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by Rajen Kumar
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The Last Word
CSR for the SMEs: Lessons from Alibaba
Rajen Kumar
Feb 2011
Feb 2011
Corporate Social Responsibility (CSR) as an agenda for the big and the mighty has been a subject of deliberations in India for a long time. Though CSR is not new to India, the subject has gained importance lately as the economic development process gained pace in the recent past.
Giant corporate houses like Birla and Tata had set the tone for the cause decades ago, the corporate of the day failed to imbibe the very concept of the social good. Many corporate houses have taken to social activities merely as an obligation rather than a responsibility.
During my recent visit to China, I had a chance to interact with David Wei, CEO, Alibaba.com. I discovered a new facet of CSR which Alibaba has been practicing. They are helping small entrepreneurs in various ways. “We well realized the problems that most of the smaller entrepreneurs face and we decided to help them move up the ladder of progress and development by delivering workable solutions,” David informed me.
Credit flow is an important issue faced by most of the SMEs even in China. How does Alibaba help SMEs get finance from the banks? In China, Alibaba.com found a unique way in helping SMEs gain access to finance. They have floated a loan assistance program and named it Ali-loan.
As a popular B2B marketplace, Alibaba.com has a large number of SMEs as their members and has online trading records of all. They ask for the credit needs of these entrepreneurs and club them and advise the banks. The simple age-old axiom “Unity is Strength” works wonders. All that the banks need is the credit worthiness of the entrepreneur seeking finance. “We believe that small businesses are not less credible. However, individually SMEs are often viewed as weak businesses and are considered high-risk propositions,” David enlightened me. So Alibaba provides the banks proof of their credits and help the entrepreneurs apply for their loans collectively. However, Alibaba doesn't offer any guarantee but just provides trade credit records. Banks trust this collective or grouping system. Thousands of entrepreneurs in china have already got loans this way.
Similarly, Alibaba has helped SMEs feature in the TV commercials. They buy larger chunk of slots on the popular channels at very economical costs and distributes small slots to different enterprises. The costly airtime which is beyond the means of small business units is made available at affordable cost.
Not only this, Alibaba has gone further to help SMEs cut costs on international courier services. Couriering two packets and couriering 100 packets means a sea of difference in costs. Alibaba has derived a simple mechanism by negotiating with the best courier service provider like Fedex for big volume of load at a staggering low cost and sends packets collectively. Imagine the amount of money being saved by the entrepreneur.
Wonder, why someone in India can't do this. This is the real CSR which could be done for the small entrepreneurs in our country.
Create Opportunities or Create Criminals
Corrupt practices in public and private life have always been there. With the development of visual media, it has only come to the fore and has become a topic of discussion everywhere. 'Money can get you everything you want and can do anything you want' is the general perception in India.
Can we achieve inclusive growth without ushering into a new ecosystem? All will agree that we cannot. But what kind of efforts are we initiating towards creating environ conducive to indulging in progressive business? The onus lies with the governance as much as with our industry leaders, chambers, federations, associations, organizations concerned directly or indirectly with the nation's economic growth. Of and on corrupt practices in the higher rungs get noticed but irregular and corrupt practices at lower levels have become like the regulatory orders.
It is a sad state of affairs that the authority's enthusiasm is blatantly lacking. Governments have come and governments have gone but the lot of small entrepreneurs remains unbudged. The MSME Bill of 2006 billed some hope for the MSME sector but the 'Bill' is still waiting to be encashed. The sector continues to be groping where it was decades ago. In the face of the looming status quo, the sector has achieved growth for which the entrepreneurs alone deserve a pat on the back. Imagine what levels of growth would have been achieved had it got the support of the stakeholders and the governance.
As of now, we have no authentic data of the sector. The so called censuses undertaken by the government only appeared to be a cosmetic exercise and failed to gauge the real sector spread in the vast rural belts, tier II and tier III townships in the length and breadth of the country.
The unemployment scenario is worsening and taking alarming proportions. Entrepreneurship has been reduced to only a topic of discussions in the seminars in five-star hotels. The growing frustration amongst the country's able youth leading to social unrest is testimony to our incapability. What the government has to say to what happened in Bareilly in Uttar Pradesh on Feb 1, 2011 when lacs of young men considered to be the hope of the country turn up for a mere 426 vacancies in the ITBP. The ruckus created leading to loss of precious lives and the working of the federal system of governance in India is another question.
If we continue to be insensitive towards the 60% of the Indian populace comprising the able-bodied potential youth, we run the risk of turning our country into a nation of terrorists and criminals. We have two choices: create jobs or create criminals.
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The Last Word
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