Asia Tomorrow U(niversity)
Social Innovation and Entrepreneurship
(This article was wrriten in 18th May, 2018)
Social Innovation and Entrepreneurship in Asia – Asia Tomorrow U 2nd meeting
Even though each country calls Social Economy in a different way, the concept has existed. 2018 Asia Tomorrow U participants discussed similarity and differences of Social Economy, related policies and social entrepreneurship in Asia; South Korea, Mongolia, Thailand, Japan and Indonesia.
Republic of Korea
(Jooeun Kim, Eunji Kim, Jiyoon Kang, Sung Joon Huh)
Social economy in Korea means economic activities that occur when citizens volunteer to cooperate and band together to solve some problems that cannot be solved only with economic activities of the market and the government. While general companies work to gain materialistic profit, social economy places more value on people than on capital, and the profit of the whole society than on profit of individual companies. The most significant social economy related policy in Korea is the Law of Promotion of Social Enterprise, which originated from the discussions about the necessity for social economic enterprises after the IMF in 1997. One example is ‘Hansalim’, an association that increases both the quality of a product and the satisfaction of a buyer by eliminating the unnecessary distribution process and directly connecting the buyer and seller.
However, Korean mainstream economy is mainly led by huge companies owned by ‘Chaebols’, which makes small social start-ups completely fall behind from the competition. Also due to the heavy reliance of Korean economy on ‘Chaebol’ governed enterprises, it is impossible for the government to entirely support social enterprises against large companies since the damage of those companies leads directly to the loss of Korean economy.
From 2000s government is fostering start-up as driving force of economic growth. Government support is continuously increasing in South Korea. Government supports for social start-ups with allocating budget. The government wants to solve unemployment with more start-ups. The start-ups must be grown and income based on receive proper assistance. Report from Korea’s Ministry of Strategy and Finance show that 16.3% of the budget will be used for increasing start-ups in general. Korean tax money was mainly used for welfare and education, and hence, the Korean government is willing to support social entrepreneurship in that area. Excluding budget, the government also support social start-up in many ways. Aiding in management, lower taxes, and legal assistance.
However, Government leading Social Innovation confronts some problems.
1. Because of government selectivity for budget support, there may be low diversity in the field of start-ups.
2. Idea theft from social start-ups by big MNCs is high in Korea
3. There are many but some assistance programs are unnoticed.
4. MNC’s are too well established in Korea. they have better legal, capital, etc, and social economies find it difficult to compete.
Japan
(Esther Park)
In Japan, the concept of Social Economy virtually doesn’t exist considering its risk-averse characteristic. Since Japan already has strong SME’s and the unemployment rate is very low, there is no need for encouraging start-ups. Also, society frowns upon entrepreneurship. Japan’s solid infrastructure.
Mongolia
(Ulziimaa Batmunkh)
The idea of what it means to be an entrepreneur is changing quickly in Mongolia. After the transition from Soviet satellite state to free market democracy, the country lacked even basic economic infrastructure. The retreating Russians took everything with them. At that time, in the early 90’s, life was difficult in Mongolia. There was little domestic industry and overland trade was practically non-existent. With so little competition, a supply-driven economy began to emerge: if you could make it in Mongolia or bring it to Mongolia, you could sell it. Small and Medium Enterprises (SMEs) – defined by the Mongolian government as any company with less than 200 people – account for 95% of businesses in Mongolia and 25% of GDP5. Within that, a third of those businesses are traders.
However, within the last 2 to 5 years, a new culture of entrepreneurship is emerging. A younger generation of globally educated Mongolians is returning to the country with new ideas about business, technology, and management that are changing the marketplace from the bottom up. As the business landscape evolves and becomes ever more influenced by and intertwined with global markets, the players are also becoming ever more sophisticated. The English word “entrepreneur” is a new term and a new idea for Mongolians. As such, the first step of this research was to explore how that term is evolving in this new context.
- Obstacles for Entrepreneurs
The largest complaint among respondents who participated in the survey was about access to finance and funding opportunities. According to respondents: interest rates are too high; banks demand too much collateral; equity investors are non-existent, too inexperienced or only interested in takeovers; and angel investors are needed. Over 20 of the 30 respondents reported getting their seed funding from family and friends. A number of entrepreneurs pursuing more proven businesses such as textiles and small-scale manufacturing were able to access second-round funding through targeted SME promotion funds from the government and other international donors. A select few even reported then being able to borrow from banks based off the credit rating they had secured through the SME promotion loans. On the other side of the spectrum, a small number of entrepreneurs with substantial international ties reported tapping into international financing networks based on personal connections and networks.
Other obstacles faced by entrepreneurs included lack of business knowledge, poor human resources, macro instability and corruption, and a small market size: depicted to the left according to the frequency which they were cited by the respondents.
Lack of mentors or success cases was a commonly cited obstacle. According to many, there are no successful case studies to guide them and correspondingly few mentors that can really speak to the experience of overcoming the current obstacles facing entrepreneurs and more specifically social entrepreneurs. Respondents claimed a successful entrepreneurship expanding out of Mongolia could act as the confidence inspiring flagship to truly invigorate the field.
-Social Economy Environment in Mongolia
The idea of business as a force for good in the community is new in Mongolia. The social entrepreneurship movement is even less clear. Without demonstrated value to declaring businesses as social enterprises, many leaders see no impetus to distinguish themselves from a purely commercial enterprise. However, foundations for the future growth of social entrepreneurship are beginning to emerge.
An increasing number of communities building and networking NGOs are seeking to support entrepreneurs, such as Startup Mongolia and its sister group Women Entrepreneurs of Mongolia (WEM). These organizations are supported indirectly by the Techstars Accelerator program based out of Colorado. Their main strength is an engaging youth in entrepreneurial communities through creative and design-based thinking workshops and networking events. Both organizations are currently without physical working spaces, lack deep reserves of technical expertise, and do not possess the ability to fund promising ventures.
Startup Mongolia is beginning to make overtones towards supporting environmental entrepreneurship. WEM recently spun-off an organization called the Momtrepreneurs Union of Mongolia which focuses on supporting mothers starting businesses. Addressing more technical skills is an NGO called Development Solutions (DS). They provide business training, consulting, and support programs for strengthening market linkages, such as the USAID funded REACH program and 2003 to 2008 Growing Entrepreneurship Rapidly Initiative.
Thailand
(Varisara Sungprasit)
In Thailand, ‘Social Economy’ has not been widely used nor had an official definition yet. Civil Society Organization (CSO) is more well-known and is used instead. CSO is a person or a group of people who develops something for common good. It is divided into 2 stages. The first stage is making a policy promoting or Civil Society. The second one is gathering and working cooperatively. Apart from this, Thailand also has ‘Digital Economy’ to lead its economic dimension. One of them is called Thailand 4.0. Thailand 4.0 is the fourth stage economic model that aims to develop the country to become a high-income country.
Starting from Thailand 1.0, it is the age of agriculture. Thais had made a living out of farmland and livestock. They had grown rice and various other plants to support themselves. They had also raised animals to generate income. Thailand 2.0 focused on light industries and Thailand 3.0 focused on heavy industries. This third stage had unlocked Thailand from low-income to be medium income country. Lastly, Thailand 4.0 is innovation-driven age. Agricultural sector needs to move away from a conventional mode to the modern style. Smart Farming should spread over Thailand. Leveraging technologies, farmers can become entrepreneurs and get richer.
Small and medium enterprises (SMEs) must transform themselves into Smart Enterprises or Startups with high potential. Labor skills and knowledge must be high. Thailand 4.0 model pursues Security, Prosperity, and Sustainability. Nowadays, it can be obviously seen that technology has taken much more roles in Thai Society in economic and financial dimension. However, Thailand still had to keep develop continuously to become a high-income country.
Indonesia
(Alira Vania Putri Dwipayana, Tesalonika Elaine)
The term ‘Social Economy’ doesn’t exist in Indonesia. When saying about ‘Social Economy’ in Indonesia, it relates to a quality of life or social equality. ‘Social Entrepreneurship’ also a new term. So, there’s not many research about it in Indonesian. However, the concept has been existed since forever.
Indonesian government calls ‘Creative Economy’ – elaborating Creativity skills and talent that has a potential for wealth creation and job creation. The government is serious in developing the Creative economy industry. They expose this concept mostly to Startups and Business that can help economic growth.
– 2004-2014: Ministry of Tourism and Creative Economy
– After 2014: Ministry of Tourism + Bandan Ekonomi Kreatif (BERKRAF) (Indonesian Agency for Creative Economy)
The creative economy is important because it gives an economic contribution and increases National identity. They are forced to create social impact. Creative Economy focuses on people as their main resource. It focuses on trying to keep people in labor market, not to lose their job because of the enhancement of technology.
In Indonesia, Social Entrepreneurship is a new term but, Community based economy/business is the exact concept of Social Entrepreneurship. Indonesia has a very strong entrepreneur spirit. Entrepreneurship class is mandatory in most of the Universities. Indonesia always empowers and embrace community to realize diverse ideas. Community-based business is maybe the other way of saying Social Economy which is called in South Korea.
‘Korepasi’ (Cooperation in eng) An Economic organization that is own by the community and works for the community. It focuses on fulfilling the well-being of the members. There are a lot of types of cooperation in way of its function, members status. From very young age, Indonesians study Koperasi concept. Here are the characteristics of Koperasi.
Characteristics of Koperasi
– It has to be open
– It runs on a volunteer
– It has to be democratic
– Members have to be active and to participate
– It focuses on autonomy and freedom
– Training and independence
– It is self-funded
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