Why are we, the microfinance institutions that operate in the nebulous and unpredictable regulatory environment that is the China finance sector, invested in this work? We want to see businesses changed and families transformed. Theory and context are the grounding, but the end goal is not to set up a functioning program—it’s to see people move out of poverty and into opportunity.
Statistics show that poverty is decreasing in China, but many who have risen above the poverty line remain vulnerable to the shocks of unexpected events: variability in the market, ill health, or local disasters, to name a few. In fact, recent reports show that the number of people in China who are at great risk of falling back into poverty is double the number of people actually living in poverty. For Liu Xuanping, the death of his wife was just such a shock.
Because of his grief over his wife’s death, Liu Xuanping struggled to motivate himself to put effort into his business—a beverage store. Combined with his already limited access to the capital he needed to bring in more products, his depression quickly led his business to suffer. Although he still had his daughter and mother to care for, Liu Xuanping was emotionally and physically at a low point in his life. With nowhere else to turn, he began drinking alcohol to assuage his grief and numb his feelings of guilt over not being able to provide for his family.
In 2008, Liu Xuanping received a loan of 3,000 RMB from HOPE China, a local microfinance institution. He used it to re-stock his store, which had lost a lot of money and inventory during his depression. His loan officer realized that money alone would not heal Liu Xuanping’s grief. He became good friends with Liu Xuanping and supported him emotionally through this difficult time. Through wise investment of the loan, Liu Xuanping was able to again build up his store to be profitable. He has since expanded the products served and hired a driver in order to provide better service to his growing customer base.
Another HOPE China client, Zhang Jiaowen, tells his story:
I have been selling tofu since I was 12 years old. Recently, there my family went through a difficult time for my family. My father became ill, and my wife had to spend a lot of time taking care of him in the hospital. So there was no one taking care of the child and cook for us. I had to take my daughter to eat in a restaurant every day. As a result, our money was used up at restaurants, and I had no money to purchase soy to make tofu. Finally, I was so poor that I had to sell some of the business equipment. If it were not for microloans, my business would have closed.
Zhang Jiaowen continued reinvesting the profits in his tofu shop, and gradually built up both a strong business and a financial cushion. He proudly shows off his new motorbike and talks about the coal he has purchased in the summer (since his cash flow allowed him to plan ahead for the winter heating season by purchasing in bulk when the price was low). “The loans have greatly helped me to develop the business,” he says, and dreams of the day that through his business he can finish a new house for his family and send his daughter to university.
These are the success stories. Not every borrower uses their
loans well, and not every loan transforms a business and family
so dramatically. But the possibility for change that is
represented by every business relationship and each loan contract
is the reason why microfinance programs like HOPE China and many
others open their doors each morning.
--Sarah Haig, HOPE International