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    China Business
     May 5, 2010
Hotelier Yu makes room for charity
By Olivia Chung

HONG KONG - Yu Panglin, an octogenarian hotel and real estate entrepreneur little heard of in his native China let alone in the broader world, has just given away the last of his cash while earning recognition as the mainland's leading philanthropist for the fifth straight year.

Yu gave away his remaining fortune, worth US$470 million, to a foundation that bears his name and supports health, education and disaster relief in China. The donation brought the amount he has given to the Hong Kong-registered Yu Panglin Foundation to $1.2 billion.

"This will be my last donation. I have nothing more to give away," Yu said in Shanghai late last month at a ceremony held by the Hurun Research Institute, which annually compiles a list of China's richest people.

The 88-year-old said he hoped his move would encourage other

 

Chinese billionaires to do more, given that his fortune paled in comparison to that of other magnates in Hong Kong and the mainland.

"My fortune is just a drop in the bucket compared to them, but I hold different views from them: I will not leave my fortune to my children," said Yu, who was on the Hurun Rich List in 2009 as the 432nd richest person on the mainland (where his name is translated into Pinyin as "Pengnian".) 

Hong Kong's Li Ka-shing, 81, cited by Forbes magazine in March as Asia's richest man outside India, with a wealth estimated at $21 billion, has given away more than $1.4 billion through The Li Ka Shing Foundation and other foundations he has established to support charitable activities with grants, sponsorships, and commitments, according to the foundation's website. Li's Cheung Kong Group also makes many contributions "under the procurement efforts of Mr Li", according to the site.

Even so, Yu's commitment to charity stands out for more than just its scale of generosity. Unlike most parents in China and elsewhere who do their best to leave everything to their children, the father of two said that all of his money will be used for charity and no part of it will be inherited by anyone, including his two sons.

His views stem from his belief that lots of money does no good being handed on to the next generation. "Why should I leave my sons money if they are more capable, or even if they are weaker than me? If they have their ways, they will do better than me. If they are weaker than me, they may indulge in dissipation - gambling, whoring and even doing drugs with the money. Thus it would do harm to them," he said.

Yu's sons, now in their 60s and board members of their father's foundation, earn thousands of yuan while working, with free accommodation, at Yu's 57-floor, five-star Shenzhen Panglin Hotel. Since it was opened in 2000 near the Hong Kong-Shenzhen border checkpoint at Lo Wu, the hotel has also served as Yu's home and office. Yu has given the net profit of his hotel to charity since it was opened, emerging as the one of the first entrepreneurs in the mainland to demonstrate corporate social responsibility.

To make sure the money is put to good use, Yu has appointed HSBC as the trustee of the foundation's fund and has stipulated that no part of it might be inherited, sold or invested. The Yu Panglin Foundation today has $260 million of bank deposits, and a Hong Kong and Shenzhen property portfolio worth just under $1 billion, which is expected to contribute $50 million of cash each year to the foundation.

The foundation has funded more than 150,000 cataract-removal operations across China since 2003 and helped to establish a number of Project Hope schools in the western rural areas. Project Hope is a widespread public welfare undertaking in China that supports children in continuing their studies.

Yu's concern with helping patients with cataracts is due to his own painful experience 10 years ago when he lost his eyesight. "I, as a rich person, felt pain to lose my eyesight, thus poor, common people must face more difficulties after becoming blind," said Yu, who recovered his sight after an operation.

Yu built his wealth literally from the ground up. After making ends meet as an odd-job worker, a cleaner and rickshaw man in the 1960s, he became a construction worker, and with some savings followed his boss to Taiwan to start a property business in the 1960s. There, he invested in some old buildings, later sold "for 10 times or even 100 times what I paid for them". That was his first fortune.

Yu then invested in property and stocks in Hong Kong. In 1975, his name become familiar in Hong Kong when he bought a luxurious 1,000-square-meter poolside residence in the city's affluent Kowloon Tong neighborhood, the home of martial arts movie star Bruce Lee until he died two years earlier. In 2008, Yu gave away the property to serve as a Bruce Lee museum after the Hong Kong government ruled out the idea of buying it back for that purpose. The villa bought by Yu for under $110,000 is now worth more than $18 million.

Yu returned to the Chinese mainland in the 1980s to join the booming property market in Shenzhen. The previously underdeveloped region adjoining Hong Kong was designated a special economic zone in 1980 and served as a starting point for China's industrial transformation under the reforms started by former paramount leader Deng Xiaoping. It is now a vast modern metropolis with a population estimated at around 14 million.

Yu still works long hours, but two-thirds of his time is spent on charity, with a direct involvement that reflects a distrust of using local governments as an intermediary for helping others and a hard-won recognition of a Chinese saying: "The charity door is hard to open." In 1988, he donated 10 ambulances to Changsha, the provincial capital of Hunan, but later found that some of them were converted for use by government officials.

Having learnt the lesson, Yu is personally involved in every donation. "I am not afraid of hardship by going to the poverty stricken areas to make sure every donation dollar has been well spent." For several years, he has traveled to China's poor western regions to hand out "red packets" of cash to those in need. Chinese traditionally consider red as a symbol of luck and happiness, and such packets are seen as a blessing given by the elderly to the younger generation - the amount inside being of little importance.

While Yu stands out, other businessmen are doing there bit to help others. Following him on the Hurun Philanthropy List is property tycoon Huang Rulun, 59. The chairman of Century Golden Resources Group gave away $315 million from January last year to April 9 this year.

Beijing-based Century Golden Resources is an industrial conglomerate involved in real estate, hospitality, shopping malls, mine exploration and finance led by Huang Rulun and his son, Huang Tao.

"I had a disadvantaged life during my childhood. Because I was poor, I could not afford to finish my studies when I was young," Huang was quoted as saying in an interview with the China Philanthropy Times, a newspaper under the Ministry of Civil Affairs.

Chen Fashu, 50, chairman of the Fujian-based New Huadu Industrial Group, is third on the list, with donations of $100 million. He ranked 15th on the 2009 list of wealthiest people in China. His fortune comes mainly from Zijin Mining, the country's largest gold producer. His wealth expanded to 20 billion yuan (US$3 billion) from 48 million yuan when the gold mining company went public in Shanghai bourse in 2008 and in Hong Kong in 2009.

The top 50 on the philanthropy list donated $1.2 billion last year, eight times the average of the first such list in 2004, with education, disaster relief and health care being the main causes supported. The average donation offered by those on the list was about 6% of the accumulated fortunes of the entrepreneurs listed on the Hurun Rich List in 2009, Rupert Hoogewerf, founder of the Hurun Research Institute, said.

"Except for Yu and Huang, the mean contribution was about 3%, and this is quite a lot, which is almost the same as in Western countries," Hoogewerf said. "They are the top people in China in terms of financial status. I think they do well if they donate 1% of their property every year.''

Hoogewerf identified several incentives and disincentives for Chinese business people to back charities.

"In the US and Britain, the tax systems give a lot of encouragement to people who are being successful in their business life to give money away before they die. However, there is no such tax allowance in China, but the Chinese entrepreneurs are willing to help charities. We should treasure that… Besides, a better social security net gives much less incentive for people to donate money to charity. That's why, in most of the western Europe, people do not tend to be active in donating compared with their US and Chinese counterparts," he said.

"Furthermore, Chinese entrepreneurs who have had first-hand experience of hardship, such as during the Cultural Revolution, are more likely to give away their fortune to charity when compared with people coming from big families in the US and Europe," he said.

Hoogewerf's view on Chinese entrepreneurs has changed over the years.

"They have more self-confidence and confidence in China's economic growth, so they have longer-term business plans. Ten or 12 years ago, my impression was that most business people had a one- or two-year business plan, with the idea of making money and taking it out of the country as quickly as they could."

About 25 years ago, there were no charity works in China, as everything was government owned. "Given that charity takes a lot of time [to develop], the priority now should be introducing social responsibility in corporations as this could encourage more people to make charitable donations," he said.

Ma Tieying, a China studies analyst, believed that thanks to the strong economic growth on the mainland, the increasing number of philanthropic donations will inspire more business leaders to take part in charity.

"Yu, as a private entrepreneur, has taken the lead. China's private enterprises are taking an active role in social causes and are becoming a key force of charity in the country," he said.

Olivia Chung is a senior Asia Times Online reporter.

(Copyright 2010 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


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