Southwest China has attracted a multitude of non-profit organizations, and in the past few months, the Chinese government has stopped renewing the registrations for these organizations (at least the smaller ones). Many of them are turning to business. What is going to happen with the non-profit minded folks flocking into the business world?
Many plan on continuing very similar activities, but start a business to do so. Is it just me, or does that not make much sense? Sure, organizations often use businesses to actually complete some projects, but can a strategy which is funded become a strategy that brings in money? Non-profits tend to have money flowing out, not in.
Because Southwest China is less developed, it has a higher number of organizations than the more developed parts of China. I have noticed some organizations in Guangxi and Guizhou provinces, but Yunnan seems to have a huge number of NGOs at work. The vast majority of the folks staffing these organizations may well know how to do development work and even do it professionally, but that does not mean know how to make money.
There are all kinds of problems. One is legal. As an example, my brother is a doctor. He can make money in the United States, but if he comes to China, he cannot exactly set up practice like he could in his home country, for legal reasons (among others). For those non-profit workers who are doctors, they most certainly have training in a service worth money, but it is not as simple as that. A foreigner cannot just do anything in China.
The medical profession is just one example among many. It seems one of the basic problems is that some see this as an issue of a visa. They want to just switch to a business visa and continue doing their activities as before. They are most likely not going to make any money, and I really do not know what happens then.
China has even made the regulations of starting up a wholly foreign owned enterprise much easier by dropping the necessary investment from about US$60,000 down to $12,500. That is going to tempt an even higher number of the non-profit folks to try out the "profit" world.
I do not want to get too much into what the government is going to think, but I can say for certain that most of these folks have no idea that they will actually have to pay taxes, and that the government will know they are a business that is making no money. To say it kindly, if I were a Chinese government official, I would seriously wonder who is funding these people and what their real motivation in China is.
I guess in the end, these folks will have very little impact on the business world, simply because they will never really enter it. This is an issue of development, though. China is making it clear that they do not really want or like all these organizations, and I have a feeling that calling it a business it not going to change much.
There are certainly ways in which business can help develop, but that is not really the way organizations typically function, at least, not around here. Small business can be an incredibly helpful force for the areas these organizations want to develop, but these organizations really only understand how to give, not make money, develop resources, and add value.
This is also treading dangerously close to an ethical issue. They say they are business, get a visa from the government to do business, and then continue using outside money to carry on projects as before. What they are doing is not bad, but they are saying they are doing something which they are not doing. The government is not going to like that very much.
I am just thinking through some of what I am seeing happen out here. What China really needs for development, as the government seems to be trying to say with their policy changes, is business. Business can be mutually beneficial. Business can transform local economies.
