Between Charity And Business

By WANG HAIRONG

Between Charity And Business

By WANG HAIRONG

Chinese social entrepreneurs seek to solve social problems by using a business approach

The journey from poverty to prosperity can take many paths. Ren Xuping went from an impoverished rural boy in Dayi County, Sichuan Province, to a multimillionaire businessman thanks to rabbits.

At the age of 13, Ren dropped out of school because his family could not afford the fees. To cheer him up, his father bought him a pair of rabbits. One of the female rabbits was pregnant and gave birth to eight babies. Ren sold the babies and was paid the equivalent of half an adult’s monthly salary at that time.

With this frst income, Ren bought more female rabbits and kept repeating the cycle. His business snowballed. By the age of 16, his business was generating 400,000 yuan ($202,000 by the exchange rate in 1983), making him extraordinarily wealthy by the standard of the time.

Today, his rabbit farm breeds 2.3 million rabbits annually, and generates a sales volume of 23 million yuan ($3.5 million). He also owns a fur company, a food company, a training school and a poverty alleviation study center.

Ren has used his experience and skills to lift others out of poverty. In 1990, he established a training school to teach others how to start rabbit rearing businesses. More than 300,000 people, from various places in China and countries such as Nepal, Thailand and India, have been trained in this school. Most of the trainees have managed to increase their incomes as a result of his training.

Now more than 40 percent of farmers in Dayi County raise rabbits, which have become the county’s major source of income. The farmers credit their success to Ren, China’s Rabbit King.

New concept

Ren was described as a social entrepreneur in a book published in China in 2010 by Global Links Initiative, a U.K.-based nonprofit organization which aims to “support positive and creative action on social inclusion and citizen empowerment worldwide.”

The term “social entrepreneur” was introduced in China around 2006, when U.S. journalist David Bornstein’s bookHow to Change the Worldwas translated by Wu Shihong, former general manager of IBM China and Microsoft China. Bornstein’s book described how individuals he called “social entrepreneurs” solved social and economic problems with innovative grassroots approaches.

“There is no universal defnition for social enterprises or social entrepreneurs,” said Chu Chaoyu, Director of the Social Service Center of Amity Foundation, a non-profit organization based in Nanjing of east China’s Jiangsu Province. “Their most salient feature is the use of business approaches to achieve social goals,” Chu said.

Jia Xijin, a Tsinghua University professor studying non-profit organizations, said that social enterprise is a social rather than legal concept so an organization run by social entrepreneurs does not necessarily enjoy tax privileges.

“When the concept of social entrepreneurship was introduced in China, many people working in the non-proft sector were very excited, expecting that it would lead Chinese non-governmental organizations (NGOs) to overcome many obstacles and develop rapidly,” said Chu.

According to Chu, Chinese NGOs face three major growth bottlenecks: insufficient policy incentives, a lack of funding, and low credibility. However, he does not think social entrepreneurship alone will remove the obstacles confronting NGOs, although he believes its key elements—ethics, innovation and adventure—will help NGOs solve their problems.

“Social entrepreneurship will inspire more NGOs to think innovatively and explore new opportunities so as to improve their own effciency and effectiveness,” Chu said.

Since 2009, the British Council has run training seminars on social entrepreneurship to “identify and equip a new generation of NGO workers in China who have the skills and desire to solve social problems using business strategies.” Some British social entrepreneurs have been invited to China to share their experiences.

So far, 580 established and would-be Chinese social entrepreneurs have attended the British Council’s trainings, and 35 organizations have obtained funding totaling 5 million yuan ($770,000), according toChina News Week, a Beijing-based magazine.

“The most important purpose of the training is to change traditional thinking about philanthropy,” said Peng Yanni, Assistant Director of Society and Development at the British Council’s Beijing offce. Peng said it prompts charitable organizations to think beyond fund raising and try a business approach.

“While the concept has inspired some Chinese philanthropists to adopt business approaches and techniques to promote their causes, China’s mainstream academic and business communities as well as the Chinese Government have not yet shown much enthusiasm for the concept,” said Wang Haijun, a program offcer at the British Council’s offce in Shanghai.

CFP

“Overall, social enterprises in China are still in their infancy. It is hard to say how many such enterprises are out there. There are few successful cases,” Peng said.

Young social entrepreneur

Ni Kaizhi is a young entrepreneur trying to apply a business approach to philanthropy. At the age of 25, Ni turned from a marketing manager in an IT company to a fulltime philanthropist after the 2008 Wenchuan earthquake. Three days after the earthquake struck, Ni took a month leave from his job and arrived at the disaster-stricken area to work as a volunteer.

After a month as a volunteer, he made the decision to remain in the Wenchuan area and work to improve the income of farmers. He joined NPI, a Shanghai-based non-proft organization founded in 2006, which aims to support other small and medium-sized nonproft organizations. After spending one year helping others to start up NGOs, Ni decided to start one himself.

Ni learned about social entrepreneurship at training programs run by the British Council. His frst project involved contracting local farmers to plant crops, raise livestock and make artifacts, and sell their products at an online fair trade platform. He started the project because he found that individual farmers had low bargaining power with purchasers and did not have suffcient access to information and marketing channels. By buying in bulk and taking over marketing, Ni hoped to help farmers overcome these obstacles, but his project wasn’t as successful as he had hoped.

Ni then adjusted his strategy and began to work on voluntourism. Voluntourism, as the word itself indicates, combines vacation travel with volunteering at the destination. For instance, travelers can pick up trash on their way, take care of injured animals, or help people in need.

Ni has contracted farmers to provide lodging and food to travelers. So far, his organization, China Rural and Urban Community network (RUC network) has signed contracts with about 100 households in various places around the Wenchuan area.

The RUC network is responsible for marketing the tours and 70 percent of travelers’ payments go to the farmers, 20 percent is spent on administrative overheads including car rentals, and the remaining 10 percent is used to fund Ni’s organization.

During the week-long National Day holiday in October 2010, a peak travel season, RUC network organized a two-day tour, which brought an income of 1,950 yuan ($300) to each contracted household.

Beautiful business

Yan Junhui, director of the Qiang Embroidery Employment Support Center, also became a social entrepreneur after the Wenchuan Earthquake.

CHEN JIANLI

After the 2008 earthquake, Yan and her husband Gao Tunzi went to the disasterstricken area with friends to distribute medicine to victims. The area is inhabited by Qiang people, an ethnic minority in southwest China.

The earthquake seriously damaged Qiang communities, and Qiang women were particularly vulnerable. Yan, who owned a handcraft business in Chengdu, capital of Sichuan Province, wanted to fnd a sustainable way to help the Qiang people. She knew Qiang women excel in embroidery, so she set out to fnd a larger market for their embroidery products.

The center recruits and trains Qiang women as professional seamstresses, which gives them the opportunity to make money by working at home.

Yan runs the center like a company, emphasizing design and marketing.

To solicit good designs from professional designers, the center has partnered with art institutes and design frms. Yan and her design team want the products to have both aesthetic and practical value. They have designed embroidered shopping bags, purses, wallets and car accessories.

The center won big orders from large state-owned companies such as Mengniu Diary, Lenovo and China Mobile. It has also opened retail shops in Chengdu and other places in Sichuan Province.

In late 2008, Yan and her team learned a hard lesson when dealing with big businesses. One company placed a 3-millionyuan ($460,000) order, yet because the center could not deliver the products on time, the company cancelled 40 percent of the order.

To make the center more effcient, Yan hired professionals to improve its management. Tighter cost controls were introduced and more incentives were given to good salespeople.

Now the center works with 8,000 seamstresses, who usually make 300-1,000 yuan ($46-154) per month depending on their time commitment and skill level.

“I make more than 1,000 yuan ($154) per month by embroidering. With this money, I have bought a television and fertilizer. It is a double blessing that we can make more money and preserve our Qiang culture at the same time,” said Guo Jianxiu, from Mianfeng Village of Wenchuan County.

support from the One Foundation which was founded by film star Jet Li. On July 24, 2008, the Qiang Embroidery Employment Support Center was offcially launched. The One Foundation offered to cover the costs of materials, transportation and human resources until the center became self-suffcient.