By Wang Zheng
SHANGHAI: Social enterprises in China will now have more options in terms of financing with DBS China's new programme which provides funds and banking services tailored to their needs, believed to be a first for banks in China.
The bank has also given a grant to four selected social enterprises, which will be used to train the underprivileged and make them employable.
According to the 2012 China Social Enterprise Report by the Foundation for Youth Social Entrepreneurship, only 42 per cent of Chinese social enterprises are profitable.
Enterprises bearing such financial burdens are usually on the lookout for funding options to balance their social missions and grow their businesses.
One of such enterprises is the Puki Deaf Coordination Agency in Shanghai.
The enterprise helps people with hearing disabilities by training them to be graphic designers, who provide services to multinational companies and government agencies.
However its earnings cannot support growth and the agency has to depend on donations to fund its training program.
"Our current annual earning is within 1 million yuan. In order to achieve a healthy growth and support our non-profit training programme for the deaf, we need annual earnings between 2 and 3 million," said Leo Xiao, CEO of Puki Coordination Agency.
Another example is World of Art Brut Culture, or WABC, an art centre for the mentally disabled.
The centre conducts art classes and develops products from the artworks to sell.
However, the young company has yet to find a sustainable business model and currently derives about 70 per cent of its capital from various foundations.
"The earnings from our products have grown from a very small amount to about 400,000 to 500,000 yuan now. But it is still very little compared to our costs. Our earnings can only cover about 20 per cent to 30 per cent of our costs," said Guo Chenggang, COO of WABC.
Puki Deaf Coordination Agency and WABC are two of the four social enterprises in China receiving a grant from Singapore lender DBS.
The amount was not disclosed, but it will be used to train over 2,300 underprivileged Chinese citizens in the next two years.
"DBS China has always been focusing on building our corporate citizenship. These enterprises have taken on the mission of solving social problems and bringing goodness to the society," said Neil Ge, CEO, DBS China.
"Also, we saw great potential in them. We believe they can grow and develop a sustainable business model by mastering market tools," he added.
DBS has also introduced a preferential banking package for social enterprises in China.
More than half of social enterprises in China were started in the last 3 years, with many still struggling to gain recognition.
Such businesses often find it difficult to get funds to start and expand their operations. Many cannot get bank loans, as they are seen to be high risk and are usually charged very high interest rates.
- CNA/jc
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