Social entrepreneurship is one of the most challenging business types to start and sustain, given the competing needs of generating both profit and societal good. During a recent interview with CEIBS Professor Shameen Prashantham, Li Xia (Susan), Founder and CEO of Shenzhen Power-Solution and recent winner of a 2024 Schwab Foundation Social Innovation Award at the World Economic Forum in Davos, shared her story of founding, building and expanding her company, a social enterprise designed to empower rural communities in Africa who live without access to reliable and affordable supplies of electricity.
Explaining the three development phases of the company – from survival to sustainable to scalable – Susan offers invaluable insights for any socially minded entrepreneur, along with key advice for Chinese companies looking to expand into high-potential markets like Africa.
01
Motivated to improve lives
"I founded Power-Solution 15 years ago," Susan explains. "During the intervening years, I've raised four children – two girls, one boy, and a baby company! From inception, Power-Solution has been providing green energy for a special group of people who are left in the dark with no electricity supply. In professional terms, we call this being in an 'off-grid area'; these are usually places where living conditions are difficult and income levels are low or very low. We provide targeted individual solar solutions to solve two problems: accessibility and affordability."
Having grown up in poverty, Susan is well aware of the debilitating effects of being unable to secure basic everyday necessities, such as reliable electricity supplies. Despite being top of her class, she was forced to quit her middle school studies due to financial constraints. Having already achieved great things in the business world, Susan is dedicated to using her talents for social entrepreneurship to serve BOP (Bottom of Pyramid) communities, bringing them the means to improve their lives and futures through clean, affordable energy.
02
Three Phrases and Tips for Startups
Phase 1
Survival
"Every startup has the same initial challenge – finding the right product for the right customer. However, this challenge was more severe for us than your average startup, because we deliberately sought out solutions that would serve less privileged populations who live on or around the poverty line. This creates a significant affordability issue to contend with."
Despite the difficulties involved, Susan initially targeted off-grid communities in Asia and Africa, which make up a larger proportion of the 780 million people worldwide who live without reliable electricity. After conducting in-depth field studies, talking to farmers and rural villagers, Susan and her extremely small startup team created what they call the "Candles Killer" – a small, simple lamp powered by solar energy and consisting of only nine parts.
Due to its simplicity, the product retails at only USD$5 while offering a lifespan of five years. This equates to spending just $1 per year, compared with $12-$18 per year for a kerosene lamp, which has further issues regarding its carbon emissions and inherently flammable nature. Power-Solution had created a product that was affordable, reliable, reusable and easily transported. However, Susan explained that getting the product right was only half the battle.
"It's a business truism that it's easier to earn money from rich people. The profit margins are invariably higher. The real challenge is convincing partners – local distributors – to join you in delivering to the last mile when the target consumer is significantly poorer. You have to find the right partner who shares your long-term vision for the social enterprise, and has the patience to commit to doing things right."
Susan found the right partner in the form of TotalEnergies, a major French multinational with a global presence in energy markets. Not only did Total help with distribution into its established channels in Ethiopia, Nigeria and elsewhere, it also came up with a new name for the product – Pocket Sunshine. This demonstrates how the right partner can support a social enterprise beyond financial or logistical considerations.
Susan's key advice for Phase 1:
Don't expect the design to be perfect initially. Focus on finding the right fit between product and user.
Take your time in finding the right partner. They must align with your vision and socially minded goals.
Phase 2
Becoming Sustainable
"After the first five years, we wanted to create the right conditions to make the business sustainable. This meant building up the core team, while expanding the range of partners and target markets to diversify both our risks and opportunities."
Phase 2 was a substantial step-change for Susan and the Power-Solution team. Initially, Susan was used to taking on the lion's share of the work herself, applying her entrepreneurial experience to the field studies, product design, partner discussions and customer communications. This has benefits as well as drawbacks, as Susan explained.
"At the start, doing everything yourself is not only useful for saving on costs, it also enables quick decision making. You're not spending time convincing your teammates who don't necessarily have your breadth of experience. The more you do, the more you learn about the overall process, and this lets you connect everything together to make quick decisions."
While useful for keeping product costs low and building momentum quickly, Susan concedes that this approach is not sustainable indefinitely. For a low-price, socially motivated product for a POB market, having a broader range of customers is essential because it diversifies the risks associated with economic and political instability, which countries with large off-grid areas are more prone to experiencing. Widening the customer base across multiple countries requires a larger team, and more partners, to ensure that nothing is missed, and the integrity of the product remains in place. However, Susan advocates a slow build up on both fronts.
"We took our time in Ethiopia, because time is what's needed to filter out unsuitable partners and hires. Similarly, a rapid expansion of your team or your partners can very easily compromise the affordability or quality of your product, as your own costs increase too quickly or if you're not paying close enough attention to what your partners are doing. Patience is critical at this stage."
Susan's key advice for Phase 2:
Build out your team slowly and carefully. Make the right hires who are in it for the right reasons.
Choose and maintain your partner relationships with utmost care. This is a sensitive time for the brand image of your social product, and your partners must respect this.
Phase 3
Scaling Up
With 15 years of social entrepreneurship in Asia and Africa, Susan is looking a further 15 years into the future, and the future looks bright:
"I see immense potential for solar in Africa. Electricity demand is growing, but Africa's population density is low. The constant challenge is developing energy infrastructure in a cost-effective way. For off-grid areas, hydro and wind are not viable, hydrocarbons are not sustainable – solar is the best and only realistic option. In China, the price of solar generation and battery storage is coming down, which is great news for Africa in terms of affordability. Putting these factors together, individual off-grid solar power storage can bring electricity access to rural Africa, improving millions of lives while promoting green energy."
Phase 3 is an exciting time for Susan and the Power-Solution team. Deepening their presence in Africa requires two things – building new local distribution channels in cooperation with local partners and selling greater quantities through established channels, such as shops and petrol stations. Susan believes that the time is right to scale up the proven business model, by collaborating with the right people.
"Everyone sees the opportunity Africa represents, but many investors are holding back because they don't fully understand the risks. With our 15 years of experience, we know the market and we're in a great position to guide them. Now is the time to open the door to greater collaboration. When scaling up, you can't rely purely on yourselves, you must work with capital investors who can get you where you want to go. As with the previous phases, having the right partners is essential for social entrepreneurship – they must share your mission, your social targets, your ESG commitments. They must understand what you are trying to achieve."
Working with its existing partners and new investors, PowerSolution will help gradually establish local manufacturing capabilities for their products. Susan has her eye on electric vehicle batteries, which still retain 50-70% of their capacity after their 'useful' lifespan powering the vehicle, and could enjoy a second life powering DC home appliances such as a fridge, freezer, or TV. This is a long-term concept the relies on several advances in battery storage technology, but it demonstrates the modular nature of future energy solutions in Africa.
For now, Susan's focus is on establishing local manufacturing capacity for a product that is already changing lives in rural, off-grid communities.
"Local manufacturing is a win-win-win outcome. Local governments win as they will enjoy higher employment and the benefits of tech transfer. The local people win because prices are lower and replacing or repairing units is faster and easier. Our company wins too, because if we supply locally, we gain market share and better brand recognition.
Susan's key advice for Phase 3:
Clearly map out the most suitable channels for cost-effective distribution. The product must remain sustainable (economically and in ESG terms) as you scale up.
Work with investors who understand your social motivations. Involve local government and communities, as they have the most to gain from establishing local manufacturing capabilities.
Always look for innovations that expand your product offering while remaining true to the inherent purpose of the social enterprise.
03
Parting Advice – Trust your Vision
With plans in place to scale up Power-Solution, Susan's vision of empowering off-grid communities is now a reality. When asked by Professor Prashantham if she had any advice for young students at CEIBS with a similar passion for social entrepreneurship, Susan encouraged them to establish their core motivation, and then stick to it no matter what.
"Find what motivates you to achieve social good and financial good. Once you have determined your motivation and your goals, and set yourself on a path to achieve them, never give up on them. Nothing worth doing is easy. Think big, have a big vision for the future, but start small. Remember that everyone wants progress, and a shortcut to achieving progress is cooperation, so find the right people to help bring your vision to life."
Writer | Tom Murray
Editors | Michael Russam & Effy HE
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