For China Venture, An Unlikely Hero

Move over, billy goat—yak is the new black for cashmere-style sweaters.

While their Kennedy School classmates head off to jobs at the United Nations and on Capitol Hill, Carol Chyau and Marie So will launch an enterprise that will bring “Yashmere” from rural China to Western wardrobes.

Chyau and So are hatching plans to convert the soft, cashmere-like yak down fiber from the Yunnan Province into high-quality yarn sold on the international knitters’ market.

The two students say they want to use innovative business solutions to tackle development challenges. To improve living standards in rural communities in western China, they have launched a non-governmental organization, Ventures in Development, with two for-profit subsidiaries designed to leverage one of the region’s most abundant local resources—13 million Tibetan yaks.

So writes in an e-mail that several fashion houses—such as Donna Karan and Jhane Barnes—“are highly excited and think this yashmere will hit the fashion market big.”

Chyau and So also plan to launch their own line of yak yarn products.

In addition to the “Yashmere” operation, Chyau and So will start a second enterprise called “Cheese for Change.” The venture will bring artisan cheese made from yak milk to gourmet consumers in the United States.

Yak milk, a highly nutritious yet under-utilized resource among Yunnan farmers who do not include it in their diets, is well-suited for producing high-quality cheese.

According to Michael Walton, a lecturer in international development at the Kennedy School and an adviser for Chyau and So’s projects, social entrepreneurs like these two students can have an immediate impact on individuals in developing countries.

“Going into public and private organizations, while undoubtedly a valid career path, can lead to work that is several steps removed from the real action,” Walton writes in an e-mail. “The model Carol and Marie are exploring has the potential for making a tangible difference in ways that make use of some of the tools of public policy and business development.”

BOTTOM OF THE PYRAMID

After studying the role of business in international development, Chyau, a native of Taiwan, and So, a native of Hong Kong, began thinking about starting a social enterprise last March.

Chyau and So say they were inspired by Indian economist C.K. Prahalad’s 2002 article “The Fortune at the Bottom of the Pyramid,” which suggested that doing business with the world’s poorest 4 billion people can be profitable to the firms and beneficial to the poor.

“A lot of the case studies we learned are from India,” says Chyau. “But we know that China and India share many problems. There’s no reason that there shouldn’t be case studies from China.”

In search of viable economic opportunities that could solve China’s development challenges, they decided to focus on rural communities in western China, an area they felt had been left out of China’s rapid economic development.

BACK TO THE YAK

Over winter break, Chyau and So traveled to China’s western province Yunnan, where they wanted to launch an education program via a “movie bus.”

The program would disseminate information to poor villages on issues such as health care and agricultural practices.

But they soon learned that local NGOs had already carried out that idea.

“The trip was a turning point,” Chyau says. “We realized that instead of bringing products from the outside to rural communities, it is much more valuable to take local products to the outside world, because it has the potential of becoming economically self-sustainable.”

After talking to the Chinese Exploration and Research Society, a non-governmental organization that has invested in yak cheese production facilities in northwestern China for the past two years, Chyau and So decided to launch the two pilot yak social enterprises—“Yashmere” and “Cheese for Change.”

Chyau and So believe that both projects will provide local farmers with a viable source of income while preserving the people’s cultural heritage and livelihood.

“START SMALL, THINK BIG”

At last month’s Harvard Business School (HBS) Entrepreneurship Conference, “Cheese for Change” reeled in rave reviews. It won the People’s Choice Award and the Best Management Award.

And last week, at the HBS Business Plan Contest, “Yashmere” won the Social Enterprise Track ‘Concept phase’ prize.

“Yashmere is really exciting to people because it’s ‘yarn with a story.’ People remember it and like it. That shows us that people are receptive to the story,” So says.

Encouraged by the positive reception to their ideas, Chyau and So say they plan to “go full steam ahead” with both projects, working on them full-time after graduation this year. Already, the pair has recruited three part-time staffers.

But they say that the venture could be risky. While most of their classmates spend their senior year searching for jobs in the public sector or refining theses, the two students have devoted personal funds to research and travel. And they spend four to five hours each day on the logistical details of these projects.

So says that starting a social enterprise “risky,” but, she adds, “the only time you can do something different is when you’re young.”

In July of last year, Chyau and So plan to return to Zhongdian, Yunnan to implement the “Yashmere” yak project. The two students estimate that the project will increase the income of 4,000 families in the province by 30 percent.

They also plan to reinvest 10 percent of their profits back to community development in areas of health and education.

“‘Start Small, Think Big’ is becoming one of our mottos,” writes Chyau in a blog devoted to Ventures in Development. “It means start with yarn but think fashion; start with Yashmere but put it in the larger context of ‘Ventures in Development.’ It also means to continuously take small but tangible steps forward, all the while not forgetting the big picture.”

Chyau and So say that they hope their efforts will encourage other development-oriented Harvard students who have entrepreneurial ideas to do the same.

“A key ingredient to the success of such projects is accessing relevant networks of people—and that is what Harvard has the most to offer,” Chyau says.