But as interest rises, sector faces concerns over financing, profitability

To set up a social enterprise is becoming a popular career choice on the mainland, although lack of funding and enterprise management skills remain major challenges for people who want to devote themselves to this fledging sector.

"Social enterprise is something new for China, but we are seeing more young people show enthusiasm to give it a try and become social entrepreneurs," said Xu Yongguang, vice-president of Narada Foundation, which is based in Beijing and has provided 1 million yuan ($158,385) a year to support social projects since 2008.

Social enterprises are organizations that use business approaches to meet social and environmental needs and make a positive difference in their communities, according to a definition by the British Council's Beijing office.

"Social enterprises employ sustainable commercial techniques and may generate profits, but unlike traditional businesses, their primary objective is to benefit society rather than enrich owners or shareholders," according to a statement from the council team in charge of its Skills for Social Entrepreneurs program.

According to a report by the Foundation for Youth Social Entrepreneurship, an organization dedicated to providing support to social entrepreneurs in Asia, social entrepreneurs are mostly aged 31 to 40, are highly educated and have international exposure.

As there is no specific legislation for social enterprises on the mainland, social enterprises face challenges but are given the freedom to choose their legal status, the report said.

Of the 52 social enterprises that took part in the study, 34 were registered with authorities as companies, 10 as NGOs, while the rest were not registered at all.

The report also discovered that most social enterprises make little profit, with roughly 70 percent generating less than 500,000 yuan in annual revenue.

However, without a consensus on the definition, there is no reliable data about the number, size and scale of social enterprises on the mainland.

Xu said, based on his observation, successful social enterprises remain "rare" in China and most are heavily tested by market conditions.

Finding funding

Yu Jia quit her job at an institute in Beijing and set up a company to make lampshades using old subway posters last year.

She estimated that each year the dumped advertisement posters in subways and bus stops could cover an area of 2 million square meters, five times the size of Tian'anmen Square.

Yu, 33, and her business partner, who specializes in design, has persuaded an ad company that has cooperation with Beijing Subway Line 4 to provide old posters, which can be cut or reshaped and then folded into lampshades.

"Financing is the toughest part for us. As a micro enterprise, it's difficult to get a bank loan, and most venture capital companies show little interest to invest because it usually takes four to five years to get a return on their investment," she said.

Yu's project, ReLight Design, is largely still relying on the 30,000 yuan she was given in seed funding by the British Council, after her project finished in the top six out of 100 in a contest on ecological innovation.

Yu plans to organize exhibitions in Beijing 798 Art Zone and Line 4 this month to attract more attention and funding.

According to the British Council, its office has been training people who plan to or have already started social enterprises since 2009, providing more than 7 million yuan in startup funds.

Apart from the British Council, some charitable foundations, including Youcheng Social Entrepreneur Foundation and Narada Foundation, provide funding for people who want to start social enterprises.

As a tutor for British Council's social enterprise training programs, Steve Koon, a consultant for social entrepreneurs from Hong Kong, said he has coached about 800 people who want to become social entrepreneurs.

"There are mismatches in the current funding channels, as charitable foundations usually provide only a small sum of money to support startups, which is far from enough for businesses to grow, and venture capital is inaccessible for most as they can't meet their rigid requirements," he said.