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Originally published in the Winter 2009 issue of the Harvard Kennedy School Bulletin.
For Carol Chyau and Marie So (both MPA/ID 2006), a yak is more than a hairy, one-ton animal. It’s an undeveloped asset, numbering in the millions, that can bring change to the mountainous areas of Western China that have missed out on the country’s stunning economic success story. The nomadic people who have herded yaks for centuries already know that it’s an extremely useful creature, of course. They use it as a pack animal, eat its meat, and make dairy products from its milk; use its dung to build walls for their homes and burn the same stuff for heat; and they turn its fibrous coat into tents and clothing. What they probably didn’t know is that patrons of fine restaurants in Hong Kong and Shanghai would pay good money to dine on yak cheese (a bit like sharp cheddar in consistency and flavor), or that in cities as far away as New York, San Francisco, and London, customers would buy clothing and accessories made from the finest hand-combed yak down.
That’s where Chyau and So come in. The pair met at the Kennedy School. Chyau, a native of Taiwan, came directly from the University of Pennsylvania, where she studied abroad in Chile and Peru and wrote her senior thesis on microfinance. So, a native of Hong Kong, left an engineering career (her last project was the Beijing Olympics’ swimming pool). They began to talk seriously about their shared passion for bringing economic change to the poorest parts of China at a social enterprise conference at Harvard Business School and traveled to China over winter break in January 2006 to research existing nonprofit organizations and opportunities there. In Kunming, the capital of Yunnan Province, they met with How Man Wong, founder of the China Exploration Research Society, and learned that the organization had brought over an expert from the University of Wisconsin a couple of years earlier to help villagers start up a yak cheese project in the isolated Diquing region.
“The society’s mission was exploration, not economic development,” Chyau explains. “Marie and I thought we could add the most value by trying to bring the cheese to market.” They returned to Cambridge and wrote up a plan for two yak-based, for-profit businesses: one selling cheese, the other, marketing a luxurious, cashmere-like yarn produced from the softest yak fiber. After teaming up with two HBS students and an undergraduate from Penn, “Yashmere” (their proposed name) won the social enterprise track of the HBS Business Plan Contest and a $20,000 start-up grant.
Chyau and So went back to China after graduating to do more on-the-ground research, traveling to four yak-rich provinces in three months to gain some clarity around the details of their proposed endeavor. (Their business plan teammates chose to pursue other opportunities.) They worked with experts in China’s Bureau of Animal Husbandry to develop the best method to hand-comb yak fiber and sourced a manufacturing partner to produce a sample batch of yarn. “It was so beautiful that it confirmed we had a doable business plan,” Chyau recalls. In September 2006 they changed their name from Yashmere to Shokay (“yak down” in Tibetan) and formed an umbrella nonprofit organization, Ventures in Development, to serve as an incubator for it and the Mei Xiang Cheese Farm, which is run by a Tibetan family. Each has the goal of operating as a sustainable, for-profit enterprise that can bring about long-term economic development.
“When we looked at traditional models, it didn’t seem that charity and philanthropy could do the job on its own,” says So. “We were attracted to the idea of bringing private sector business efficiency to social enterprise.” It’s a concept that doesn’t always go over easily, So acknowledges. When she and Chyau speak to new herders about coming into the business, they often find they have to do quite a bit of explaining. “If you go into rural areas in China, people often expect free stuff,” says So. “We try to show them the difference between a onetime deal and something more sustainable that they can create by using their own resources. It’s a paradigm shift; the government doesn’t always understand what we’re doing, and we’re learning as we go too. It can be very challenging.”
No day is the same, she adds. From April to October, Chyau and So are often in the field, exploring new areas for development, training villagers in proper shearing techniques, or surveying households to measure the program’s impact. Given that they’re working with nomadic herders who don’t follow a set schedule, this can take a while — but it’s an essential part of the process. “Otherwise you’re just talking, right?” So remarks. “We focus on income generation, but also on what is done with the money. We do our best to educate people on the value of investing in an education for their children versus buying a radio or alcohol, although we can’t dictate how the money is spent.” Recently the pair took a short break from their field work to attend an Echoing Green Fellowship conference at Duke University. (The fellowship awards a two-year, $90,000 grant to social entrepreneurs.)
Shokay has scaled up quickly, working with 15,000 people this year compared with 3,000 last year. In 2009, they expect to break even and expand their reach into new communities. After an initial product launch with yarn, hand-knitted scarves, and throws, the business has branched out into pillows, children’s clothing, and accessories like hats and mittens, all of which can be purchased via the Internet, at the Shokay retail store in Shanghai, or at boutiques in cities around the world. Soon, Shokay will even be offering hats, gloves, and scarves through Harvard Student Agencies.
Despite these early successes, the demands of Shokay, the cheese business, and building the Ventures in Development nonprofit can be overwhelming at times. “My brain every day is divided into 10-minute slots,” says So. “The driving factor is the level of satisfaction that comes from making a difference in someone else’s life.”
“Balancing the double bottom line of financial return and social impact is challenging,” Chyau agrees. “But I love using business skills in a way that helps other people.”