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Insights

The enthusiasm for discussions on social enterprises seems to have ceased abruptly after the debate between Yongguang Xu and Xiaoguang Kang three years ago. After the heated argument on the topic of “what is a social enterprise”, it is not so much that everyone has reached a consensus of seeking common ground while reserving differences, while it is better to say that everyone is tired of disputing. The debate on the definition of social enterprise, no matter how exciting it is, is actually powerless. Firstly each counterpart has their own standingpoint of argument, and the focus should not be on the definition but on the preference of each players. Secondly to make an analogy if social enterprise is a cute baby, its loveliness should not be on the name, the essence of social enterprise lies in its capability to solve social problems by market approach.

The debate on definition is therefore powerless compared to the vision and capability. Thus it is better to keep the “small” name of social enterprise and minimize its scientific name. And focus on the justification of vitality and capability. In another words, we would better to reveal its true value rather than continue arguing the definition. The true value lies in its fresh vitality. The best way to show its power is to place it under a specific scene and give it a more specific social proposition. The most suitable scenario in China today is the community.

Social enterprises submerge in the “small” scene of community has three “big” meanings:

Firstly, social enterprises address social problems through a market-driven approach, enabling them to accurately identify people’s needs and respond quickly at the micro-level. The bottom-up model of “pull” is more powerful than top-down model of  “push”. Whether it is for elderly-care, migrant children services, or garbage sorting and recycling, only by submerging in the communities and accomplish mission at the micro-level can social enterprises achieve scale-up and further get what they have longed for, recognition of identity, at the macro-level.

Secondly, social enterprises that have social missions can fill in the gap of pure commercial solutions, which are insufficient to meet the needs of hundreds of millions of low-income people. Take the “urban village” (a unique community with huge market potential) as an example. The community’s demand for property services is a special “market” that ordinary commercial companies choose to give up due to the lower profitability than the general market. However, this is an excellent opportunity for social enterprises that place social responsibility first to develop business solutions in this “unexplored” market.

Thirdly, Chinese communities have always lacked an “identity” to link market with law, and social enterprises can be a good bridge. At the community level, someone needs to represent the community to protect the rights and interests of the community and ensure the contracted services to be fulfilled. Compared to the “two committees” in the community, the property management companies and the property owners committee, social enterprises have both legal status and flexible management mechnism. The solution to this identity problem indicates that the activation of the community can follow the market and legal rules. Where there are rules, there is an order.

By creating solutions to meet the above three community needs, social enterprises are likely to unleash tremendous power in China.

In terms of “how social enterprises can submerge the community”, the author believes that there are three areas to intervene.

First of all, social enterprises should clearify their identities in the community. There are two identities in community: owner refers to community and manager refers to the service provider. In the case of community property management, resident is the owner while property management company is the manager.In China, there are too many cases that the property management companies who are supposed to be the service providers but turn to become property owners. There have also been cases in which the property owners have gotten used to being managed and then play the role of their property management companies by themselves or simply leave it alone. The “trust” mechanism can be used for reference. The community committees act as the “entrusting party”, the property management companies act as “trustees”, and the property owners are the “beneficiaries”. The two community committees can take charge of supervising. Clarifying each party’s role and service function and position of social enterprises in the community is the prerequisite for them to serve the property owners. Clear roles and responsibilities should be defined and divided between various parties to start the game. 

Additionally, community assets should be identified to make most of them. The development and management process of community resources is actually the process of serving and governing the community. What is a community asset? It’s not just the facilities in the community. All the demands (such as ealderly care) and things that need to be served (such as property services) in the community have commercial value and can be priced, which can be collectively referred to as community assets. Identifying community assets means identifying the most important needs in the community (software) and the most valuable space (hardware). To leverage the community assets, on the one hand, is to make the best use of the community space and to connect the demand and supply in the community in order to maximize the value of community assets. On the other hand, community assets should be well managed, which belongs to the category of community governance. Take the turst model as example again, the transparency and openness required by the “trust” model can be fully applied to social enterprises running in communities. Only through transparency and openness can the interests of social enterprises and communities be aligned to the greatest extent.

Finally, tackle the problem of “community resource monopoly”. The problem is particularly crucial for those community authorities to initiate social enterprises in communities by themselves. Once community resources are “monopolized” by social enterprises, there will be no free-market competition. This will not be good for improving the quality of community services. In order to solve problems within and outside the community, social enterprises must have the tolerance and wisdom to face the problem of “two walls”. They should have the patience to tear down a “resource wall” and let competent people from outside the community come in to help activate community resources. At the same time, they should have the wisdom to build another “benefit wall” and put the interests of the residents first, rather than the interests of the management companies or others. The “trust” model can be used for reference again, because the supervision mechanism of “trustee” is clearly defined in the trust model. In the community, “supervisor” is the community’s two committees or social organizations entrusted by the community.

Take Chengdu as an example, where is currently one of the three hot spots for social enterprises. Although the number of social enterprises for serving communities has grown exponentially under the promotion and support of the two community committees, their roles are more like “management” than “service”. Without the essence of “service”, revitalizing the community is an empty word. There is much left to be done for social enterprises to take roots in the community.

In a word, the people’s yearning for a better life is the common pursuit of the government and society, and it is the most resounding slogan of social enterprises. The good life utimately take place in the community. If the needs of the community have not been met and the residents in the community have not been well served, the wish of the community to live a better life will not be fulfilled. The ideal of social enterprises to “meet the needs of the community by market means” is nothing but a slogan. Only by putting down oneself and exercising in tens of millions of communities can a social enterprise demonstrates its vitality and finally define its essence of “solving social problems by market means”.

Again, on the topic of social enterprises, it is better to bring their “value” in the community than to study their “definition” literally.