A minimalist shopfront display, a haircut costing up to HK$180, and a long menu of free drinks rivalling that of a cha chaan teng distinguishes the Fullness Salon from other hairdressing salons in Sai Wan Ho. Key shareholder and co-founder Kee Chi-hing says he deliberately avoided the tendency of other so-called social enterprises to offer a cheap or subsidised service. Instead, he chose to price his haircuts at almost two-thirds above the going market price and went upmarket with a drinks menu and a smart, modern ambience for the salon. The salon not only generates care, but also revenue, he said. Under the government's social enterprise initiative, operators are encouraged to employ and train the socially disadvantaged and plough some of their profits back into pursuing social objectives. Seed funding is available to qualifying enterprises. But the Fullness Salon receives no government funding and pays rent and wages at market levels, said Kee, even though it functions as a social enterprise by hiring and training former drug addicts, teenagers who have dropped out of school and juvenile delinquents. It does so in an effort to help them live a meaningful life and learn the skills to make a living for themselves, he said. It is one of the three most expensive of 260 salons in the district. 'If someone wants to provide great services and great products but at a low price, the person obviously has no idea about running a business,' said Kee, who retired four years ago as the managing director of technology firm Hewlett-Packard Hong Kong. 'If a company can't be self-sufficient and financially viable, how can it pursue a social mission on a sustainable basis?' Kee said he had to charge a premium over his competitors not only to cover high rent and labour costs, but to offset revenue foregone every Wednesday and Sunday. That's because all five hairdressers at the salon are Christians and attend church on a Sunday morning and a fellowship meeting on Wednesday. His rivals are open seven days a week. The bold pricing model has delivered results, however, and the salon became cash-flow positive three months after opening in June last year. Its success sets it apart among social enterprises. Fewer than one in five social enterprises funded by the government generate a pre-tax profit. A Hong Kong General Chamber of Social Enterprises survey earlier this year found that only 24 per cent of respondents subsidised by the government were profitable. About 16 per cent went bust in the past three years. Government-funded companies accounted for 70 per cent of the 236 social enterprises responding to the survey. There were 330 social enterprises in the city. Kee, who spent 26 years working for Hewlett-Packard Hong Kong, succeeded in turning the group's China personal computer unit around within six months and went on to grow its China IT services unit into a US$1 billion business within six years. 'Even social enterprises must have financial discipline while fulfilling their social responsibilities,' he said. 'I can't say I make a lot of money out of Fullness Salon but I can say I have strategies to reduce the chance of losing money and wasting resources.' Kee and a group of shareholders, through Fullness Christian Social Enterprise, has opened three salons, including the Sai Wan Ho operation, since 2007. They also opened a garage at Kwun Tong Pier that employs and trains younger immigrants from the mainland and teenagers who have dropped out of school. A key challenge for the investors was to raise funds to replenish working capital and expand the operations. In a landmark deal for a social enterprise, Fullness Christian Social Enterprise raised HK$3 million by selling shares to 17 investors last year. 'New shareholders come from different backgrounds and contribute management expertise and social network in addition to funding,' Kee said. Some of the proceeds will be used to open another one or two salons in the next five years. By 2015 there would be 10 salons, he said. Ted Kwan Chi-hong, one of the investors who contributed HK$140,000 to the cash call, said the contribution involved more than making a conventional investment. 'It has so far generated an insignificant return in money terms,' said Kwan, who teaches chartered financial analyst courses. 'But the most meaningful part of the return is invisible. It is the help we are able to give the youngsters in restoring their sense of values.' Stephen Lee Chi-kong, president of the non-profit management institute Peter Drucker Academy, and president of social enterprise Bright China Group, said social enterprises funded by the government emphasised their counselling services rather than looking after their financial health, and hence were more vulnerable to losses. He said companies with private investors and management innovation stood a good chance to be viable financially, with accounts subject to shareholders' scrutiny. Lee, who advocates using the management values of Peter Ferdinand Drucker - dubbed the father of modern management - to run social enterprises, said a growing number of Hong Kong companies were adding social responsibilities to their functions. 'Drucker's legacy is about maximising resources rather than asking for more resources,' he said. 'Our social projects are about how much impact or change is brought to the people we serve rather than how many people we have served.' The Peter Drucker Academy, funded largely by Bright China, has taught prisoners, prostitutes, school drop-outs, new immigrants, and single mothers skills to make a living. Lee said the organisation planned to extend the services to pupils from Band Three schools whose academic performance is not strong enough to enable them to access tertiary education but who are not poor. Helping the underprivileged was a theme of Chief Executive Donald Tsang's policy address on October 13, which called for the setting up of a HK$10 billion Community Care Fund. The fund, to which the government and the business community will contribute equally, will promote social responsibility and expand the scope of help to students and the elderly.