Social Entrepreneurship in the Greater China Region - Essay Example

• Introduction

With the phenomenal economic growth, Chinese business entities and non-profit organizations started to pay more attention to social responsibility and environmental protection. Factors that empowered the shift of priorities lie mainly in the Chinese government’s support of entrepreneurship and China’s transition towards a market-based economy in the early 1980s. At the time, many social and economic issues remained without governmental stewardship resulting in an environmental pollution, limited natural resources, water wastes, the prospect of a climate change, and a number of other heavy environmental woes (Huggins 2013). To address the issues, the activists from the government, social and business sectors came up with an idea of the use of green enterprise, rooted in a Western business model. The concept of a green enterprise consists in the usage of business strategies in order to attain philanthropic goals concerned with the environmental protection. This paper will provide an overview of the literature related to the rise and challenges of green entrepreneurship in China and outline key ideas discussed in academic manuscripts and periodicals. The work structure includes three sections apart from the introduction and conclusion: “Emergence of Green Entrepreneurship in China”, “Rise and Challenges of Green Entrepreneurship”, “Glance into the Future”.

• Emergence of Green Enterprise in China

China has witnessed significant changes in the social and economic environment in the past 20 years. Scholars conducted a number of studies to identify factors and background conditions that resulted in an unconditional acceptance of sustainable development in the Chinese business community. It is noted that the concept of organizations serving social purposes is not new to China, nevertheless, in recent years, green growth gained its popularity in media and now is viewed mainly as a Western practice that deals simultaneously with business needs in profitability and takes care of environmental problems (Man & Terence 2013). According to the UN organization, green growth is “a strategy that seeks to maximize economic output while minimizing the ecological burdens” (Wang & Wu 2011, p. 81). Green enterprises include companies that adopt environmental issues in their management practices, apply cleaner production processes, and start-ups founded on ecological or natural resources, e.g. solar and wind energy companies, ecotourism (Nikolaou, Ierapetritis & Tsagarakis 2011).

Scholars report on the vigorous development of Chinese green enterprises in recent years owing to the new governmental policies. The introduced regulations enabled more investment channels for small and middle green enterprises, thus, increasing attractiveness of the social entrepreneurship for business people (Wang & Wu, 2011). Not less important was the public concern that exploded after the smelly smog settled on Beijing in the beginning of 2013. Cheng (2014) stated that the concentration of particles hit 900 parts per million, which is 40 times increased the level the World Health Organisation approved to be safe. Another severe problem, threatening the Chinese nation, is water shortage (Huggins 2013). China has suffered water stress for years, with an annual average water access just 450 cubic metres per person and even worth situation in the regions (Hilton 2014). However, in recent years, this environmental disparity was sharpened by pollution. The government bodies surveyed that the third part of the Chinese mother-river was too polluted even for agricultural purposes, and only 50% of urban water sources are fit to drink today (Hilton 2014). Among other concerns, there is soil erosion, desertification, giant consumption of energy, loss of biodiversity, and a range of other issues. Domestic problems of China contributed to global environmental woes including ozone depletion, global warming, and degradation of China’s wildlife caused by industrial development.

Environmentalists argue that 2012 became a tipping point for China’s environment. The government raised the priority of natural resources and energy efficiency to the highest level (Wang 2012). Academics converge in the opinion that, with the expanded entrepreneurship, the Chinese political and economic climate became favourable for the development of new environmentally responsible industries. A policy of green enterprises development is regarded as a panacea for improvement of environmental conditions in the country (Man & Terence 2013). One of the driving forces turned to be external financing for funding of business growth. To attract investors, the Chinese business community needs to foster environmental changes. The economic and political perspective of the issue is examined by Zhao (2012), Man and Terence (2013), Peng and Sun (2015), Korosec (2013).

• Rise and Challenges of Green Entrepreneurship in China

Due to the green demand of the society, the challenges of green entrepreneurship are widely discussed by modern scholars and entrepreneurs. Researchers highlight that China and India are the two countries that must focus on green entrepreneurship claiming that their natural resources’ demand is skyrocketing (Woody 2013; Worthington 2012). According to European experts in green economy, green strategies should be adopted in developing markets in order to save the natural environment (Farinelli et al. 2011).

A number of efforts have been undertaken by entrepreneurs and non-profits’ practitioners to promote green entrepreneurship and sustainable business solutions (Worthington 2012). Over the past several years, environmentalists even conducted a series of experiments to study environmentally specific leadership behaviour within organisations (Robertson & Barling 2015). Some green entrepreneurs offer environmentally friendly products to their customers, while others work towards saving natural heritage (Chandra & Wong 2016). Another project introduced the Green Business Options Training Scheme. The recently implemented program helps young entrepreneurs to acquire skills for the development of feasible green business opportunities (Chandra & Wong 2016). The Climate Group, with the support of leading Chinese businesses and non-governmental organizations, launched the China Youth Project in order to help low carbon leaders in implementing their green business ideas (Chandra & Wong 2016).

Other recent studies conducted in China explored the methods of developing green buildings and their effects on total energy consumption (Xu 2013). Today, industry, transportation, and construction are the key areas of opportunities for energy conservation and emission reduction. In this situation, China can greatly benefit from large-scale projects on green buildings development. The authors arrive at a conclusion that innovations in the construction industry can help in the development of the low-carbon economy.

Green strategies implemented in China include the energy conservation policies and solar technologies. The country is home to 80% of the world’s solar panel manufacturing (Woody 2013). The industry boom became possible due to cheap government loans. However, Woody (2013) argues that Chinese solar companies face debt loads and decreasing prices for their products. The Chinese economic model is too big and complex to manage all the risks and opportunities existing in the market. US executives hold the opinion that China should join efforts with the USA in order to fight against global environmental risks (Woody 2013). Due to the latter, China began to lose its competitive advantages in traditional industries on the global level and faced more challenges in the development of green economy, according to some researchers (Peng & Sun 2015; Korosec 2013).

Scholars distinguish three most important risks of the Chinese green growth. Firstly, economic transformation lacks core technologies for the introduction of environment-oriented strategies into domestic industries. The technology gap between Chinese companies and its European or American competitors can lead to plants’ shut down as demand for traditional heavy polluting industries can last only for 15 more years (Peng & Sun 2015; Korosec 2013). Secondly, the domestic market is filled with traditional energy industries leaving little space for new green industries. And, thirdly, natural resources such as water, land, minerals are excluded from the enterprises’ loss-profits calculations, and consequently are extremely underestimated. Economists advise China to expand green industries following the domestic demands and then attempt to take competitive advantages in the global market (Peng & Sun 2015). A study sponsored by the UN Environment Programme and the Chinese Ministry of Environmental Protection states that in order to respond to economic and environmental risks China should invest more in research and development (Korosek 2013). The study also includes an argument that in order to drive green development Chinese Government should enforce domestic businesses with stricter regulations on environmental protection, introduce clearer policies for sewage treatment, grid capacity construction, and cement sector pollution.

Despite existing challenges, scholars report that over the last years the country has become a world leader in investing in renewable energy (Korosek 2013). China has the highest capacity of wind farms and hosts the biggest manufacturer of solar PV modules. Efforts in industrial energy efficiency resulted in 19% fall in energy intensity per unit of GDP (Korosek 2013). Serious threats for green economy development remain in heavy-metal pollution and greenhouse gases (Peng & Sun 2015).

• Glance into the Future

As economists and business people take a look into the future of Chinese green enterprises, they see positive changes in a rapidly growing business environment alongside with the risks related to the non-Western Asian context of the issue. Compared to the Western world, Chinese social entrepreneurial spirit is still in a relatively early stage of development. The local mentality is focused on making money rather than altruistic opportunities (Elliott 2013). Nevertheless, Leach (2013) suggests a good future for green enterprise as the Government understands the need in social contribution from the business side. New approaches are to be introduced for the creation of more diverse and effective social resources.

Moreover, observers identify increasing numbers of young graduates and young professionals ready to choose an alternative career path and enjoy an opportunity to make a difference (Leach 2013; Zhao 2012; Chandra & Wong 2016). It sounds reasonable to believe that younger generations will fuel the green growth. Their recent educational and working background encourages young people to believe that there are new approaches for resolving the ingrained environmental woes. They easily embrace a new socially responsible green enterprise model and have a clear understanding of the green entrepreneurship.

Greening the supply chain in building industry is identified as a key green opportunity for the country (Korosec 2013). China should not stop on the development of energy efficient buildings, but continue investing in clean energy and create greener supply chains that would limit the use of water and energy and reduce waste generation.

According to the UN and domestic experts, China should promote green industry development through the establishment of a “forced-upgrading-mechanism” in terms of traditional industries and “incentive-development-mechanism” in terms of new green industries (Peng & Sun 2015, pp. 129-130). They also encourage the Chinese government to consider introducing an economic development evaluation system based on a total factor productivity. Other green growth innovations suggested by environmentalists include all types of promotion and integration of the new-type urbanization and emerging industries into Chinese economy (Wang 2012).

At present, scholars and officials argue about future social reforms. They admit a possibility that such reforms would turn into a new form of administration enforced by the Government rather than empowerment of new green initiatives. It is difficult to foresee the progress of green growth which can be interfered by the government at any time (Zhao 2012). Nevertheless, the common opinion is that time is ripe for green enterprises to deploy a governmental support for innovative solutions. China’ s government could enhance the global competitiveness of its industries through such initiatives. Chinese leaders and business practitioners should strive for the creation of green consumption patterns in the whole society (Peng & Sun 2015).

• Conclusion

To sum up, the conducted literature review revealed an evolution of a green entrepreneurship over the past decade. There are many reasons to say that China is beginning to have a more environmentally responsible direction in its industrialised economy. Scholars converge on the idea that green entrepreneurship could be the driver for a new economic start in China. The government encourages green enterprises by introducing new policies aimed at increase of energy efficiency and promotion of clean energy technologies. The emerging green industries are aligned with the national interests and should contribute to the future economic growth through the development of international competitive advantages for the Chinese business community. However, experts admit that there are factors such as heavy-metal pollution and emission of greenhouse gases that have a negative effect on the country’s developing green economy. The Chinese government is advised to address these issues with greater investments into research and development programs as well as the introduction of clearer policies and stricter regulations on environmental protection.