Why SMEs in China registering independent non-profit

After leaving CSR Asia, I’m spending more and more of my time with NGOs as development of civil society is one of my great career interests. Recently I talked to some NGOs in Guangdong and they are now doing the legal registration through the Civil Affairs Bureau. But every single government official is now waiting for the 18th National Party Congress so that all the registration process can be said as suspended nationwide. (I am now registering a NGO with a friend in Beijing as well but the official said “every single decision will be made after the 18th NPC. What can you say?)

One interesting phenomena found by NGOs who visit civil affairs bureau regularly for the registration is that they can see lots of registration for non-profit form being pending at the bureau office. Interestingly many of those non-profit are registered by companies or businessmen. You might think it is about companies becoming more social responsible and they want to register independent corporate foundation. But it is not the case. Many companies or businessmen are registering NGOs for their own business purposes.

First, the so-called cause-related marketing has now become very popular in China. Many companies are thinking about how to combine charity with their business as it is widely accepted by the public and also government. Many SMEs in China are facing tough time now. They have limited resources, connection and capital for their marketing and sales channel. Therefore they think charity is a good means for them to develop new market. They can talk to potential partners and get the deal easily as people think they are doing charity.

For example, I know a paper recycling company wants to put some big waste paper collection machine in schools of a city in Anhui. But they couldn’t do that as they are a business. No school will listen to them as school management may think they want to do business. Then this company registered a NGO (non-private enterprise, strange name, hah?) with focus on environmental protection. The boss of the company is also the NGO director, and he talked to the education bureau in that city about launching an “environmental education and recycling programme” in all the secondary school in the city. The education department thought they are a non-profit and agreed to work with them. As you know in China, if the so called managing authority wants to do something, its members or units will follow. A red-headed instructing document is being passed to all school by the bureau and schools were asked to join the programme. Then the “NGO” went to the schools and installed the machine freely, and delivered some training courses on environmental protection for students. They can then get the wasted paper for free and the amount is big (as schools produce lots of waste paper everyday).

So this is so called cause-related marketing by small companies in China, and it is becoming more and more common as some companies think it is a new business model. I am in Hangzhou, the capital city of Zhejiang Province, and met several owners of private enterprises. They are all very interested in such thing. As a CSR practitioner, I am still struggling whether I should use this means as a entrance to local private companies for their better CSR performance. It is very dangerous as the companies involved in this ignore the need assessment and real impact to the community. If you have suggestion, please let me know. Thanks in advance.


Second, the Chinese government, especially Guangdong, talks a lot on “innovation for social management” recently and it is all about how to “utilize” the expertise and connection of NGOs to solve social problems thus constructing harmonious society. There are now a lot of government contract on social services and these are being outsourced to registered NGOs. The amount of money is huge as government has a very ambitious target. Some businessmen, with their connection with some government officials, think it is a new business opportunity. They register NGOs and get the project through their “connection”. It is also happening in China as I heard from some NGOs.



After reading this piece of news, what do you think?


----------------------------------------------- Blog in English: brianckho.blogspot.com Blog in Chinese: blog.sina.com.cn/brianho Twitter: @brianckho Chinese Weibo: @何智权Brian Email: brian.ck.ho@gmail.com