Impact Investing at the Bottom of the Pyramid, Chinese Style

Last week, I found myself sitting in a conference room among a majority of suit-clad business executives listening to a panel of state commerce officials and legal experts discuss the current international trade in Arizona. A lot of numbers were thrown around about import and export goals met and jobs created, but my attention was most jolted when the discussion centered in on China and more so, China in Africa. What is China doing in the African marketplace, one of growing opportunities and that has recently appeared on investors’ radars? The discussion inevitably shifted from international trade to trade with China [read: why haven’t the Americans sought out Africa and how can we compete with China to capture the lion’s share of investment?]

It seems to me that Chinese investors are taking more risks these days and more of these risks appear in the form of privately held businesses across Accra, Dar es Salaam, Lusaka, and even in Juba. But much to the big dogs of media’s surprise, some Chinese entrepreneurs have not followed in the footsteps of what many Chinese companies have rampantly invested in the past decade across developing regions of the world–everything in between Presidential mansions, shaky buildings, and hoards of Chinese labour that is. Instead, on the minds of a new wave of Chinese investors are heralding the way for increased social entrepreneurship where wealth and charitableness are starting to go hand-in-hand as opposed to the common belief “为富不仁” -wéi fù bù rén.

In a recent Q&A session with Tao Zhang, Chief Operating Officer of New Ventures, WRI’s center for environmental entrepreneurship, the key message emphasized that the Chinese are certainly commercially motivated but it does not mean their commercial returns cannot also create social and environmental benefits. Unprepared to make an impact in the social sense of the word, the  way the Chinese see fit (for now) is to team up with interested partners, investors, and thinkers across different developing and emerging economies, such as in India and Africa. Investors are now collaborating with centers like New Ventures of the World Resources Institute, where its Chinese office helps entrepreneurs to better conceptualize and quantify the social and environment impacts of their new start-up.

So rather than trying to push more American companies to invest in Africa, I think it’s high time to push for a renewed type of investing..from the bottom-up that is, and more awareness on the social and environmental impacts. And this is as much a priority for entrepreneurs as it is for policy-makers to foster the kinds of environments to best accommodate impact investing.

An example of a Chinese firm working with impact investment in Asia: Avantage Ventures seeks to create a marketplace for social capital by advising social entrepreneurs and investors on strategic impact investing!