• 1 Sutia Kim Alter, “Social Enterprise Models and Their Mission and Money Relationship,” in Alex Nicho (...)
• 2 Raymond Dart, “The Legitimacy of Social Enterprise,” Non-profit Management and Leadership, Vol. 14, (...)

2Existing literature has interpreted socially entrepreneurial non‑profits as “stronger, more innovative, and entrepreneurial” alternatives to conventional non‑profits,1 having the potential to solve social problems and create social values in more sustainable, creative, and effective ways. As Raymond Dart notes, “The changes from conventionally understood non‑profit to social enterprise are stark: from distinct non‑profit to hybridised non‑profit‑for‑profit; from a pro-social mission bottom line to a double bottom line of mission and money; from conventionally understood non‑profit services to the use of entrepreneurial and corporate planning and business design tools and concepts; and from a dependence on top‑line donations, member fees, and government revenue to a frequently increased focus on bottom-line earned revenue and return on investment.”2

• 3 Elizabeth Chell, “Social Enterprise and Entrepreneurship,” International Small Business Journal, Vo (...)
• 4 Xiaomin Yu, “Social Enterprise in China: Driving Forces, Development Patterns and Legal Framework,” (...)
• 5 Xiaomin Yu and Kaijie Ding “Shehui qiye de fazhan lujin: guoji bijiao yu Zhongguo jingyan” (The dev (...)

3However, SE is intrinsically a contextual process in which socioeconomic, historical, and cultural contexts may have determining effects on its dynamics and nature.3 Empirical study of the phenomenon needs to analyse specifically the embeddedness of SE through comparing the contextual effects of different countries, especially across the lines between developed and developing countries or Western and Eastern regions. As the largest developing country in the world, China has experienced a bourgeoning development of SE over the last few years, providing a theoretically promising research locus to examine the contextual effects of SE. Socially entrepreneurial organisations emerging recently in China vary from one type to the other in terms of development origin, social mission, organisational nature, legal status, and operational model.4 The burgeoning of SE in China is driven by multiple forces embedded in the state, the market, and the third sector of China as well as the international community. Various driving forces exert their impacts in different ways, such as marketisation of state-owned welfare institutions in the state sector; corporate social responsibility in the market sector; commercialisation of non-profits and new co-operative movements in the third sector; and diffusion of overseas experience (especially in the fields of microfinance and fair trade) in the international community.5

• 6 Jacques Defourny and Shin-Yang Kim, “Emerging Models of Social Enterprise in Eastern Asia: A Cross‑ (...)

4The development of SE in China is still in its infancy, drawing scant academic attention. A handful of scholars have explored the issue by defining its conceptual boundaries, identifying its driving forces, and delineating its development landscapes.6 However, few of them have provided empirical analysis of the issue using either qualitative or quantitative techniques; and none of them has examined the phenomenon through comparing SEs with conventional counterparts in China’s non-profit sector. To what extent can socially entrepreneurial non-profits be understood as a “stronger alternative” to conventional non-profits in China? In what ways will SE respond effectively to development challenges faced by China’s non-profit sector, such as scarcity of financial resources and the predomination of the Party-state over civil society? This article seeks to provide preliminary answers to these largely unexamined questions through analysing empirical data drawn from a qualitative case study approach.

• 7 Shawn Shieh and Guosheng Deng, “An Emerging Civil Society: The Impact of the 2008 Sichuan Earthquak (...)

5The year 2008 is referred to as China’s “Year of the Volunteer” or the “Year of Civil Society,”7 in recognition of the unprecedentedly vibrant civic response to 5.12 Wenchuan Earthquake that wreaked devastation on Sichuan and other parts of southwest China. In addition, the post-disaster reconstruction not only witnessed a dramatic growth in the scale of civil society (in terms of social donations, volunteering, and participation of grassroots NGOs), but also fostered SE practices that have the potential to overcome the barricades hampering the development of China’s civil society. For instance, scarcity of financial resources is a grave challenge confronting many Chinese social organisations, especially those operating at the grassroots level. By launching socially entrepreneurial initiatives, grassroots civic organisations may find alternative funding sources through generating market-based revenue, or establishing partnerships with commercial companies. Therefore, the innovative participation of civil society in post-disaster reconstruction provides a suitable window to examine the research questions we focus on.

• 8 Robert K. Yin, Case Study Research: Design and Methods (Third Edition), Thousand Oaks, Sage, 2003.

6Data for this article derive primarily from an in-depth case study conducted in 2011 of the “Joyful and Harmonious Home” (JHH), an SE initiative operated in quake-affected areas by Global Village of Beijing (GVB). The case was selected as a “critical case”8 utilised to confirm, challenge, or extend an existing theory, based on several considerations: 1) as one of the most prominent grassroots environmental NGOs in China, GVB has made a considerable effort to integrate the notions and approaches of SE into its strategies and practices; 2) the JHH program is recognised as the best practice of civic participation in post‑disaster reconstruction because of its innovative quality and social impact; 3) the JHH program is one of a small number of “sustained” SE initiatives located in the quake-stricken areas. Empirical data were collected from anthropological fieldwork at a small village in the mountainous rural region of Pengzhou City, Sichuan Province, where the JHH program operates. Two kinds of research methods were employed: 1) semi-structured interviews with multiple stakeholders involved in the JHH program (including two employees of GVB, one local government official, two village cadres, and eight ordinary villagers); and 2) participant observation of various reconstruction activities and business ventures under operation.

• 9 Raymond Dart, “The Legitimacy of Social Enterprise,” Non-profit Management and Leadership, Vol. 14, (...)
• 10 J. Gregory Dees and Beth Battle Anderson, “Framing a Theory of Social Entrepreneurship: Building on (...)
• 11 Sutia Kim Alter, “Social Enterprise Models and Their Mission and Money Relationship,” art. cit.

8The last two decades have witnessed a flourishing of SE as a “radical innovation”9 in the non-profit sector across the world. Discussion of SE in the non-profit sector is dominated by three different schools of thought – the earned-income school, the social innovation school, and the social enterprise school.10 Although the three schools of thought diverge in delineating the boundaries and nature of SE and examining its dynamics, they converge on a common analytical focus – the way SEs differ from traditional non-profits as a new approach to solving social problems and creating social value more sustainably, innovatively, and effectively. Synthesising contesting explanations of this issue, socially entrepreneurial organisations (or social enterprises, SEs) have been interpreted as “stronger, more innovative, and entrepreneurial” alternatives to conventional non‑profits11 in terms of strategy, structure, norms, and values. Specifically, the differences between SE and traditional non-profits have been delineated in the following nine aspects.

• 12 Sutia Kim Alter, “Social Enterprise Topology,” The Four Lenses Strategic Framework, www.4lenses.org (...)

9Balancing social and economic objectives. Substantially distinct from traditional non-profits driven solely by social goals, SEs need to strike an appropriate balance between social and economic objectives. As “marketdriven and mission‑led” dual-value organisations, SEs usually emphasise “using business tools and approaches to achieve social objectives.”12

• 13 Howard P.Tuckman, “Competition, Commercialization, and the Evolution of Non-profit Organizational S (...)
• 14 Sutia Kim Alter, “Social Enterprise Models and Their Mission and Money Relationship,” art. cit.
• 15 Carlo Borzaga, Sara Depedri, and Ermanno Tortia, “The Growth of Organizational Variety in Market Ec (...)

10Hybridising organisational structure. Many SEs set up hybrid organisation structure in order to engage in both non‑profit and for‑profit activities. The hybrid organisation forms found in SEs range from “holding companies” that carry out for‑profit activities and generate income for the non-profit parent to “joint ventures” that take the form of partnerships between non‑profits and for‑profits.13 According to the level of integration between their social programs and business activities, SEs fall into three categories: embedded, integrated, and external.14 In addition, organisational forms of SEs vary in terms of legal status. After Italy introduced laws regulating social cooperatives in 1991, at least 14 European and North American countries, as well as Japan and South Korea, had approved laws on SEs by 2009.15

• 16 Jonathan Moizer and Paul Tracey, “Strategy Making in Social Enterprise: The Role of Resource Alloca (...)
• 17 Sutia Kim Alter, “Social Enterprise Topology,” art. cit.

11Broadening operational models. Because they have both social and commercial objectives, SEs contain a high level of complexity in their strategies and operations. Not only do they have to generate sufficient revenue to re‑invest in their business ventures, they also have to maintain investment in social projects.16 Sutia Kim Alter classifies a variety of operational prototypes normally used by SEs, including nine fundamental models (entrepreneurial support, market intermediary, employment, fee-for service, low-income clients as market, cooperative, market linkage, service subsidisation, and organisational support) and combining models that provide the best fundamental models to achieve the organisation’s dual objectives.17

• 18 Helen Haugh, “A Resource-based Perspective of Social Entrepreneurship,” in Jeffrey A. Robinson, Joh (...)
• 19 Jerr Boschee, “Eight Basic Principles for Non-profit Entrepreneurs,” Non-profit World, Vol. 19, No. (...)
• 20 Laurent Gardin, “A Variety of Resource Mixes Inside Social Enterprises,” in Marthe Nyssens (ed.), S (...)
• 21 Adalbert Evers, “The Significance of Social Capital in the Multiple Goal and Resource Structure of (...)

12Diversifying resource base. As with mainstream non-profits, socially entrepreneurial organisations rely on a resource pool combining financial, physical, and human assets.18 As the earned‑income school highlights, in contrast to traditional non-profits, which rely primarily on grants and donations to achieve their social goals, SEs often engage in profit‑making activities and generate a significant amount of their revenues.19 Going beyond earned-income strategies, the social enterprise school stresses that SEs often obey “three different types of economic principles – market, redistribution, and reciprocity,”20 and create a diversified resource base that often mixes earned income, donations, volunteering, and government subsidies.21 In contrast, the social innovation school focuses on elucidating the innovativeness of social enterprise in using resources.

• 22 Helen Haugh, “A Resource-based Perspective of Social Entrepreneurship,” art. cit.
• 23 Angela M. Eikenberry and Jodie Drapal Kluver, “The Marketization of the Non-profit Sector: Civil So (...)
• 24 Marthe Nyssens (ed.), Social Enterprise: At the Crossroads of Market, Public Policies and Civil Soc (...)

13Strengthening cross-sector partnership. In searching for resources they need, SEs frequently rely on effective cross-sector networking and partnership.22 In the nexus of SE and company, SEs are increasingly partnering with companies in new ways, such as cause-related marketing, endorsement, sponsorships, and other forms of dealings with corporations, instead of accepting donations.23 In the nexus of SE and government, public authorities usually provide direct support (such as public purchasing or grants) and indirect subsidies (such as exemptions and tax deductions) to certain types of SEs.24

• 25 Jerr Boschee, “Eight Basic Principles for Non-profit Entrepreneurs,” art. cit.
• 26 Jean-Louis Laville and Marthe Nyssens, “The Social Enterprise: Towards a Theoretical Social-Economi (...)
• 27 Moshe Sharir, Miri Lerner, and RonitYitshaki, “Long-term Survivability of Social Ventures,” in Jeff (...)

14Facing new challenges to achieve organisational sustainability. The earned-income school argues that financial sustainability and self‑sufficiency are essential aspects of SEs that distinguish them from traditional non‑profits.25 However, financial viability in itself does not provide a full picture of the organisational sustainability of SEs. Instead, the long-term durability of SEs depends on their ability to acknowledge and manage the symbiosis between two competing sides of the organisation – commercial activity (assessed by efficiency, competiveness, profitability, etc.) and social action (evaluated by legitimacy, participation, impact, etc.).26 In addition, some empirical studies show that the long-term viability of SEs is determined by a variety of internal and external factors, especially “their ability to gain resources and legitimacy, create cooperation with other institutions and develop internal managerial and organisational capabilities.”27

• 28 Sara Depedri, “The Competitive Advantages of Social Enterprises,” in Leonardo Becchetti and Carlo B (...)
• 29 Sutia Kim Alter, “Social Enterprise Topology,” art. cit.; Jonathan Moizer and Paul Tracey, “Strateg (...)

15Nurturing stakeholders’ participation and democracy in governance. The main advantage of SEs over traditional non-profits is their governance model.28 In many countries (especially in Western Europe), SEs typically have a democratic governance structure that allows the direct involvement of a wide range of stakeholders (e.g. users, clients, donors, employees, volunteers, social investors, etc.) or indirect participation through trustees or directors who have the power to make decisions on behalf of stakeholders.29

• 30 Sara Depedri, “The Competitive Advantages of Social Enterprises,” art. cit.

16Limiting profit distribution. Unlike conventional non-profits prohibited from profit distribution, SEs are subjected to a “weakened” non-profit distribution constraint, to allow them to accumulate financial resources and improve their economic stability.30 However, the degree to which profit distribution is constrained varies among SEs based on legal status and operational model.

• 31 Sutia Kim Alter, “Social Enterprise Models and Their Mission and Money Relationship,” art. cit.

17Enlarging social impact. SEs are deemed to be more innovative than conventional non-profits in that they seek new ways to accomplish social change on a large scale. The SE paradigm provides non‑profits with a mechanism to strengthen, expand, or enhance their missions by creating more meaningful social impact, by reaching new client markets, or by diversifying their social services.31

• 32 Elizabeth Chell, “Social Enterprise and Entrepreneurship,” art. cit.; Janelle A Kerlin, “A Comparat (...)
• 33 Daphne W. Yiu, William P. Wan, Frank W. Ng, Xing Chen, and Jun Su “Sentimental Drivers of Social En (...)

18Based largely on SE practices in developed Western societies, previous literature has identified salient features that make SEs distinct from traditional non-profits. However, as a handful of scholars assert, theoretical development in this field needs to recognise the socio‑economic, historical, and cultural contexts in which SE practices are rooted.32 The embeddedness of SE indicates that previous theories on SEs that are constructed primarily in the context of Western societies may have limitations if applied directly to explain the situation in China, which differs from many Western societies in terms of stage of development, welfare regime, state-society relationship, and the nature of civil society. Therefore, empirical studies are needed to achieve a deep understanding of the development dynamic of SEs in the Chinese-specific context. Although recent years have witnessed the growth of empirical studies on SEs in China,33 none of the existing literature focuses specifically on explaining whether, why, and how SEs in China differ from traditional non-profits or deserve the label of “stronger alternatives.”

• 34 Tom Spender, “Development: Grassroots Groups Flourishing in China,” Global Information Network, 1 M (...)
• 35 Ting Yang, “Volunteer Groups Starting to Have a Bigger Role in China,” The China Post, 13 May 2011.
• 36 Chuanjin Tao, “Dizhen zaihou jiuyuan zhong NGO de canyu jizhi” (The participation mechanism of NGOs (...)

20The year 2008 was recognised as the “Year of the Volunteer” or the “Year of Civil Society” in China because of an unprecedentedly vibrant civic response to the disaster. Immediately after the disaster, ordinary citizens, social organisations, and socially responsible companies nationwide rushed to the stricken areas to deliver all kinds of aid. The year 2008 saw 100 billion yuan in social donations, with the earthquake accounting for 76 billion yuan, up from 31 billion yuan in 2007.34 Moreover, nearly five million volunteers poured into quake-stricken areas to engage in rescue, relief, and reconstruction.35 In addition, the quake triggered the growing participation of grassroots NGOs. By the end of 2008, 263 NGOs or volunteer groups had responded to the earthquake by raising funds, delivering materials, providing services, or organising networks.36

• 37 Limin Bao, “Shui lai zhizhang 760 yi yuan dizhen juankuan?” (Who is in charge of 76 billion yuan do (...)

21However, as the emergency phase moved into the more complicated and demanding recovery and reconstruction phase, the involvement of civic groups receded like an ebbing tide. It was reported that by April 2009, the number of NGOs or volunteer groups working in the quake-stricken regions declined from nearly 300 to fewer than 50, while the number of volunteers decreased from nearly five million to some 50,000.37 The fading away of civic participation in the reconstruction process was a manifestation of the structural obstacles encountered by Chinese civil society over the long term.

• 38 Ibid.

22First, scarcity of financial resources remains a grave challenge confronting many Chinese civic organisations, especially those operating at the grassroots level. Currently, grassroots groups depend mainly on unstable donations from overseas funders. The earthquake seemed to bring about an outpouring of domestic social donations. Nevertheless, China’s current charity policies stipulate that only governmental organs and government-organised charities are allowed to receive donations for disaster relief from the public. Amongst the 65.2 billion yuan in donations collected by the end of 2008 for the earthquake, 58% went directly to government accounts; 31% (collected by local branches of government-run foundations) also indirectly ended up in government coffers; and only 11% went to government-run foundations, which became the only possible financial resource accessible to civic organisations. However, in practice, these government-organised foundations relied mainly on their local branches and governmental ties to put the funds to work.38 In short, although social donations grew rapidly after the earthquake, only a tiny share of the new resources was available to civil society and was unable to alleviate the scarcity of financial resources among grassroots civic groups.

• 39 Shawn Shieh and Guosheng Deng, “An Emerging Civil Society: The Impact of the 2008 Sichuan Earthquak (...)

23Second, with an authoritarian political-social regime, the Chinese Party‑state persistently holds the predominant position in its relations with civil society and exerts tight control of civil society organisations through onerous regulation of their registration and operation. To register as legal non‑profits in China, civil society groups need to meet certain physical conditions (such as assets, staff, and an office) and find a qualified government agency willing to be their “professional supervising unit.” However, many grassroots organisations find it extremely difficult to meet all these requirements. Limited by these registration hindrances, many NGOs choose to register as for‑profit businesses or to remain unregistered. Moreover, even registered non‑profits are prohibited from establishing branches and operating in areas outside of their registered location.39 In the case of post-disaster relief and reconstruction, the Chinese government took a supportive position toward the involvement of civic organisations, especially those capable of providing professional services as a necessary supplement to governmental agencies. However, all institutional barriers stemming from the predomination of the Party‑state over civil society still constrained the legitimacy and sustainability of grassroots organisations (especially those not officially registered) to participate in post-quake reconstruction.

• 40 Jiaju Xie and Fan Li,“Gongyi xin siwei: 10 ge Zhongguo shehui qiyejia de gushi” (New ideas of phila (...)

24In sum, given the lack of funds and the unfavourable policy environment, discovering an alternative way to sustain participation in post-quake reconstruction became an imperative task for many grassroots civic organisations. In response, some innovative NGOs began to explore the possibility of using the socially entrepreneurial approach to overcome financial and institutional hurdles. According to existing studies, a wide spectrum of SEs have emerged in quake-affected areas, ranging from non-profits engaged in commercial activities, farmers’ cooperatives, and fair trade organisations, to microfinance institutions.40 However, there is no in-depth empirical analysis on the newly mushrooming SEs in disaster-hit areas. It is therefore difficult to clearly delineate the characteristics of SE initiatives in comparison with traditional non‑profits and to comprehensively assess the advantage of SE in overcoming major development hurdles faced by China’s grassroots non-profits. The following section aims to fill this gap.

• 41 Facing various difficulties in registering as government-accepted non-profits, many grassroots NGOs (...)

26GVB is an environmental NGO founded by Liao Xiaoyi in 1996 and registered in Beijing as a for-profit business.41 Since Liao Xiaoyi won an international environmental award, the “Sophie Prize,” in 2000, GVB has been increasingly recognised as one of the most remarkable grassroots NGOs engaged in environmental education and sustainable development in China. As the notions and practices of SE have been increasingly introduced to China in recent years, GVB has gradually learned to make SE a tool for transforming its disadvantage as a “business” NGO into an advantage in terms of enhancing social legitimacy and financial resources. One of the most noticeable entrepreneurial activities taken by GVB was a “fair trade service platform” established in 2008 to facilitate fair trade between urban communities, where consumers suffer increasingly from unsafe foods, and rural communities, where farmers have no guarantee of livelihood due to unfair trading rules in the over-commercialised agricultural sector.

• 42 Xiaoyi Liao, “Cong Lehe Jiayuan kan xin nongcun shengtai wenming jianshe” (Construction of ecologic (...)

27GVB’s SE aspirations achieved robust development through the launch of the JHH program in Da Ping Village. For GVB, embarking on the JHH program was much more than a spontaneous response to the disaster. Rather, it was a deliberate effort to pursue sustainable rural development in China’s countryside, which has run into various developmental pitfalls such as environmental pollution, community fragmentation, family dysfunction, languishing rural economy, and the disappearance of traditional culture and lifestyles in the country’s decades-long journey toward modernisation through industrialisation, labour migration, and urbanisation.42

• 43 Ibid.
• 44 Yingchun Wang, “Lehe Jiayuan: yige lixiangzhuyizhe de xiangjian wutuobang” (Lehe Jiayuan, a utopia (...)

28However, the JHH program was only a dream before GVB got start-up funds of 1.8 million yuan from the Chinese Red Cross Foundation (CRCF) in August 2008. Noticeably, GVB explicitly highlighted its SE nature when trying to tap more investment opportunities for the program. As Liao Xiaoyi explains, “One of the five salient features of the program is that it represents a form an innovative philanthropy (…) as a social entrepreneurship entity, on the one hand it is able to enhance investment efficiency through ensuring a better operational performance in marketplace, but on the other hand, its social mission to service the interests of villagers can be safeguarded through a governance mechanism with participation of villagers. Thus this program deserves more consideration and support from government, society, and the investment community.”43 Consequently, the JHH program received funds from several foundations such as CRCF, Narada Foundation, Jet Li One Foundation, and Give2Asia Foundation. By the end of February 2009, the JHH program had grown into a multi-purpose reconstruction program backed by total funding of nearly 5 million yuan.44

• 45 Interviews with employees of GVB and village cadres, 28 August 2011.

29To revitalise Da Ping Village in a manner that was environmentally, economically, and socially sustainable, the JHH program launched a variety of reconstruction activities, ranging from rebuilding residential houses and public facilities, developing ecological industries, and providing social services, to establishing a grassroots environmental protection mechanism.

• 46 Interview with village cadre, 30 August 2011.

36Hybridising the organisation structure. In contrast to many traditional non-profits or cooperatives, all green business activities included in the JHH program take the form of jointly-owned social ventures based on 15‑year cooperation contracts involving three partners: 1) GVB plays the crucial role of absorbing investment and carrying out industrial planning, management, and marketing. GVB therefore holds the controlling shares (51% of the stake). 2) Da Ping Mountain Ecology Association (DPMEA), a grassroots environmental group established shortly after the disaster with GVB’s facilitation, represents the interests of 100 village households involved in the JHH program by facilitating the management of various green industries and coordinating the involvement of villagers. Thus, DPMEA and individual villagers hold a 49% stake in the businesses. 3) The villagers’ committee (the prevailing type of grassroots organisation in rural China, quasi‑governmental in nature) plays the role of maintaining the partnership between the three parties and supervising the operation of the businesses.46

• 47 Interview with local government official, 29 August 2011.
• 48 Interview with staff of GVB, 31 August 2011.

38Diversifying the resource base. The JHH program is a social experiment in diverting mixed resources creatively from the state, social, and market sectors. With regard to monetary resources, although its start-up funds are mainly derived from social donations from foundations, local governments also provide substantial grants – for example, the Pengzhou City government offered one million yuan to construct the first motorway, which was the precondition for developing the eco‑economic sector in the remote mountain village.47 In addition, GVB attaches importance to self‑earned income through producing and trading organic vegetables, green livestock and poultry, and innovative handicrafts. However, income from the sale of green products currently constitutes only a small source of revenue, partly because these new businesses remain small in scale or are operated mainly as experiments for gaining know-how in green farming (such as fertilising, controlling weeds, and saving water).48

• 49 Interview with local government official, 29 August 2011.
• 50 Interviews with ordinary villagers, 29-31 August 2011.
• 51 Interview with village cadres, 30 August 2011.
• 52 Interview with the staff of GVB, 29 August 2011.

39Strengthening cross-sector partnership. GVB has made various efforts to establish and strengthen partnership with local governments to gain legitimacy and obtain resources crucial to the success of the program. In its interaction with local governments, GVB focuses on networking with the government at the municipal level rather than with the subordinate township level, believing that the former is more capable of providing substantial resources. Such a strategy worked well until 2010, when the deputy chief executive of the township government was elected head of the village branch of the Chinese Communist Party (the Party chief), which is typically the decision‑making agency of the Party‑state in the villages. Various disagreements gradually arose between GVB and the newly elected Party chief, who criticised GVB for not respecting the opinions of the township government and two grassroots quasi-governmental organs, the villagers’ committee and the village branch of the Chinese Communist Party. The Party chief subsequently set up a farmers’ cooperative planting bamboo shoots and plans to launch other eco‑industries through absorbing commercial investment.49 This kind of conflictual relationship between GVB and the township Party-state and its village branch apparently undermined villagers’ trust and loyalty toward GVB. Many villagers began to place their hopes in alternative reconstruction plans that promised more significant benefits to villagers than the JHH program.50 On behalf of the villagers, the villagers’ committee finally proposed revising the cooperation contract between GVB and Da Ping Village, claiming that the villagers should have more shares in the joint-venture businesses and that the villagers’ committee should have more decision-making power.51 Improving the relationship with local governments and regaining villagers’ trust then became a top priority in GVB’s agenda.52

• 53 Ibid.

40Facing new challenges to organisational sustainability. The program has not generated sufficient earned income to support its social programs. Several organisational and contextual factors constrain its ability to accomplish financial self-sufficiency. First of all, as the major green industries of the JHH program, ecological farming and livestock/poultry breeding are located in unfavourable market conditions in which the demand for organic food in local rural communities is quite limited, and grasping market opportunities in large cities makes the products lose their price advantage due to increased storage and transportation costs. Nevertheless, GVB persists in its market‑based trading activities by exploring new approaches such as processing fresh livestock and poultry products into instant products and developing new market opportunities in local communities by more closely integrating ecological farming and livestock/poultry breeding with countryside tourism.53 Secondly, engaging in business activities poses various managerial challenges to GVB, such as cultivating new efficiency‑oriented values, figuring out new ways to manage mixed human resources, and creating new approaches to assessing performance. Thirdly, the organisational sustainability of an SE is not solely determined by its internal operations but also by management of the environment in which it operates. In the case of the JHH program, the fragile partnership with local governments appears to be the major contextual factor jeopardising its legitimacy and sustainability. In addition, the underdevelopment of the “social investment” sector in China also makes it difficult to access sustained investment from “social investors” that use a mainstream investment approach to provide growth capital capacity‑building services for SEs.

• 54 Interviews with ordinary villagers, 29-31 August 2011.

41Nurturing stakeholders’ participation and democracy in governance. As designed by GVB, the JHH program operates through a “democratic” governance structure to enhance the participation of villagers. To this end, GVB in 2008 facilitated the creation of the Da Ping Mountain Ecology Association (DPMEA) as a voluntary association of villagers involved in the program in order to coordinate villagers’ participation. However, in the eyes of villagers, DPMEA is merely a “puppet” of GVB and is unable to truly represent villagers’ opinions and interests, as the committee administrating DPMEA was created through GVB’s appointment rather than through election by villagers. It appears that in spite of the good intention to strengthen villagers’ participation in the program, a democratic governance structure was not effectively established. Decision‑making power was usually held by GVB, and such a non-participative governance situation made villagers felt “marginalised” or even “employed as tools” in the process of reconstruction.54

• 55 Andrea Bernardi and Mattia Miani, “The Long March of Chinese Cooperatives: Towards Market Economy, (...)

44As revealed by the unsustained participation of civil society organisations in post-disaster reconstruction, grassroots civic groups in China persistently suffer from two major development pains: 1) the predominance of the Party-state over civil society (or the dependency of civil society on the state for legitimacy and resources); and 2) the insufficiency of financial resources. As illustrated by the case study of the JHH program, some innovative grassroots NGOs in China have taken socially entrepreneurial approaches to seeking more sustained participation in post-disaster reconstruction. As other relevant studies show, various types of SEs are also playing active roles in other fields of development in China, such as work integration, social services (e.g. eldercare and childcare), health care, poverty alleviation, education, rural development, and sustainable development.55

• 56 The Centre for Advancement of Social Entrepreneurship (The Fuqua School of Business, Duke Universit (...)

45As the case study shows, grassroots civic organisation still encounter various challenges to overcoming the structural hurdles constraining their development, even when using the innovative vehicle of SE. However, in recent years, various efforts have been made by the Chinese government, SE incubating organisations, and social investing institutions to strengthen the “ecosystem of social entrepreneurship” – a healthy institutional and social environment to support the practice of SE56 in China.

• 57 Guowuyuan bangongting (General Office of the State Council of China), Guowuyuan bangongting guanyu (...)

47Meanwhile, although a specific policy concerning SE has not yet be promulgated, several policy changes at both the central and local levels are providing direct or indirect support to the development of SE in China. At the central level, the Chinese government issued a new policy in 2013, Circular of the General Office of the State Council on Government Procurement of Services from Social Forces. The policy clarifies that the entities undertaking government procurement include both non-profit organisations legally registered with civil affair departments or approved by the State Council as exempt from registration, and social forces such as enterprises legally registered with industry and commerce departments or institutions registered with industry administration departments.57 The policy apparently relaxes restrictions on government purchasing of social services, thereby offering SEs registered in diversified legal forms more opportunities in the growing market of government procurement of social services.

• 58 Xiaojing Yu, “Shehui qiye zhengce de bentuhua lujin” (The localised route of policy on social enter (...)

48At the local level, several provincial and municipal governments have recognised the concept of social enterprises or have even begun to promote the development of social enterprises in related policies. The Beijing municipal government was the first local authority in China to use the concept of “social enterprise” in policy documents. In June 2011, the Beijing Municipal Committee of the Chinese Communist Party issued Opinions on Strengthening and Innovating Social Administration and Promoting Overall Social Construction, which recognises “actively promoting the development of social enterprise and vigorously developing social services” as a strategy to further enhance the level of public service. In November 2011, the Beijing authorities issued a Social Construction Plan for the Twelfth FiveYear Period of Beijing City, highlighting the importance of “bolstering social enterprises.” However, the definition of social enterprise is quite unclear, which poses a vital obstacle to the government making more concrete policies subsequently.58

• 59 British Council,“Social Enterprise Programme,” https://www.britishcouncil.cn/en/programmes/society/ (...)

49Secondly, in order to fully employ SE as a solution to alleviating the scarcity of financial resources, grassroots NGOs need to develop their entrepreneurial spirit and business skills, which are crucial to enhancing financial viability and ensuring organisational sustainability. Very recently, innovative initiatives have been launching SE incubating institutions to meet this demand. For instance, in 2009, the Cultural and Education Section of the British Embassy in China launched a Social Enterprise Programme that provides aspiring and existing social entrepreneurs with skills training, mentoring, and access to UK expertise. Up to the present, the programme has trained around 3,200 social entrepreneurs, and has distributed 29 million yuan in funding from partners to 91 social enterprises.59

• 60 Social Enterprise Research Centre, Centre for Civil Society Studies of Peking University, 21st Cent (...)
• 61 LGT Venture Philanthropy, “Portfolio Organizations,” www.britishcouncil.cn/programmes/ society/soci (...)

50Thirdly, the flourishing of SEs depends heavily on the development of the social investment sector, which provides the prominent funding pool for SEs. In recent years, experimental instances of social (impact) investing have emerged in China, providing a new source of investment to fuel the development of SEs. Private foundations (most of them corporate foundations raising funds from individual enterprises or entrepreneurs) are becoming the most important players in the field of impact investment in China. Several corporate foundations are playing a leading role in supporting SEs in China, such as the Narada Foundation, China Social Entrepreneur Foundation, Leping Social Entrepreneur Foundation, and Live Foundation.60 Meanwhile, international investment institutions are also employing the approach of impact investment to provide funds to SEs in China. For instance, LGT Venture Philanthropy invests in three SEs in China: Driptech, which provides low‑cost, effective drip irrigation system for small plot farmers, Shangrila Farms, which provides market access to farmers, and the Institute of Public & Environmental Affairs, which discovers and eradicates the root causes of massive pollution.61 Moreover, several foreign foundations, such as the Ford Foundation and SOW Asia, which is based in Hong Kong, also take an active role in supporting SEs in China. Although most of these impact investment initiatives remain relatively small in scale, they suggest a promising trend for the future development of SEs in China.