Wokai.org is a “capital-contributing microfinance intermediary” trying to bring money to Chinese entrepreneurs who want to set up their own small businesses, by raising loan capital online from individual contributors for microfinance institutions (MFIs) in China. Its goal is to expand financial opportunities for the country’s poor (and mostly rural) population.

Though its primary goal is fundraising, Wokai also provides “capacity building” for microfinance organizations, which can mean anything from emotional support for first-time borrowers to computer training for loan managers.

Wokai.org American founders Courtney McColgan and Casey Wilson think that the website will not only be a fundraising platform, but also a community for people interested in supporting microfinance in China.

Through Wokai, people will be able to make loans online directly to individuals who have been selected by Wokai’s local partner MFIs. These MFIs in select clients, whose profiles are then posted on the Wokai website through profiles that outline their business ventures and loan request.
Contributors browse these profiles, select who and how much to finance, and then transfer money to Wokai through our online payment system. Once funds are transferred, Wokai distributes this loan capital to partner MFIs for allocation to micro entrepreneurs. At the end of the loan cycle, partner MFIs collect loan repayments and re-issue loans.

Like other “capital-contributing microfinance intermediaries’ Wokai is not legally a financial service organization, so it does cannot receive savings deposits, which means that the pool of money cannot grow and requires constant capital injections.

The website is scheduled to be launched in Mod-November, so stay tuned.

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It’s inappropriate to restrict car purchases or license plate issuing to control the total number of vehicles. We need to take into account the overall situation of boosting domestic demand and maintaining steady, rapid economic growth.

said Wang Haiping, deputy head of the Beijing Municipal Commission of Development and Reform here.

With the poor economic situation, officials are thinking twice about whether to close polluting factories, whether the benefits to the environment really outweigh the dangers to social stability

said Peng Peng, research director of the Guangzhou Academy of Social Sciences, a government-affiliated think tank here (Washington Post).

A slowing economy will use less resources, but is this bad for China and the workers making stuff out of those resources? Does China want to ensure consumption remains high (even of polluting goods) and is willing to do anything to keep it that way? Will China still be willing to accept the short-term financial costs for longer-term environmental (and, often, financial) gain? Will the recent trend in stronger environmental protection enforcement continue, or will the economy take precedent over all else, again?

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Getting back to the Shanghai summit, I was able to catch panel 10 on “New Business and Financing Models” and a breakout session titled, “Competition & Regulation: What you need to know about China’s Green Technology Market.” Below are my notes for each the panel and breakout session.

Panel 10:
•    Government incentives are crucial in order to finance a greener economy.  Government must take the lead to help with start-up costs and the government’s policy innovation is the precursor to establishing a green market. A case in point would be San Francisco with their Solar Task Force, which cuts the cost of solar installation at different rates for residents, commercial buildings and nonprofits. If you look at the cost for solar, the only states in the US that are going for it are California and New Jersey because they have these government incentives.
•    When it comes to financing technology companies, inherent conflicts exist between: the cost of technology and the profitability of the firm and the growth of a region and meeting pollution reduction goals. There needs to be a good working relationship between government, technology businesses and investment banks in order to mitigate these conflicts.
•    There were a couple comments on the effects the financial crisis has brought to the financial sector for green tech. As a result of the crisis there is now higher equity and lower returns. In addition, it used to be all about collateral, but now it’s about the ability to re-pay: equity is not what it used to be.
•    China is showing a move away from the institutionalized banking system since they can now establish small loan companies. These small loan companies give money to SMEs (Small and Medium Enterprise).

Breakout Session:
•    Moderator David Gossack from the US Consulate General Shanghai highly recommends “Clean Energy: An Exporter’s Guide to China.” Check out www.export.gov or contact him directly to receive a copy.
•    Benjamin Pinney, from the Boston Consulting Group gave a refreshing overview of discussions at the two-day summit. He said he heard people talking about “solar collaboration” and “grid-parity.” He finds solar collaboration to be flat wrong because solar is about competition not collaboration. In addition, we are a long way off from even coming close to talking about grid-parity.
•    Mr. Pinney also had an excellent point about China’s consumer attitude about environmental protection that I think was dead-on. He said that we have to remember that alternative energies are a security issue and, thus, it is heavily financed by the defense bureau of government. Therefore, since consumers aren’t the one financing it, they only become aware of environmental protection and its importance because its being told to them from on-high. This type of “education” does not make them feel empowered because there is no role to play.
•    Regulations to achieve national goals: Renewable Energy Law (2006), Top-1000 Enterprise Energy Efficiency Action Plan (2007), Middle and Long-term Development Plan for renewable Energy (2007), tax incentives for renewables, and subsidies for renewables.
•    It is important that all sectors (wind, solar, hydro, etc.) do not have equal access to the market, government incentives, etc.
•    Charles McElwee gave a great presentation answering the often asked question: Can I do business legally in China?
1)    There is a catalog for foreign investment that is encouraged, restricted, prohibited, and other. See where you fall under these categories.
2)    What form of business? Contracting (easiest), establish a representative office (difficult), joint-venture (ok), WFOEs (ok).
3)    What about my IP (intellectual property)? Chinese businessmen do not use long contracts and the civil law system is not well developed. Also not a lot of case law to figure out ambiguous legal clauses. For dispute resolution don’t go to a Chinese court, arbitration is best. Arbitrary bodies include CIETAC, SAC and internationally Hong Kong’s HKIAC (preferred by the PRC).
4)    Major laws: Renewable Energy 2001, Conservation laws (April 2008), and be mindful of the Foreign Corrupt Practices Act (i.e. do not pay for guanxi)
“Slow, steady and wary wins the race in China”
•    According to Robert Theleen, Chairman of Chinavest, 90% of China’s bank loans go to State-owned enterprises and 10% to SME’s/private sector. Access to capital and bank funding has slowed in China, thereby changing the landscape of due diligence with commercial liability. Now, China finds the cost of capital as the most important, which is a sign of sophisticated banking.
•    An innovative technology came from the Solar Environment Technology Corporation case study. CENICOM is soon to be on the market. There technology can store solar energy for 5-10 days as opposed to the common 5-6 hours for existing solar thermal systems. There are no emissions and can be used with both local and regional grids.
•    The session closed with a recommendation to look for locally-sourced capital since it is your best bet for panicked-driven capital.
One interesting magazine distributed at the conference was called innocomm, published by the Knowledge & Innovation Community. Check the bilingual site out at: www.kic.net.cn
More to come this week from Beijing!

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China’s wealthiest have access to the best money can buy of course, but for China’s vast majority, access to healthcare often does not come so easy. In fact, given China’s policy of pay as you go, for many who are at the bottom of the pyramid, gaining access to even some of the basics is a luxury that many cannot afford.

A point that was hammered home to me while visiting the children at a Shanghai children’s hospital, I found that many of the parents who had children with leukemia and other ailments were having to making huge sacrifices to get the proper care and medications.  Quitting jobs and moving to Shanghai as a first step, many families were actually selling their homes, selling their possessions, and taking out huge loans to pay for the treatments.

Sadly, efforts to raise money though were rarely enough and parents would simply pull their child out of the program until they were able to afford the treatments again…

This is a situation that the recent Shanghai Daily article Cancer pair’s orange lifeline that described the efforts of one couple to be able to afford their own health care treatments

The Chongming couple, who suffer from cancer, are depending on their Mandarin orange harvest to fund their treatment. And it just might not be enough.

To help them raise money, the Jing’an District Cancer Rehabilitation Club recently bought 1,500 kilograms of oranges from Shen for 2,000 yuan (US$293).

and worse yet, they seemed resigned to their fate:

“It’s very hard for us to continue living. We can afford only in half doses of our medicine,” Li said.

“We are doomed to lose money this year. We had planned on my surgery after we raised money from the sale of oranges. But now, I don’t think we can earn enough.”

As a westerner living in China, the above situations are hard for me to understand. that to ride in an ambulance you must pay first, that to see a doctor you must pay first, to have surgery pay first, and so on.

There is no credit. There is not life over limb. It simply is a cash based process that one needs to be able to afford in order to gain access.

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According to the press release, the key highlights of Cargill’s engagement in China include:

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When the environmental costs of coal are considered, along with the impact of price distortion caused by current regulations, the total external costs of coal reached RMB 1745 billion in 2007, equal to 7.1 per cent of China’s GDP for the same year.

An interesting attempt to put a number on the costs of environmental degradation and impact on lives caused from the coal industry in China. This goes beyond vague statements or simplified injuries/deaths statistics to bigger picture, accurate numerical analysis.

Find out more about the true cost of Coal in China.

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(h/t Danwei) for highlighting a new site that is tracking officials who have taken bribes, abused their power, or otherwise gone beyond the call of duty.

Like Ma Jun’s website that locates, documents, and pubilcy identifies air and water polluters, this is a resource that 5 years ago would not be viewable in China (assuming the information could have been gathered), and it is a sign in the right direction that these sites are now not only visible in China… but hosted here.

Shanggui

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There are 508 grassroot-level environment NGOs in China as of October this year.This has increased by nearly 300 from 2005, the All-China Environment Federation said in an environment report here, which it took eight months to finish beginning January this year.

In total, there are 3,539 environment NGOs in the country, including government-sponsored ones, grassroot ones, branches of international organizations as well as school environment societies. The figure jumped by 771 from three years ago, the federation said.

According to the report, 55.2 percent of the NGOs now have their own offices, up 15.2 percent from 2005; while 26 percent have fixed source of investment, up 2.1 percent. However, most environment NGOs still face problems including difficulty in raising money, shortage in personnel and weak organization ability in their development process, the report said.

Interesting stuff. 58.6% were involved in energy saving and emissions reductions, and 11% participated in protecting people’s rights concerning environmental protection. No doubt this is a trend that will continue. Especially interesting that the survey categorised NGOs in this way as we have seen a tremendous growth in Environmental NGOs involved in legal cases, involved in utilising existing information to affect change, and in those trying to increase transparency as a way to overcome corruption and punish irresponsible companies.In all cases we have seen all levels of government work with, and against, such organisations in different circumstances!

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