plays an important role in this entrepreneurship spirit. After having discussed with one of the CEO of a new online e-commerce platform named Artifesto, I realized that education plays an important role in developing an entrepreneur spirit. Coming from Holland, he told me that for most of the students it is evidence that they will create their own companies. That is why I found interesting to search on education about entrepreneurship in China.

2.2.2. Education about entrepreneurship in China

Entrepreneurship and small business development are dealing with a revival of interest since a couple of years. First it starts in Europe, then USA. There appears to exist a consensus that entrepreneurship education and training has a major role to play in the development of entrepreneurial attitudes, abilities and related skills. Research have put the stress on the fact that individual having entrepreneurship courses are more able to develop a related business than others. However, as Matley suggests it in 1999, it is still very difficult to do a link between those kinds of programs and the proper ability of individuals to start a business.

Entrepreneurship education is a relatively new practice in China’s higher educational institutions. It comes from the Ministry of Education in 2001, which highlighted the importance of introducing special courses about entrepreneurship education, such as entrepreneurship financing or new venture management. It has for example lead to some students’ competitions about how to create the best business plans. Those initiatives are a real proof of the will of China to develop youth skills. It is important to realize that the growth of the Chinese economy in the post-1978 period was phenomenal. From 1980 to 2002 the growth of Chinese gross domestic product (GDP) averaged 8-10 per cent per annum, outpacing the performance of most other economies in the world. This growth has been yield by medium and small companies. In 1999 there were more than thirty three million small and medium sized companies registered in China. As China was still very state- controlled until the eighties, it is normal that they were no real helped for entrepreneurs, such as entrepreneurship education.

Then the sector of High-Tech has grown up quickly. In 2001, there are estimated to be 100,000,small firms, generating more than six hundred billion dollars. Then, the restructuration of society of policies has of course yielded to difficulties to provide jobs for everyone. Entrepreneurship has then become a way to do it, and has been promoted.

First initiatives to develop the entrepreneurship in China have been conducted in the sixties when radical politics were established. It was started at the moment of the Cultural Revolution but stopped until end seventies when education was more focused on being pragmatic. As the society was changing, and as new businesses were judged on efficiency, it has become necessary to give access to education on entrepreneurship, as those structures need, at least, a good management.

In the eighties China starts developing business and management schools. Those schools provide classes of Finance, Management, and accounting. In the nighties, MBA are introduced in China. The access to business schools, and partnership with Foreign one is quite new for China. This rapid access to education is a positive point to give keys to student to create their business.

2.2.3. The Raise of foreign entrepreneurs

Finally, I have decided to study the real face of entrepreneurship today in China. I have the opportunity to live in Shanghai, a city where many events happen. Shanghai is a business city, and a place for networking.

I have been introduced to “Drink Entrepreneurs”, an association who organized drinks in order to meet a lot of new entrepreneurs in China. The aim is to connect them together, in order to share experience, tools, and views of the Chinese Market. Trough this structure, I have discovered that a lot of other tools are available for entrepreneurs in China. Most of them are online and generally thanks to Facebook. A lot of structures exist in China to support entrepreneurship. In the same category, Meetup, a startup created in 2011, aimed at connected entrepreneurs in the world. They opened a group in Shanghai, and they connect entrepreneurs together to exchange networking tools and advice.

Those groups are composed of Chinese investors but also of foreigners. This is also the new face of China; it attracts a lot of entrepreneurs from abroad. But if we look deeply about what is happening, the main problem is always the same: China is a different market, with its own rules. As seen before, government implications are very difficult to deal with.

What I discovered among my research is that if a company wants to set up a business in China, it can try to deal with regulation during years, or, it has the possibility to create a very simple structure if the company only uses online payment systems.

This law permits to create very easily, websites online for foreign investors.

China’s online market has been growing with over 100% year on year for several years now. It has passed fifty billion euro in 2010 and will double in 2011. China has today most Internet users and online shoppers in the world. China also has the fastest growing online market in the world.

There is strong surplus in “Consumer to Consumer” online business, but lacking of Business to Consumer approach. And China is still the factory of the world. Foreign presence is still scarce but growing at impressive pace.

Those researches led me to discover iQubator, a business support office. I work there in Part- Time job, additionally to classes. It is very interesting to discover this kind of structure, which helps develop entrepreneurship in China.

An example of support office, iQubator, E-Business Support Office & e-Commerce Incubator

The aim of iQubator is to simplify the entry of foreign companies in China. As explained before, it can be very complicated to set-up a business here, because companies have to deal with a lot of parameters, such as government regulations and tax.

But if an investor wants to do business in China, having an office here, or at least a representative is crucial. This is how the Chinese Market works, you can’t have any credibility if you don’t have an address of a telephone number in China.

That is what iQubator provides. There are an E- Business Support Office.

- It is an office where companies and entrepreneurs can rent one or several spaces to work and lower the cost of office and support functions.
- A company, which can hire personnel, to work for the client company at the rented spaces and offers a wide range of services and packages to support the clients.
- A low cost and safe step in entering China with access to a wide network and extensive guan xi complemented by an infrastructure to support the customer’s supply chain, logistics, payment service, web shop developers and much more.

It is also a practical way to conduct a business without setting up a company (which can take years and cost millions). China is still one of the most difficult countries to start a business in, but iQubator makes it simple and safe so that companies can skip bureaucracy and concentrate on interesting aspects of Chinese Business.

Services:

- e-Business Support Office
- Serviced Office
- Business Consulting
- Virtual Office
- Virtual Assistant & Outsourcing
- Supplier Search
- Business Incubation
- Drop-in Office Business Visits Programs
- E-Commerce Support

Nowadays China has several well-know companies online, like Tabao, Alibaba, Ququ, Weibo and lot of other websites. The future of Chinese Entrepreneurship is online.

So this kind of support will really be used and helpful in the next few years.

3. China’s social entrepreneurship today

3.1. Social entrepreneurship, a recent concept, plenty of definitions

Several definitions can be used to describe and explain the concept of social entrepreneurship, first of them appears thirty years ago. It can also have several aspects.

The first aspect that I was introduced to was the concept of social entrepreneurship as a form of business that generates value for all components. It means that this kind of business will have a positive impact on the society.

The concept refers more broadly to private initiatives in the service of the general interest, adopting an innovative approach, inventing new solutions to social problems, so as to mobilize resources, adapting some methods used in the capitalist sphere to serve a social mission. It comes from the fact that people realized that change can happen and that it can happen thanks to them.

There are continuing arguments about what can be considered as part of social business. It is for example often associated with non-profit businesses, as an activity dedicated to support social actions to help people in needs. For example I had the opportunity to attend some Green Drinks events in Shanghai, in one of them I was introduced to association whose name Shanghai YoungBakers. Their aim is to provide education to young people in precarious situation in teaching them how to become bakers so that they can have a job.

If we look over the last decades, a lot of authors and economists have wrote about social entrepreneurship and have given different definitions.

Theobald (1987), economist and futurist author, describes entrepreneurs as risk-takers able to provide new business structures with no reference models.

More recently, Thompson et al (2000) view social entrepreneurs as individuals who see and identify an unmet need in a society and mobilize manpower, financial, and other resources to make a social impact.

Other authors perceive social entrepreneurship as heavily anchored on social responsibility. For instance, Dees (1998) highlighted the relevance of social goals and objectives while implementing the operational strategies. Finn (2004) noted that individuals who have converged business acumen and social conscience found social enterprises. Puttnam (2004) consider social entrepreneurs as people who are breaking rules, act outside the commons methodologies of business and focus on social transformation;

Banuri & Najam (2002) put the stress on the fact that those entrepreneurs also have an influence on policy change and reforms. Pomerantz (2002) studied the importance of alliances and partners.

At the end, in integrating those definitions, Social entrepreneurship can be seen as a dynamic process including pro-active and mission oriented actors whose aim is to develop a sustainable business in using new management methods. Social entrepreneurs are visionaries and have some excellent ideas for change. They are risk takers and innovators and instinctively they push at the boundaries of accepted norms of behavior or knowledge or business practice. The problem with social enterprise is it doesn’t have a legal structure. It is more a state of mind as much as anything else. Much of this is about the individuals that are involved in running these social businesses.

In China, social entrepreneurship is a growing trend; entrepreneurs drive it because the trust in government-controlled charity is very poor. Asking for donations is not the best way to work on social issues in China. Still, some good examples of charity in China have been referenced, such as donations during the earthquake in Sichuan.

Social entrepreneurship in China is still a new concept. Whereas everywhere in the world it is well known since several years, in China, first notions about it appears in 2004.

The phenomenon began with the translation in Chinese of two very interesting books: “How to change the world” by David Bornstein, and “Banker to the Poor” by Mohammed Yunus.

The 2008 Sichuan earthquake has lead to a lot of social actions in China and since then, the sector (incubators, impact investors, the media and academic researcher) have expanded across the country. In 2008, it is eight billion dollars that people gave for solidarity. Where during the government of MAO, solidarity was considered as a lack of the government to provide sufficient access to wealth; it is now a growing trend in China.

Globalization has facilitated the expansion of international businesses. While China is booming and integrating new activities year after year, there are also a lot of inequalities to deal with, particularly in rural area. Poverty, surplus rural workers, low-paying jobs, air pollution, soil erosion, are all justifications of the development of social entrepreneurship.

Over the past three decades China has lifted about 500 million people out of poverty, yet by 2011, 128 million, nearly one-tenth of the nation's total population, still remain below the national poverty line of RMB 2, 300 per annum.

As an emerging nation, China is seeking to define a balance between the good of the private enterprise and public good. The prevalent mindset is to aspire to build a generally well-off society with a GDP per capita of about $900 by 2020 (Guiheux, 2006). This is still extremely low compared to Europe. As social entrepreneurship often takes place in emerging countries, China is then a vast territory with infrastructures to develop a sustainable business. But it implies to deal with challenges.

Why can we consider that there are opportunities for social entrepreneurship in China?

This has been a subject for many authors to write about.

Friedman (2000) alluded to the “democratization of information” in a global environment that has facilitated the flow of information due to communication and technological efficiencies.

This has lead to the development and the implementation of new concepts in China, such as social entrepreneurship that has been identified has manners and way of doing business with a responsible part. Prahalad & Hart (2002) have been studying that there were a shift in the interest of the market and where before only five percent of the richest were consuming now forty percent of the poorest are also considered as interested markets. Some companies are realizing that they are also able to find success for their products and services in emerging countries.

Looking at the statistics along, the potential of Chinese social enterprises for job creation, as well as individual motivation are similar to social entrepreneurs in other countries including the United Kingdom or India. Yet, the entrepreneurial ecosystems in which they operate and the challenges they face are unique due to the high influence and role of the government.

Social entrepreneurs in China face a variety of challenges, some in common with their global counterparts, some unique to China. Access to funding is the main problem; China is still very poor in terms of services provided to entrepreneurs. It is still very difficult to get a loan. Then the government’s influence is also very controversial. Dealing with rules and government control is a problem of companies. For example, some companies are not even registered, because entrepreneurship is so new that there is no framework at all. Those professionals have a very high vision and expectation but within the Chinese institutional system, much of their potential has not yet been released.

3.1.1 What is a social entrepreneur? – The point of view of experts

The definition can be different depending on points of view. I decided to select major definitions of most influential companies in social entrepreneurship,

For Ashoka, “Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps. Social entrepreneurs often seem to be possessed by their ideas, committing their lives to changing the direction of their field. They are both visionaries and ultimate realists, concerned with the practical implementation of their vision above all else.

Each social entrepreneur presents ideas that are user-friendly, understandable, ethical, and engage widespread support in order to maximize the number of local people that will stand up, seize their idea, and implement with it. In other words, every leading social entrepreneur is a mass recruiter of local change makers—a role model proving that citizens who channel their passion into action can do almost anything.

Over the past two decades, the citizen sector has discovered what the business sector learned long ago: There is nothing as powerful as a new idea in the hands of a first-class entrepreneur.”

For Make Sense, A social entrepreneur is someone who got the potential to change the world. In other terms, his aim is to further broader social, cultural and environmental goals.

3.1.2 Social Enterprise versus NGO’s

A difference has to be made between a social company, which is a company aimed at doing social business on a profit- making basis, and NGO’s, Non-governmental organizations that are non-profit. At the moment China has to deal with the fact that most of NGO’s lack of funding, and tried to change their status to become companies. From a research conducted in 2008 by the British Council, it has been determined that 68% of social enterprises interviewed were more or less linked to NGO’s, which resulted in saying that China does not have social entrepreneurs.

3.2. Main particularities of social companies in China

3.2.1 Legal aspect & Governance

Social enterprises in China are a relatively new concept, there is no specific legislation for them and they have to adhere to the existing legislative framework. This is kind of a challenge for social enterprises but they can choose which status they want.

(Commercial companies, farmers’ specialized co-operatives, Social Welfare Enterprises (SWEs), civilian-run educational institutions and civilian-run non- enterprise units)

Depending on the legal status chosen, social enterprises have to follow a specific ownership structure, profit distribution and governance model and may benefit from tax exemption. As seen before, some companies still prefer to register as NGO’s.

3.2.2 What about tax exemption?

It really depends on the status companies have. If they register as NGO’s they don’t have any taxes to pay. But as it is a particular status, this is very difficult to obtain it; there are several institutions involved, such as the Civil Affairs Bureau. They can register as this bureau at the only condition they have a “supervisor”. This supervisor has to be a member of the government who will act as an agency, in charge for you to register your company.

[...]

Excerpt out of 56 pages

Details

Title
Social Entrepreneurship in China
Subtitle
Modern face of a new challenge
College
Tongji University
Author
Year
2013
Pages
56
Catalog Number
V231933
ISBN (eBook)
9783656481430
ISBN (Book)
9783656481409
File size
1184 KB
Language
English
Tags
Entrepreneurialism, Social entrepreneurship, Youth education, Corporate Social Responsibility
Quote paper
Apolline Reyniers (Author), 2013, Social Entrepreneurship in China, Munich, GRIN Verlag, https://www.grin.com/document/231933

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