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The new Chinese
philanthropy
By Michael Mackey
Bricks, golf and art for China's new
rich (May
13, '05)
SHANGHAI - China is not
only a place where fortunes are being made, but
increasingly a place where they are being given
away, as the new wealthy become the
philanthropists of today and tomorrow.
A
double - possibly even triple - take is needed to
understand the significance of this phenomenon:
the millionaires in allegedly communist China
giving their money, or at least part of it, away
voluntarily. Furthermore, there are enough
benefactors for someone to have compiled a list -
namely, the the 2005 China Philanthropy 50
compiled by Euromoney China - recording who gave
how much to whom and releasing this to the public.
That this is the second year the list has been
compiled suggests growing corporate maturity.
This year China's most generous individual
(quick, get me in his mobile phone directory) was
Huang Rulun, 54, chairman of the Beijing-based
Jinyuan Group. Huang has donated or pledged
US$34.5 million to education, poverty alleviation
and health causes since 2003, and it's his second
year at the top of the charity tree. He is
followed by Yu Pengnian of Pengnian Industries,
the oldest on the list at 83, who, having made his
money in trade and property in Guangdong, has now
set up his own fund to support health and
education projects. And for the second year
running, the philanthropy bronze goes to Li
Jinyuan, chairman of the direct-sales Tiens Group,
for donating $10.1 million in health and
education-related projects.
China also has
an emerging corporate giving culture. At the head
of that pack is APP, the Shanghai-based paper
multinational, which has given $25 million to
various educational causes. Beer drinkers will be
pleased to know that China's Tsing Tao beer has
donated some $2.9 million of corporate money to
various charities.
The new philanthropy
represents a profound change from recent times,
although the scale of it is still relatively
small. Statistics from the Chinese Ministry of
Civil Affairs show that charitable donations were
less than 1% of gross national product. A recent
survey by China's charity administrators revealed
that fewer than 100,000 of China's 10 million
enterprises, or 1%, have records of donation. Many
local donations are derived from the Chinese units
of large multinational companies, according to
some in the charity sector.
There are
various explanations for the still-modest scale of
charity in the country. China remains a society
where the family and clan tend to take precedence
over the broader community. There is also an
absence of inheritance laws (which, ironically for
a socialist state, encourages the retention of
inherited wealth) and the charity sector itself is
underdeveloped. But the small scale of
philanthropy also reflects the point where China
is on the development axis. "Uppermost in their
[private entrepreneurs'] minds now is how to
increase their wealth and further develop their
enterprises. They don't have much energy to care
about charity," is the candid assessment of Deng
Shengguo, deputy director of the NGO Research
Institute at Beijing's Tsinghua University.
Where it's happening, though, there can be
no doubt about its significance. First, private
wealth exists that can be given away, a sea change
from the period when there was no wealth, period.
"Twenty-five years ago there was no private wealth
in China," says Rupert Hoogewerf, founder and
compiler of the "China Rich List". "But now as the
business environment has become more stable, you
have millionaires who don't mind saying 'I've made
it.' It's indicative of growing confidence in the
business environment." Second, the wealth is being
donated voluntarily, rather than confiscated
during periods of political hysteria such as the
"Speak Bitterness" campaign against the landlords,
or the Cultural Revolution.
Government
support, even encouragement, also needs to be
factored in, as a research paper from consultancy
firm Access Asia makes clear. In 2003, with the
SARS epidemic at its height, in a bid to garner
support, the State Taxation Administration raised
the deductibility for cash and materials given to
fight the deadly virus from 3% to 100%. Not
surprisingly, donations soared. It is possible
that emergency clause might remain in effect,
which would give China "one of the most liberal
[charity tax deductibility regulations] in the
world in terms of encouraging donations." Since
then, the government has also allowed five big
charities to write "frapiao", or tax receipts,
another sign of its wish to legitimize charitable
giving. Practical politics are also involved.
Beijing is very concerned that the emerging
rich/poor divide in the country could threaten the
regime's survival over the long term, and
encouraging charity and corporate responsibility
is one way to address the problem. As Jin Zhigou,
president of Tsing Tao Brewery and a deputy of
China's parliament, the National People's
Congress, told reporters: "If the PRC is to
develop a sustainable and harmonious society, then
social responsibility is the key."
Interestingly, there is an international
twist to this, in which the government didn't so
much support as lead by example. When the tsunami
hit Southeast Asia, Beijing's good neighbor policy
meant donations both of cash and resources, with
private donations following the public ones. But
certain details of the Chinese response to the
tsunami disaster suggest deeper changes within
China. First, the public donated $18.11 million.
"Such an outpouring of support from the public is
phenomenal," said John Sparrow, Beijing spokesman
for the International Red Cross, especially since
it was composed of small individual donations in a
country where the bulk of the population gets by
on less than $1,000 a year and often less.
A second highly significant aspect was the
fact that the money went to countries with no
strong cultural links to China - a significant
first, discounting small donations to Africa
during the mid-eighties famines. Third, the volume
was probably boosted by another change: the
entertainment galas which plague Chinese
television adapted their format to raise funds and
hence increased public awareness of the tsunami.
Lastly, the funds went to a specific cause rather
than to a government committee, usually at the
provincial level, with the responsibility for
disbursing them. It is tempting, maybe too
tempting, to suggest here that the changes
reflected a desire for accountability; the public
saw and gave, but consciously bypassed the
government in the process. Regardless, the tsunami
charity demonstrated the emerging civil society in
China and the growing willingness of its people to
think (and act) internationally.
Why
philanthropists and companies donate within China
is a complex question. Certainly, some might be
shelling out to protect or increase their
"guangxi" - the connections that move wealth and
power in China - and buying face and prestige is
no doubt a part of it. On the other hand, if the
rise of philanthropy shows the environment in
China is changing, isn't it possible that business
is also undergoing a paradigm shift, becoming more
aware that along with big profits comes a
responsibility to be a good corporate citizen?
"We are seeing indications that these
entrepreneurs are building long-term businesses,
as opposed to short-term, get-out-quickly
businesses, and are beginning to accept taking on
social responsibility," said Hoogewerf. He points
out that many foreign blue-chips have trumpeted
their social responsibility, and this has not gone
unnoticed in Chinese business circles. But he adds
that "[on] an individual basis - there's a lot of
self-fulfillment."
Clearly, education and
health care are big concerns for the
entrepreneurial class in China, since nearly all
the top 50 donors on the list donated to education
and health-related institutions, although other
sectors - poverty alleviation and welfare -
weren't entirely forgotten. Worryingly, given how
polluted China, especially urban China, can be,
the environment didn't get a single donation from
the top givers. This pattern may serve as a crude
indicator of China's development status. The
concerns are basic - health care and education -
with some other areas getting less attention. The
US, with multiple foundations for the arts,
environmental issues, and disabled in seemingly
every city, is still a long way ahead in terms of
philanthropic breadth.
Real estate, or
property, was a recurring theme with 21 of the 50
top-giving companies. The explanation, according
to Hoogewerf, is that real estate has been the
greatest creator of wealth in China over the past
25 years. "It was state-owned land and they
developed it," he said in an interview with Asia
Times Online. Manufacturing-derived wealth is not
as prominent on the charity list as one might
expect; this is mostly because manufacturing in
China is generally done by small and medium-sized
enterprises, usually family owned, who have work
subcontracted to them by overseas companies. The
factory owners are typically well-off, but not
millionaires, and their charitable giving tends to
be small in scale and well below the Rich List
radar.
Where the new philanthropy is
happening is much less of a surprise: the newly
industrializing belt, or rather its buckles, the
Pearl River and Yangtze River deltas. Head offices
for the companies involved were heavily
concentrated in the latter, with 11 (over a fifth)
in Zhejiang province alone. Zhejiang is the
coastal province south of Shanghai, where a
further 10 companies were headquartered - meaning
some 40% of the biggest givers in China were in
two neighboring provinces. Throw in the two top
givers in Jiangsu province, and nearly half of
China's corporate philanthropists come from the
Yangtze River delta. The other big concentration
is in Guangdong, across the border from Hong Kong,
where seven of the companies are headquartered.
Beijing is home to the head offices of four,
suggesting the capital's governmental significance
outweighs its economic, and charitable, clout.
This regional dispersal of charitable
giving is another fact hinting at the emergence of
a multipolar China, with economic power found
mostly in the Shanghai region and Guangdong, and
Beijing a lesser star - more evidence that China's
future will be increasingly determined by its
economy, not its politics.
Michael
Mackey is a Shanghai-based freelance writer.
(Copyright 2005 Asia Times Online Ltd. All
rights reserved. Please contact us for information
on sales, syndication and republishing.) |
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