Social enterprises are hybrid organizations that combine for-profit, market-based practices with nonprofit goals. Social enterprises in China face specific political and institutional challenges that negatively affect their development. This study explores how a Government-Organized Non-Government Organization (GONGO) overcomes institutional challenges at different stages of social enterprise development by engaging strategies, which eventually lead to the establishment of a sustainable social enterprise. The GONGO applies social entrepreneurship in the three major aspects of identifying challenging social problems, implementing innovative market-based solutions, and initiating long-term institutional changes to tackle the stubborn social issue. This study demonstrates a unique top-down social enterprise model and shows that in an authoritarian context, the GONGO could potentially take up the role of developing new social enterprise. This study initiates a deeper conversation between social entrepreneurship and China’s socio-political development.