This article first appeared on Pan Xinlei’s blog.
Rainer Lau decided to take his girlfriend Annie to a special place for dinner to celebrate Annie’s birthday. The rendezvous is called Happy Veggies. It is the first non-profit vegetarian restaurant of social enterprise in Hong Kong, but this is not the only reason that intrigues Lau.
“I found from the Internet that the restaurant mainly hires hearing-impaired people, and I think that is really cool,” said Lau.
Founded in 2010, Happy Veggies now has 20 employees, and nearly half of them suffer from hearing loss. Thanks to the Enhance Self-Reliance Through District Partnership Program (ESR Program) offered by the Home Affairs Department, the idea gets a chance to live.
The ESR Program was first introduced in 2006, aiming to prevent and alleviate poverty through district-based approach for eligible organizations to set up social enterprises. The funding ceiling for each approved project is HK$3 million, and Happy Veggies received HK$2 million as its full seed grant.
The veggie restaurant has been able to make both ends meet after only one year of operation. “Being a social enterprise means business plus social service, but business comes first,” said Jackie Chan, the executive assistant of Happy Veggies.
But for other social enterprises in Hong Kong, striking a balance between serving society and keeping a budget is not always easy. There are altogether 406 social enterprises in Hong Kong in 2012, according to a survey done by the Hong Kong Council of Social Service (HKCSS). And over one hundred of them are receiving funds from the ESR Program. “One third of them is successful, one third of them is struggling, and the other one third has a long long way to go,” said Yan-Leung Cheung, former chairman of Advisory Committee on ESR Program.
ESR Program has granted over HK$125 million to more than 130 projects and created at least 2,000 jobs, according to an open letter from Tak-sing Tsang, Secretary for Home Affairs. But the demand is also rising. In a 2012 survey done by Social Enterprise Summit in Hong Kong, 68 percent of the 173 participants said they were once running out of money, and 64 percent of them estimated it might take at least two to ten years to balance the budget.
“The rent is often the big problem for most social enterprises, as property owners normally won’t give a discount,” said Jessica Tam, Business Development Manager at HKCSS-HSBC Social Enterprise Business Center.
Despite the money, skill is also on shortage. “Most social enterprises, being operated by welfare NGOs and social workers, put more emphasis on the social goals, and do not have the business mindset and skills. They have difficulties of competing with the business sector. Sometimes, these two goals may be mutually exclusive, difficult to compromise,” said professor Joe Leung from the Department of Social Work and Social Administration of the University of Hong Kong.
Social recognition is also an issue. According to a 2009 survey done by the Public Opinion Program of the University of Hong Kong, less than half of the citizens know what a social enterprise is and two thirds of the students never heard of it. “Although the government and civil groups have been pushing hard to raise the awareness of the social enterprises, yet due to a lack of explicit definition of what a social enterprise is and supporting legal structures, the public is still a little skeptical,” said Tam.
Happy Veggies has tasted each of the difficulties. It is located in populous Wanchai where rent for small business couldn’t be any higher, employees have to be trained with great care and effort, and communication with the customers was once tiring. But as Chan said, they don’t see them having an advantage as a social enterprise. “We come up with two business models, one for quick-time lunch and one for more exquisite dinner and they worked. We also conduct market research to find what best serves veggies’ appetite and our employees are doing great now,” said Chan.
Meanwhile, the government is trying to ensure a promising future for local social enterprises. Chief Executive CY Leung has suggested allocating HK$500 million from the Lotteries Fund to form a Social Enterprises Development Fund to provide loans to social enterprises last July. Leung said the fund would help social enterprises to set up business, develop, and expand.
An expansion that Happy Veggies really desires now as it starts to consider opening a branch. “There are still thousands of hearing-impaired people out of work in Hong Kong,” said Chan. “If we have one more branch, then ten of these people can have a chance to work and if what we do is echoed by more people, it would make a big difference.”
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