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Each panellist will speak on a different angle with regards to their involvement in the social investing sector of China. This will cover the philanthropist/social investor, the regulatory and infrastructure: i.e. government, the pipeline: incubation of social enterprises.The panel discussion will review challenges and opportunities for social investment in China, and how other foreign investors can participate most effectively.
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Social Investment in China
presented by China Social Enterprise and Social Investment Forum (CSESIF)
JIAWEI ZHANG Secretary Team of CSESIF
AVPN Conference
April 20
1Why CSESIF was founded
Policy
Enhanced role
of social
Development
Transformation
of government
function
Government
procurement
becomes more
systematic
Some local
governments
start to support
SE
Talent
Along with
British Council
training
programs, more
programs for SE
is emerging
SE courses are
emerging in
university
Community of
Social
entrepreneurs is
forming
Capital
Oversea Social
Investors are
looking for
projects in
China
Local Social
Investors are
emerging
Banks,
Investment
Banks etc are
interested in
impact
investment
Support
Like NPI ,more
grassroots or
government
incubators for
SE are emerging
SE can access to
various service
by three party
Impact
Investment
Advisory are
emerging
More global
communication
Awareness
SE and Social
Investment are
reported by
more key media
Universities and
Research
Institutions are
conducting SE
study & report
More events on
Social Enterprise
and Social
Investment are
held
Development of Social Enterprise and Social Investment is in the market construction phase in China
1 Why CSESIF was founded
China Social Enterprise and Social Investment Forum (CSESIFjointly initiated by Mr Xu Yongguang , President of Narada Foundation and Mr Zheng Weining, President of Canyou Group was founded as a member network by a group of organizations dedicated to the development of social enterprise and social investment in China
CSESIF
Annual
Forum
Research
Advocacy
Member
Service
Platform
Goals Facilitate the Cross-border communication and collaboration Promote the growth of SE and SI industry Build up favorable external environment for the industry
Working Areas
CSESIF Founding Member
JACK MA Foundation
2About 2015 Annual Forum
CSESIF will hold a large annual forum every June, which will become the most prestigious social enterprise and social investment event in China
Number of Participants More than 500 guests from China and overseas
DateJune 18-19 2015
Venue Intercontinental Hotel Shenzhen, China
3Highlights of 2015 Forum
Biggest Highest-level Social Enterprise and Social Investment event in China
Famous Entrepreneur Speaking on Social Innovation
Open and Cross-border breakout sessions on 5 themes
Special arrangements on networking and exhibition
Overseas Study and Workshops after the forum
CSESIF Launch Event CSESIF Press Conference
Mr Zhang JIAWEI TEL86 13801998858 [email protected]; [email protected] Wechat: 13801998858 Websitewww.csesif.org
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Social Enterprise Sector in China: Fragmentary Innovation Stage
Features of each stage
Stage3 Stage2 Stage1 Insufficient Data
Overview of global social enterprise development stage
Stage1
Fragmentary Innovation Stage
Quite few SE cases showed up here and there, and without a supporting environment
China, African countries
Industry Emerging Stage
Number of SEs grow rapidly
Growing policy support, capital, talents, and research in the sector
India, Japan, Korea
Maturity Stage
Clusters of SEs in different fields
Policy and regulations, social investors and impact assessments standards are gradually matured
US, UK
Stage2
Stage3
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China: From Fragmentary Innovation to Industry Emerging Stage
Total number of SEs < 1000
54% of the SEs < 3 years old
No supporting environment: A few social investors with insufficient and unsustainable funds
Central and local government show supportive attitude to social innovation
Increasing intermediary organizations
Increasing patient capital go into the market
Leading foundations like Narada Foundation transiting from operating to grant-making
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Social Investment in China
Limited number of appropriate investment targetsVery few social enterprise is mature enough or ready to take the investment
Most of the investees are in the early stage: A lot of social investors were involved in the incubation, capacity building and consulting process before investment.
Emergence of players along investment chainCapacity building, intermediary and financial services provider for SEsBritish Council, NPI, Avantage Ventures, DBS Bank Limited
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5
Social Investors in China
Social Investors
LGT Venture
Philanthropy
4 investees with investment less than $1million, two of them are
grants
Chuangqi99 Investing 3 social enterprises with total investment of $700,000
Transit Investing 7 tech social enterprises with total investment of $500,000
Avantage Ventures Investing 3 social enterprises with one failure case
Yu Venture
Philanthropy
Investing 3 social enterprises with total investment of $1,200,000
China Impact Fund Unknown
Zengai Foundation Investing 1 social enterprise with total investment of $80,000
Leping Foundation Investing/nurturing 5 social enterprises since 2002, with total
investment of $17 million
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Challenges: Incomplete Eco-systems
Lack of government and policy support
Lack of intermediary organizations
Lack of patient capital, most of the foundations are operating foundations
Underdevelopment of impact assessment
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Leping Foundation: SE Investor-Turned Manager
Since 2002, 17m USD investment + main shareholder in 5 SEs
2 micro-credit companies servicing farmers
1 professional training school for farmer laborers looking for jobs in cities
1 R&D company aimed at improving education in rural kindergartens
1 eco-agriculture company to save Chinese farmland from massive use of chemicals
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As a SE Investor-Turned Manager: Our Challenges
Capital:
Considerable time spent on networking/exchange with investors
Human Capital:
Significant difficulty in locating SE management
High turnover rate for certain key positions
Insufficient professional capabilities of team
Shared service hard to pool
Insufficient internal resources
Scarce external resources
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As a SE Investor-Turned Manager: Our Takeaways
Capital: growing number of investors seeking innovative ways to support social innovation
Human Capital: more capable business professionals turn to philanthropy
More faith in our own value:
Provide kick-start capital
Provide continuous flow of operating cash
Proper governance ensures value on track
Internal shared service: a must-have
Impact Assessment: trial in micro-credit company
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From Investor-turned Manager to Venture Philanthropist
Trend, albeit not in a year or two
Launching SE Venture Capital Fund
Carry forward innovations that can unleash social strengths
Financial tools to prompt investors interest
Encouraging SE entrepreneurship, esp youth
Giving circle vs. SEs (eg SVP China)
Shared service circle
Volunteerism
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Thank You
Chinas Social Investment Environment and Innovation
Mechanism
Wang Zhenyao
China Philanthropy Research Institute
of Beijing Normal University
2
Outline
Four significant elements of Chinas social investment
The internal logic of Chinas social innovation
The future of Chinas social investment
3
Four Significant Plates of Chinas Social Investment
4
1. Government-Led Poverty Alleviation SystemSince 1986
The amount of expedition on poverty alleviation is more than 70 billion RMB per year.
Government-led: The State Council established as lead agency for development-oriented poverty alleviation (all related government organs contribute).
A trinity pattern of poverty alleviation: specialized poverty alleviation, poverty alleviation by industry, and poverty alleviation by society, including:
the party, government, military, civil service, industry, commerce and academia all participated in poverty alleviation by contributing funds for industries, technologies and projects, including farmland and irrigation system construction, industries with local advantages, water safety, transportation, education, healthcare and others.
Achievements: The number of impoverished population reduced from 250 million in 1978 to 29 million by the end of 2003.
5
Financial arrangements for poverty alleviation funds can be divided into the following parts:
Development fund
Cash-for-work fund
Minority development fund
Three Westspecial subsidies for agricultural construction
State-owned impoverished farm poverty alleviation fund
State-owned impoverished forest farm poverty alleviation fund
Poverty alleviation loan interest subsidy fund
Central Governments Financial Budget
6
2013 Central Governments Final Accounts poverty alleviation) unit: 100 million RMB
Budget Actual Cost
725.67 841.00
Administrative Operation 16.31
General Administrative Matters 10.15
Authorities Service 0.76
Rural infrastructure 343.79
Production Development 194.78
Social Development 6.82
Poverty Alleviation Loans and Interest Subsidies 24.81
"Three West" special subsidies for agricultural construction
3.34
Poverty Alleviation Agencies 1.62
Other Cost on Poverty Alleviation 238.62
7
Social Poverty Alleviation Mechanism: all organizations participate in poverty action
Social poverty alleviation: collaboration between targeted poverty alleviation by government bodies and east-west poverty alleviation.
In 2002, the central government bodies, enterprises, institutions and social organizations directly invested 850 million RMB in the targeted poverty alleviation units. The amount of the investment in 2012 was 1.9 billion RMB, increasing by 1.2 times with an average annual increase of 8.4%. There were 310 units participating in target poverty alleviation, with a full coverage of 592 key counties.
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2. Social Welfare Enterprises
1978 1982 1987 1992 1997 2002 2007 2013
Units 920 1704 27793 49836 55509 35758 24974 18227
Disabled Personshundred) 350 640 4330 7780 9100 6830 5630 5390
Amount of Profit(million) 80 80 880 3260 6630 14830 16930 10690
0
10000
20000
30000
40000
50000
60000 Peak Value55,509
55,509
Peak Value910,000
Peak Value16.93 billion
Data Sources: 2013 China Civil AffairsStatistical Yearbook
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3. Private Non-enterprises
Private Non-enterprises since 1999
5.901
82.134
124.491
147.637
173.915 190.479
204.388
254.67
0
50
100
150
200
250
300
1999 2001 2003 2005 2007 2009 2011 2013
Data Sources: 2013 China Civil AffairsStatistical Yearbook
10
The Category of Chinas Private Non-Enterprises (NGO/NPOs) There are 225 thousand private non-enterprises in China by the end of 2012 with 2.8 million employees and RMB 99 billion in profits. The chart below provides a breakdown of the different categories:
Category Amount Category Amount
Technology and research 13,729 Sports 10,353
Ecology and Environment 377 Legal 511
Education 145,210 Business Service 2,335
Health 21,234 Religion 94
Social Service 36,698 Agriculture and Rural Development
1,617
Culture 11,694 Employment 1,162
Global Affairs 4 Others 9,652
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4. Foundations, Corporations and Academic Institutions
Foundations and Corporations are the important suppliers in the social investment
Academic institutions provide supports such as policy advocacy, evaluation, consulting and capacity building.
CFPA Microfinance: Annual amount of lending is almost 3 billion RMB
12
The Internal Logic of Chinas Social Innovation
Starting from government leading the society and to social restructuring
13
Government-led Social Innovation
Connected government with the problem of poverty
Developed a mechanism where governmental officials directly intervened in villages to alleviate poverty.
Poverty alleviation by production: encouraged employing the impoverished people, including the disabled people.
14
Definition of the private non-enterprises (eg. social organizations engaged in non-profit social services, operators of non-state-owned assets by enterprises, social groups and other social forces, and individuals.
Modern philanthropy has developed since 2005. Social innovation run by a financial support
system.
The Non-governmental Social Innovation
15
Increased Social Re-structuring in Depth and Breadth
Social re-structuring has been promoted since 2012 and has led to a split of social affairs from the governmental affairs.
Social organizations under the jurisdiction of the
government become more socialized.
16
The Future of Chinas Social Investment space
How does society lead and support the governments reforms
17
The Future of Chinas Social Investment
Involved in social service which could make social innovation and social investment more powerful and dynamic
- Social Innovation Fund - Social Impact Bond Link the four plates of social innovation through supporting services - Ratingestablish evaluation system, promote social values and
influential cases - Consultingprovide professional consulting services for investment
organizations and social enterprises/social purpose organizations - Research summarize Chinas current social innovation practices,
develop Chinas own model as well as build the channel for international exchanges
- Trainingfoster innovative model of social entrepreneurs and guide social awareness of innovation.
Thank you!
Beijing Normal University China Philanthropy Research Institute
/Tel+86-10-58801928 /Fax+86-10-58801966 /Add191003A100875 Rm.1003A Jingshi Building, No. 19 Xin Jie Kou Wai Street, Haidian District, Beijing, China100875
www.cbucf.org
www.cbucf.org
What skills do entrepreneurs need
to participate in social investing?
3 Types of Social Investing
Commercial
Philanthropic
Social Investing
Four Forces of Social Investing
Social Impact
Social Needs
Transferability
Management Capabilities
Strength of Implementation Framework Capital
Surplus Resources
Sustainable Platform
5 Levels of Social Investing
Individual Team Industry Society Integration
Lin Feng
Thank you
Collective Sharing of Capital
Dezhi Lu
Chairman, Huamin Charity Foundation
Vice Chairman, International Confucian Association
Vice President, China Social Security Society
Capital is omnipotent
Capital is evil
Welfare Capitalism
New view of capital: capital is the wealth that can
reproduce wealth from itself
I. Understanding of Capital
In sum, the more developed capital is, the richer the
material benefits, to a greater extent it will benefit the
majority, the more progress the society will achieve,
and the more civilized the society will be.
Two important categories in human development:
The majority vs. the minority
Equality vs. Efficiency
II. The Necessity of Collective Sharing of Capital
Traditional views of capital in main social forms:
Traditional socialism view of capital
Traditional capitalism view of capital
Main view:
The more developed a society is, the mode developed
the capital will be. The more developed the capital is, to
a greater extent it will serve the majority, and the more
civilized the society will be.
III. Approach and Trend of Collective Sharing of Capital
Philanthropy is an important approach toward collective
sharing of capital
Collective sharing on the domestic scope: the minority
bears a little more to achieve the benefits of the
majority (modernized literati spirit)
Collective sharing on the global scope
With capital and the majority in mind, China will rise
peacefully. A stronger China will not pose threats to
others, but firmly safeguard the worlds peace, stability,
and development. Philanthropists should be clear on
this.
Western civilization has made a significant contribution
Eastern civilization should also come into play
Let oriental wisdom play a great role in the collective sharing
of capital
Conclusion