Posted:26 Jul 2015

Scaling Social Entrepreneurship in China

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ICSF_China_ReportAs China’s economy transitions towards maturity, where conversations of balanced growth replace growth at all cost, awareness of social entrepreneurs and enterprises is possible solutions to the environmental, societal, and economic challenges faced. A change in dynamic that will lead to increase opportunities, and markets, for scale.

In fact, as borne through our research, the first organizations are already breaking out. Organizations that were once struggling to be recognized, struggling to find traction in programming, or struggling to find funding, are now finding scale in program portfolios, organizational size, funding, and most importantly impact.

It is a shift of mindset that is also occurring across a range of critical stakeholders:

• Business leaders are looking at social issues as new markets, and successful social minded enterprises as potential investments
• Consumers have begun looking for safe, reliable, high value products, and more importantly they are showing that they are willing to pay a premium
• Non-profit leaders are finding that their organizations are gaining traction as service providers to the government are overcoming their fear of “profit” when planning for the future, and as a result are paying market wages for themselves and their staff
• Employees are now wiling to leave comfortable lifestyles and jobs behind for the prospect of building a new model for change
• Universities are forming new programs that move beyond research and into the classroom, with several funding centers and creating master’s levels programs
• Government agencies hiring social enterprises and creating new opportunities for entrepreneurs through the government infrastructure, be paid well for their service, and be given access to training opportunities, new programs, and the ability to advocate.

A final trend that we found to be on the cusp of scale is that of Chinese rooted organizations taking their platforms abroad. Until recently there has been very little (if any) interest in outreaching to other countries as China’s own needs have been so large, but this is changing and going forward we see the potential for scaling the lesson and platforms that Chinese entrepreneurs have created into other areas of the world where job creation is a critical need. Where urbanization and settling large migrant populations will be a critical need. Where the expectations of the middle class rise, and new systems for safe food delivery, affordable education, and accessible healthcare are required.

All trends that we believe will provide the foundation for a significant amount of additional traction, and scalability, in the next 3-5 years.

As presented in this report, with opportunity comes challenges, and through our research we have come to understand that the obstacles that entrepreneurs face are often rooted in both the ecosystem that they are operating in as well as in their own business and management models.

In particular, there were 10 dynamics of scaling that we felt posed the greatest challenges, or were areas where one could look at the organization to understand better about how they
were scaling:

• Did the organization have a clear value proposition?
• Were organizations localizing platforms as they scaled into or across China?
• Has the entrepreneur, or organization, proven a concept that can be scaled?
• What is the business model, wholly owned or franchised, that will serve as its medium for growth?
• Did the organization have a legal structure?
• Does the organization possess the internal processes necessary to grow?
• Does the organization have the middle management capacity necessary to manage the growth?
• Is the funding right-sized and diverse enough to support, and maintain, growth of operations
• Is the firm’s mission, and products or services, aligned with the needs of the government

To help entrepreneurs manage these dynamics and overcome the challenges of growth, to fully realize their vision, it will take multiple stakeholders to bring a coordinated impact.

It will take intermediaries to build knowledge bases, opportunities for peer-sharing, mentorships, and bring focused support to organizations when they are in need, and it will take customers who are not only willing to pay, but do pay, for the products and services that these entrepreneurs are bringing to the market.

For us, we remain hopeful and optimistic about the prospects for socially minded entrepreneurs and enterprises to find opportunities to scale, and we hope that through this report you find ways in which you are able to participate in the
process.

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