Li Zhiqiang: the three elements of a social enterprise

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Li Zhiqiang, the co-founder and first chairman of Aurora Social Enterprise, shared his views on social enterprises in a recent article in the Chinese media, written to help people gain a more specific understanding of the concept. There isn’t a common understanding of social enterprises in China, but some basic criteria can still be taken into consideration when defining a social enterprise.

As he argues, a social enterprises should be a business aimed at a social purpose, rather than an enterprise which simply makes use of a social purpose to do business, or a not-for-profit enterprise. A social enterprise should thus include (but not be limited to) three elements, which are as follows: first of all, social enterprises have a social mission, which is solving social problems or creating social value. It doesn’t matter whether they focus on an urgent social problem in a small area or a deep-rooted problem on a large scale.

Secondly, social enterprises conduct business activities, which is necessary for them to sustain themselves. Obtaining funds and resources, production and marketing, and profits distribution are all elements of their business activities.

Thirdly, social enterprises conduct business activities for social purposes. When there is a conflict between their social mission and generating profit, social enterprises will give priority to the social mission, which is the paramount factor distinguishing social enterprises from businesses.

Li Zhiqiang also states that establishing social enterprises is an innovative action which can perfect the joint efforts of the government, enterprises and the third sector. Social enterprises may be totally different from both enterprises and NGOs, and cannot replace either the public sector, the private sector or the third sector.