In 2011, philanthropy in China was rocked by a series of scandals, most notably that of Guo Mei Mei, a young woman whose parading of a ‘bling’ lifestyle while apparently associated with a highly respected charity became national news. While charities in China have since improved their standards of accountability, many donors are opting instead for direct giving via the internet and ‘sustainable’ approaches such as social enterprise and impact investment. Curiously, the true legacy of Guo Mei Mei (pictured below) may be that China is able to make a ‘generational’ leap towards these new forms of doing good.
To explore this hypothesis further, UBS has supported a major study undertaken with partners including the Social Enterprise Research Centre at Shanghai University of Finance, the Center for Civil Society Studies at Peking University, the 21st Century Business Herald newspaper in China and the University of Pennsylvania. Published in English just as UBS successfully launched its own US$50 million impact investing fund, this is the first comprehensive survey of the field undertaken by academics attached to leading Chinese universities. The Chinese version of the report was released at the Boao Forum for Asia in April 2013 in Hainan province in southern China, a major event attended by many senior figures from business, government and civil society in China.
The status of social enterprises in China
To date, no broadly accepted definition of or administrative arrangements for social enterprise exist in China. However, there is an existing model, the ‘welfare enterprise’, which dates back decades. Welfare enterprises typically provide employment opportunities to disadvantaged groups, notably the physically handicapped. In the mid-1990s, with government incentives and support, the number of welfare enterprises exceeded 60,000 in China employing more than 900,000 people. Since then, with greater market liberalization, the number has halved. Nevertheless, welfare enterprises provide an authentic tradition in China on which social enterprise may build.
The first, and most successful, social enterprises have grown out of the welfare enterprise tradition. Of these, perhaps the best known is Canyou, headquartered in the fast-growing city of Shenzhen, an IT services company of which more than 95 per cent of employees are disabled. The founder of Canyou, Zheng Weining, started the company in 1999 with five disabled employees and one computer – ‘trying to divert myself from my own loneliness and provide myself with another way of living’. Now Canyou has 32 subsidiaries in 11 provinces, employing over 3,700 people and providing a full suite of IT services including animation design, system integration, business process outsourcing and e-commerce.
The outpouring of public support after the 2008 Wenquan earthquake also provided a spur to establish sustainable enterprises to bring long-term support to affected areas. One such venture is the Aba Qiang Embroidery Support Programme, which provides employment opportunities to craftswomen in a minority ethnic group facing extreme poverty. (Pictured: Peer-to-peer learning among Aba Qiang embroiderers.) Start-up capital for the venture came from One Foundation, founded by actor and martial arts star Jet Li. The first store for the venture, founded by couple Yan Junhui and Gao Tunzi, opened in the western city of Chengdu in 2010, with a total of 14 planned by the end of 2013.