Social Entrepreneurship is the process of developing a business solution that directly addresses social or environmental issues. Social entrepreneurs are usually someone who has a great passion, to have a positive impact on their community, society, or the world with a sustainable business model.
However, it is very difficult to start a social enterprise. Unlike normal enterprises, social enterprises will need to find a balance on how to make sustainable revenue while creating a long-lasting positive impact on their beneficiaries. Hence, social enterprises often require more support from the stakeholders like businesses, government, etc, to be sustainable in the market.
In Vietnam, there are about 19,000 social enterprises including SMEs, Cooperatives, and NGOs, according to the British Council Study. Furthermore, most social enterprises in Vietnam often have around 15 people, with an annual income of less than VND$ 1 billion. Most social enterprises in Vietnam are either in Agriculture, EdTech, Creating Jobs, Supporting Disadvantaged Communities like disabilities, empowering women, or training young leaders.
According to Truong Thi Nam Thang, Director of the Hanoi-based National Economics University’s Center for Social Innovation and Entrepreneurship, parents in Vietnam would be extremely worried if their children are working in a social enterprise. She also added, in modern Vietnamese society, entrepreneurs are treated as one of the highest social statuses while most people think of social enterprises as only looking to achieve social missions but unable to earn many profits.
Indeed, most social enterprises are facing difficulties to grow. According to a study by the British Council, most social enterprises’ plans for growth are depending on finding new customer segments (75%) or developing new products or services (62%), while more than 50% of the surveyed social enterprises are having trouble raising funds to expand. Furthermore, about 40% of the surveyed social enterprises are also facing trouble recruiting employees or volunteers to support their operations.
The market became more difficult for social enterprises to survive when the COVID-19 pandemic occurred. About 38% of social enterprises were closed at the end of 2020 and up to 95% of social enterprises are facing the risk of bankruptcy at the end of 2021, according to a survey done by the Center for Social Innovation and Entrepreneurship (CSIE) under the National Economics University. This scenario has also directly affected up to 28,000 employees and more than half a million people who are benefiting from social enterprises.
In Vietnam, Social Enterprises were only incorporated into the Enterprise Law in 2014. The law defines Social Enterprise as a type of business that will reinvest at least 51% of the profits to achieve its social missions and registered social or environmental objectives. However, in the new era, more social enterprises have different innovative business models to operate, which might not fit into this category. This results in more social enterprises trying to register themselves as cooperatives, non-governmental organizations, and charity organizations. As they are not registered according to the law, it makes it harder for some of the social enterprises to ask for preferential policies and support from the State.
Thus, It can be summarized into 3 main points of why many Social Enterprises are not doing well in Vietnam:
- There is still a misperception about Social Enterprises, and many people still tend to see Social Enterprises with a lower social status.
- It is difficult for Social Enterprise to grow as it is usually harder to raise funds for Social Enterprise.
- There are more innovative business models for Social enterprises nowadays, but due to the law’s definition, they have to look for other ways to register their businesses, which makes it harder for them to receive support.
Although the market for social enterprises might not seem as optimistic in Vietnam, more people and stakeholders in the ecosystem are starting to pay attention to this problem. According to the same study by the British Council, about 74% of the surveyed social enterprises said they have received more support and understanding from the intermediaries. While more than half of the social enterprises are still operating in rural areas in Vietnam, more need to be done to better support them to growth and help other parties recognize the efforts and contributions done by the social enterprises.
Examples of Social Enterprises in Vietnam:
Kym Viet is a social enterprise that aims to empower disabled people through training programs and to help them to find a job to reduce the financial burden on their families. Minh Thuy, 39 years old, has been deaf since childhood, without an education certificate, and has been jobless until 32 years old, when she received support from Kym Viet, who is willing to provide her with a job.
Le Viet Cuong, the Director of Kym Viet, said that “The incentive policies of Vietnam are not very clear, so the number of social enterprises is not increasing rapidly enough”.
Zó project is a social business, which preserves, supports, and expands the Vietnamese traditional paper and its making technique sustainably and creatively. Dó paper is renowned for being very durable, and resilient with a subtly textured surface and is now widely used for woodblock Dong Ho folk paintings. Zo Project also partners with a village in neighboring Hoa Binh Province, where the paper is still produced by hand according to age-old techniques.
Through collaborating with multiple partners and preserving the traditional Vietnamese culture, the Zó project has received much support from the local authorities and even international artists.
KOTO is one of the first established social enterprises in Vietnam since 2001 and is also one of the first legally-recognized Social Enterprises in Vietnam in 2016. The concept of KOTO — Know One, Teach One — began when Jimmy, the Founder of KOTO, asked some of these young people what they wanted out of life.
Today, KOTO provides an opportunity to more than 100 at-risk and disadvantaged youth per year in Vietnam to undertake our 24-month holistic hospitality training program to end the cycle of poverty and truly empower our trainees to realize their dreams.
With more stakeholders in Vietnam starting to call for a change and support the social enterprises, it is foreseeable to see more new social enterprises rising and shining in Vietnam.
Are you also operating a social enterprise and require more support to impact more beneficiaries?
British Council Vietnam. (2019). Social Enterprise in Vietnam. British Council Vietnam.
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Lush, E. (2018, August 15). The Social Enterprises in Hanoi You Must Visit. Wander-Lush. Retrieved November 11, 2022, from https://wander-lush.org/social-enterprises-in-hanoi-vietnam/
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Peek, S. (2020, July 30). What Is Social Entrepreneurship? 5 Examples of Businesses with a Purpose. U.S. Chamber of Commerce. Retrieved November 2, 2022, from https://www.uschamber.com/co/start/startup/what-is-social-entrepreneurship
Vu, M. (2022, March 29). Social enterprises playing increasingly creative role. Vietnam Investment Review. Retrieved November 2, 2022, from https://vir.com.vn/social-enterprises-playing-increasingly-creative-role-92268.html