Subject: home affairs, welfare services, social enterprises

Key issues faced by social enterprises in Hong Kong

  • In 2015, there were just 78 social enterprises per million population in Hong Kong, far behind that of 1 083 in the UK. Moreover, it is noted that local social enterprises are highly concentrated in business of lower value-added activities, such as catering (30%), medical care (26%) and retail and personal services (25%).2Legend symbol denoting See香港社會服務聯會(2016).
  • In a nutshell, development of social enterprises in Hong Kong are constrained by a number of factors as follows:

    (a)Lacking business experience: At present, the Government's funding schemes for setting up social enterprises are earmarked to non-profit-making organizations ("NPOs"). According to a Government study3Legend symbol denoting See Central Policy Unit (2008)., "these organizations may lack expertise in running a business. The social enterprises may not be able to survive in open-market competition". In fact, 20% of social enterprises were forced to close upon exhaustion of seed money.4Legend symbol denoting See Home Affairs Bureau (2015).

    (b)Limited support in application for funding: It would be burdensome for inexperienced NPOs to submit detailed business plans to apply for seed money. Coupled with limited government guidance and support in the stage of application, this tends to dampen the propensity of prospective operators to establish social enterprises.

    (c)Limited mentorship support: During 2008-2013, the Government only arranged 41 voluntary mentorships for the social enterprises which were set up by the Government's funding schemes. In 2014, the Audit Commission commented that the mentorship scheme should serve all social enterprises of Hong Kong instead of confining to Government-funded social enterprises.5Legend symbol denoting See Audit Commission (2014).

    (d)Lack of public service contracts: The Government launched a pilot scheme in 2008 to accord higher priority to social enterprises in bidding government service contracts. While this initiative helped create new service demand for social enterprises6Legend symbol denoting During 2008-2012, 75 government service contracts valued at HK$30.1 million were awarded to social enterprises., the scheme ceased at end-2012, weakening service demand for social enterprises.

Recent developments of social enterprises in the United Kingdom


  • By and large, the UK government has adopted a multi-pronged approach to foster social enterprises which may have reference value for Hong Kong. They include (a) granting social enterprises a separate legal status under a simpler regulatory framework; (b) facilitating development of a wide range of financial intermediaries offering greater diversity of financial products to social enterprises; and (c) introducing legislation to require public bodies to consider social value in the award of public service contracts.

Prepared by YU Chun-ho
Research Office
Information Services Division
Legislative Council Secretariat
14 November 2016


1.There is no universal definition of social enterprise. According to the Government, a social enterprise is a business to achieve specific social objectives such as providing the services (e.g. support service for the elderly) or products needed by the community, creating employment and training opportunities for the socially disadvantaged, protecting the environment, or funding its other social services through the profits earned. Its profits will be principally reinvested in the business for the social objectives that it pursues.


3.See Central Policy Unit (2008).

4.See Home Affairs Bureau (2015).

5.See Audit Commission (2014).

6.During 2008-2012, 75 government service contracts valued at HK$30.1 million were awarded to social enterprises.

7.See Social Enterprise UK (2015).

8.See Civil Society (2014).

9.Big Society Capital was supplied with £400 million (HK$4.7 billion) from England's bank accounts left dormant for over 15 years and £200 million (HK$2.4 billion) from the four largest UK high street banks.

10.Social value is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of each individual contract and looking at what the collective benefit to a community is when a public body chooses to award a contract. Social value asks the question: "If £1 is spent on the delivery of services, can that same £1 be used, to also produce a wider benefit to the community?" See Social Enterprise UK (2012a).

11.See Social Enterprise UK (2015).

12.The CIC status is an overlay on one of the existing forms of limited company, which have greater flexibility to engage in different businesses and activities. According to the CIC Association of the UK, "CICs can be established for any lawful purpose, as long as their activities are carried on for the benefit of the community … charities are subject to more onerous regulation than CICs". See CIC Association (2010).

13.In mid-1990s, there were some concerns as to whether the social enterprise label could be "hijacked" by businesses that were not genuine social enterprises. It was not until the introduction of CIC that gave confidence to the investors and society. It is because CIC is required to (a) enshrine its social objectives in its governing documents; (b) contain an asset lock which stops the assets of CIC being distributed; and (c) cap the distribution of profits to the shareholders. See Social Enterprise UK (2012b) and British Council (2015).

14.A Community Development Finance Institution is an organization that provides affordable loans and support to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies.


Hong Kong

1.Audit Commission. (2014) Report of the Director of Audit (No. 62) on promoting the development of social enterprises.

2.Central Policy Unit. (2008) Social Enterprises in Hong Kong: Toward a Conceptual Model.

3.Chan, K.M. & Yuen, Y.K. (2013) An overview of social enterprise development in China and Hong Kong.

4.Home Affairs Bureau. (2015) Enhancement Measures of the Enhancing Self-Reliance Through District Partnership Programme. LC Paper No. CB(2)228/15-16(05).

5.Home Affairs Bureau. (2016) Report on the Pilot Scheme for Priority Bidding of Selected Government Service Contracts by Social Enterprises. LC Paper No. CB(2)1717/15-16(01).

6.Home Affairs Department. (2016) Enhancement Measures of the Enhancing Self-Reliance Through District Partnership Programme. LC Paper No. CB(2)844/15-16(02).

7.Lee, C.M. (2011) A study on social enterprise in Hong Kong: a solution for social problems.

8.Legislative Council Secretariat. (2007) Social enterprise policies of the United Kingdom, Spain and Hong Kong. LC Paper No. RP03/07-08.

9.Legislative Council Secretariat. (2015) Enhancement measures of Enhancing Self-Reliance Through District Partnership Programme. Updated background brief submitted to the Panel on Home Affairs meeting on 13 November 2015. LC Paper No. CB(2)228/15-16(06).

10.Yan, J. (2012) What makes social enterprise effective in Hong Kong.


United Kingdom

12.British Council. (2015) Social enterprise in the UK - Developing a thriving social enterprise sector.

13.Cattel, C. (2012) CLG, Charity or CIC?

14.CIC Association. (2010) Differences between CICs and Charities.

15.Civil Society. (2014) Government plans £100m foundation to help charities win investment and contracts.

16.Social Enterprise UK. (2012a) Public Services (Social Value) Act 2012 - A brief guide.

17.Social Enterprise UK. (2012b) What makes a social enterprise a social enterprise?

18.Social Enterprise UK. (2015) State of Social Enterprise Report 2015.

19.Teasdale, S. (2009) Can social enterprise address social exclusion? Evidence from an inner city community.

20.Third Sector. (2007) How to: Decide between charitable and CIC status.