Establishing A Social Enterprise In Hong Kong Commerce Essay

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In Hong Kong Social Enterprise is still in beginning stage. In year 2006, Chief executive officer was announced a policy to promote the social enterprise. The aim for the government is use social enterprise helping the poor and needy, promoting self-reliance. The government has different type's financial support and subside scheme for financing Social Enterprise startup capital. Such as: Enhancing Self-Reliance through District Partnership Programme" from Home Affairs Department; Enhancing Employment of People with Disabilities through Small Enterprise Project" from the Social Welfare Department and "Community Investment & Inclusion Fund" from the Labor and Welfare Bureau etc.

In Hong Kong over 90% Social Enterprise run by NGOS and most provide business in retail, catering, car cleaning, repair and maintenance, laundry, recycling, tele-survey service, mobile massage, travel and conference service, eco-tourism etc.

Even though the social enterprise scheme was adopt several years, the development and creating social enterprise still faced lot of challenges and difficulties. According to Shue Yan University online newspaper, around 30% social enterprise has earned little profit and one-third social enterprise record loss over four years and closed down.

In the following, we will use three cases to discuss the development of social enterprise in Hong Kong. And will provide some recommendation to start up the social enterprise.

The Personal Emergency Link Service

Senior Citizen Home Safety Association started the Personal Emergency Link Service since 1996. The service operates by connecting PE Link users through an advanced communication system to a 24-hour PE Link Centre. By pressing the main unit or the portable remote trigger service, the service users can speak to operator through the main unit at home. Operators are thus able to identify the needs of the caller and provide the necessary support services. The PE Link Service is open to applicants of all ages, home districts and living environment. Anyone with a residential telephone line can install it.

According the figure of 2008, SCHSA is the biggest social enterprise and annual return over HK$20 million; the personal emergency link service is the most successful social enterprise in Hong Kong. After study the SCHSA, we found out several factors gives SCHSA success in create the social enterprise.

Demand condition and unique opportunity

The Personal Emergency Link Service started in 1996; in that year over one hundred elderly citizens living alone were found unattended deaths during an unexpected cold winter. These incidents create the public awareness on the independent elderly emergency contact service. The SCHSA discover the market niche and very efficient to develop the service of 24 hours emergency link service for elderly.

Branding and weak competitors

SCHSA is an NGO and clear social responsibility image for the public. The companies have clear vision to promote "Living alone without fear, caring for the elderly is here." So the public fast accept and confidence on Personal Emergency Link Service. Even there have two other profit-making organization provides similar service; the public mindset will prefer social enterprise have more social responsibility than private organization.

Close relationship with public media

In starting the Personal Emergency Link Service, the SCHSA was approaching Social Welfare department allocated fund for support the service. However was rejected by Social Welfare department. Luckily, many TV and newspaper media approach interview the service of Personal Emergency Link Service, create the public awareness the organization is self-financing and short of capital for further development. Many citizens and organization start donate the fund to maintain the organization operation cost. Nowadays, a large portion of charity fund was used to PE link charity cases and development on the value adds support service.

Continue innovation and care of the consumer needs

Unlike others social enterprise, SCHSA very concern the quality management, the company implement the total quality management (TQM) to continue gather customer opinion and feedback. In July 1999 SCHSA set up the Elder Ring Hotline which provides two-ways conversation for elder, sharing and providing emotional support and answering enquiries and providing information to the elderly. The continue innovation and improvement increase the user satisfaction also gives SCHSA sustainable and driven out the weak competitor.

5 ) Diversification and expand new business

Today SCHSA not only target in Personal Emergency Link Service, the organization start business in Mobile Link which target the outdoor elder and Easy Home Service which provide reliable, efficient and tailor-made "one stop" high quality household management services. These diversifications broaden the income source and create more job opportunities in needed group. Also meet the social mission, encourage employees become self-reliance and integrate into the community

3R Zone Massage Shop 「鬆一Zone」按摩專é-€åº-

3R Zone Massage Shop is one of the projects developed under Employees Retraining Board (ERB) HMIS Scheme start in 2007. ERB gave franchise to Hong Kong College of Technology for operation and management 3R Zone Massage Shop as a social enterprise. 3R Zone provides foot, head to shoulders and full-body massage services and employed the graduate of ERB massage course students. The 3R Zone aims to provide an education and training location, for the graduate of ERB massage student earned working experience and has job opportunities.

3R Zone Massage Shop located in a tourist and business zone New world Center Tsim Sha Tsui and the owner New World offer a below market price rent for the shop. The target market for the 3R Zone was middle-class office lady and tourist. Since the shop aims to provide a professional and relax massage skill at a reasonable price $150 for one hours body massage.

With the good location and public praise, 3RZone can balance of payment within one years and record profit for the following three years. In the year 2009, 3R zone was trained over 1,000 students and wining the goodwill from customer.

Unfortunately, the shop closed at the end of 2009, due to the New World Group restructured the New World Center. ERB made a decision closed the shop, with expensive rental in others shopping mall and lack of financial and human resources on this project.

In that case we found the external environment and entrepreneur decision let the firm failure. If 3R zone is a private enterprise earned profit and stable client base, we can found different solutions. For example, assigned franchise to current students, so the student can make their own business. Move to private residential club house or move to commercial building rather than shopping mall.

After interviewed with the ERB's project manager, she replied that ERB is an independent statutory body established under the Employees Retraining Ordinance. The legal regulation limits ERB can only make business with Academic or NGO, so the 3R zone cannot give franchise to current students. In addition, the ERB need to promote another project "smart living", as a result no budget and human resources to further maintain the 3R zone Scheme.

Rehabilitation Alliance Hong Kong-7-11 Convenience Shop

Rehabilitation Alliance Hong Kong is aim to encourage disabled people to fight for equal benefits for equal opportunities and full participation in society. The Alliance start running two 7-11 shops since 1994, these two shops located in Polytechnic University and Queen Elizabeth Hospital. The vision for startup social enterprise was gave public understanding of the working abilities of people with disabilities the same as with normal people, so that they can develop their potentials to contribute to society. Since most workers are social workers, they both without business sense and business experience, they hope using franchise, can more effective startup and purchase discount through 7-11 purchase system. Also the 7-11 shop has a goodwill effect, so the public will more easily accepted. Two shops employed 70% disabilities, and earned profit after two years.

Unfortunately, Queen Elizabeth Hospital 7-11 need to closed down in 2005, the hospital Authority open tender to public for attract other convenience store into Hospital. Due to 7-11 can't win the tender and afford expensive rent, the Alliance closed down the QE 7-11.

The director of Rehabilitation Alliance Hong Kong, the Hospital Authority was only concern on business value rather than social value. The government also afraid if too much protect and subside social enterprise will affect other private company. She hopes the government can balance both value and restructure current policy to enhance social enterprise survive.

Findings and recommendations for establish social enterprise in Hong Kong

Table 1 Comparison of three case success and difficulties

The Personal Emergency Link Service

3R Zone Massage Shop

Rehabilitation Alliance Hong Kong-7-11

Success factors

Demand Condition

Market Niche

Weak Competitors

Brand Name

Quality and Innovation product

Continue improvement and diversfication

Good location

Quality Service

Cheap rent

With Academic body provide management advice

ERB brand name gives people reliable

Franchise: easy management

Brand Name


Lack of government support in beginning

Legal regulation cannot franchise to public

Faced expensive rent

Lack of resources support

Slow decision making

Lack of government support

Hard to find a good location

Without business sense staff

Limit budget hard to competition with private enterprise

We can see that Social Enterprise still face many difficulties. In Hong Kong, profit seems to be King. For the private enterprise also need faced profit and sustain problem daily. Social enterprise also need to meet a bottom line fulfill social goals.

For the above case, we can found the main difficulties are hiring qualified people to manage the social enterprise. Most NGO without qualified management teams, their background is from social worker. Their mindsets are more care for the society rather has commercial mindset. Most social worker think provide "sheltered workshop" more important than profit. In addition, social worker will think spend less on promotion and can employ more peoples. Without promotion, it is hard to find a target customer. For example: Deaf Café 聰鳴茶åº, the café with less promotion and far location which was loss every year, but the Hong Kong Society of Deaf still keep the café to provide job opportunity to staff.

Social entrepreneur failure on define the market and create demand. Most of Social enterprise didn't have good business plan and always under predict the market, in depth analyze external environment such as suppliers, potential competitor, substitution and location. Without gimmick and quality product, it is hard to retain customers and keep competition to competitors.

To resolve the above problem, we can follow the ideas in CSR Asia. CSR Asia has number of business expert to teach and use their knowledge helping people start up Social enterprise and social responsibility. As many NGO without qualified business peoples, the organization can found business consultant ideas before setting up their own Social Enterprise. On the other hands, if the NGO too tight budget on employ consultant, they can try buying franchise. Franchise can minimize risk, with efficient guidance, reliable and brand name support from franchisor. The NGO also can learn from experience by doing franchise, it can provide advantage for further develop their own brand name.

Government mindsets are another barrier for social enterprise development. Hong Kong is a freedom of trade society; the government was worried if too much subsides on social enterprise will harm the business in private sectors. So most of social enterprise closed down when the government seed money was used after three years. The NGO should united their power, formed synergy bargaining with government provide tax allowance and t urge government more educate the public about the social enterprise.

In Hong Kong doing social enterprise faced a lot of barriers i.e. higher rent, fast change environment and lack of government support. However, the Social Entrepreneur should keep their passion and patience to discover market niche and create innovate product.