Will Xenophobia and Cynicism Obstruct Chinese Philanthropy?

Bill Gates and Warren Buffet have arrived in Beijing to meet with some of China’s richest tycoons and discuss philanthropy. Gates and Buffet have been visiting the world’s richest people to sell the idea of “The Giving Pledge”—a commitment to donate a large majority of one’s wealth, either during their lives or upon their death, to charity.

Bill Gates and Warren Buffet

Since beginning this campaign, they have convinced over 40 U.S. billionaires, including Michael Bloomberg, Larry Ellison, George Lucas and David Rockerfeller, to pledge giving at least half of their fortune to charity. While Gates and Buffet have been very clear that the objective of the meeting with the Chinese is not to ask for contributions, but instead to share their experience, xenophobia and cynicism seem to be a major obstacle to establishing a Chinese rival to western philanthropy.

According to CNN, China boasted 477,000 millionaires (in U.S. dollars) at the end of 2009, a 31-percent increase from the previous year and trailing only the United States, Japan and Germany, according to a report jointly released last June by consulting firm Capgemini and investment bank Merrill Lynch.

CNN also reported that wealthy Chinese seem unwilling to open their purse strings for charitable causes, however. In 2009, a government-sponsored honor roll listed 121 Chinese philanthropists who donated a combined $277 million, less than half of what a single family — American financier Stanley Druckenmiller and his wife — gave away in the same year in the United States.

So what is it that is keeping the Chinese from opening up their wallets and giving? Recently, Economic 30 Minutes has released a three-part series on Chinese philanthropy. The first part examines the reactions of some who were invited to the meeting. Below are reactions to the invite, as well as some insightful comments by Zhang Xin, CEO of Soho China.

Translation

Chen Guangbiao

Chen Guangbiao, Chairman for Jiangsu Huangpu Recycling Resources: I hope to learn from their experiences. [Hopefully, they] can enlighten more Chinese entrepreneurs on philanthropy. I gladly accept their invitation.

Wahaha Group Co., Ltd. Chairman, Zong Qinghou, respectfully declined the invitation, saying, “As I’ve recently been invited to attend a Forbes CEO meeting, the timing is inconvenient. I hope no one misunderstands. I’m not afraid of being pressured into making a contribution. It’s just that I don’t have the time [to attend].”

Fuyao Glass Group Chairman, Cao Dewang, said, “There’s still sometime before the event. I’ve yet to decide on whether or not I’ll attend.”

Soho China CEO, Zhang Xin, said, “This is an opportunity to advance my own experience by studying from foreign philanthropists. I will certainly attend.”

Zhang Xin: Recently there have been a number of official groups which have come and discussed with us philanthropic opportunities and channels which exist. I feel that these channels are not very affective. Realistically, philanthropy isn’t about just donating money. It’s about donating your experience, your compassion and your spirit. It’s about identifying those within society who need to be identified [and helped]; this is the quintessence of philanthropy.

Zhang Xin, CEO Soho China

Zhang Xin: [One of the largest problems is that] there is really no system. Today, we come across this opportunity, so we donate. Tomorrow, we come across another opportunity, so we donate [directly to that cause]. Sometimes we donate to orphanages, sometimes we donate money for surgeries to repair hare lips in pediatric cases. After some time of donating, and realizing that net contributions were starting to increase, we had to begin doing some serious research to consider how to go about continuing our philanthropic causes. [Since the start] we’ve really just been crossing this river stone by stone. [We’ve had to consider], do we simply just write a check to a charity that’s already established, or do we try and do something on our own.

Analysis

Clearly, there are a number of Chinese who are genuinely concerned and actively involved in philanthropy. Of notable mention, Chen Guangbiao, worth an estimated US$440 million, has pledged his entire fortune to charity upon his death. Chen commented, “I don’t want to become a slave to my wealth. Every dollar I made was with the help of others — so I want to give it back to society and make my life more meaningful and valuable.”

But why isn’t this charitable line of thinking more prevalent in China? If China is home to the second largest group of billionaires, why aren’t more Chinese stepping up to challenge charitable groups such as the Gates foundation and others?

The answer likely lies in China’s xenophobia and cynicism to giving to charity, both foreign and domestic.

What will China's wealthy do with their money?

In regards to how the banquet has been portrayed by many invitees as well as the media, many are referring to the Gates-Buffet event as the “Hongmen Banquet”, a reference to an episode in Chinese history where guests were lured to a fancy dinner which turned out only to be a ploy to murder the attendees. The idea propagated here by the media is that Gates and Buffet are trapping China’s rich, and will pressure them into making large donations.

Another red flag for many would-be philanthropists is the skepticism that money donated would even reach the cause. Jet Li said in a recent interview that, “The main reason [why Chinese are skeptical about donating is] because there is an inherent mistrust in giving your money to any third party to pass it on. They’re convinced that for every 100 that they give, the end party won’t receive anything near that 100.”

Such an example can be found in reports that have been filed on how Sichuan earthquake relief funds have been seized and misappropriated by corrupt officials. Such acts not only hurt those who would be directly benefiting from such donations, but also further cynicism amongst the rich and discourage them from donating.

Zhang Xin and others have commented that transparency amongst domestic charities is an issue. According to Wang Zhenyao, director of the Center for Philanthropy Research at Beijing Normal University, “The environment is not ready in China for rich people to donate large sums of their fortune, where the progress is mainly led by the government and driven by the public…. Chinese rich people cast doubt on the transparency of charity operations. For example, very few of the country’s growing number of charity organizations and foundations offer feedback to the donors or publish the money flow.”

If transparency and a lack of systems is the leading excuse for China’s rich to keep their wallets closed, then the Gates-Buffet banquet should prove to be an excellent opportunity for potential donors to learn about what charitable causes and opportunities exist, channels they can use for making charitable contributions, as well as systems which can be used to established independent charities in China and develop trust amongst the public.

But it seems many wealthy Chinese are more willing to take a chance giving to domestic charities, as a recent pledge head by Chen Guangbiao suggests. While only a small number of the Gates-Buffet invitees accepted the invitation to attend the dinner, Chen had persuaded more than 100 entrepreneurs to donate all of their personal wealth to charity ahead of the Gates-Buffet dinner.

Is China willing to learn from western philanthropists?

Does such a pledge suggest that Chinese pride is also an obstacle to giving—that the Chinese do not want to admit that their charities and donation systems are underdeveloped compared to that of the West’s? Such sentiment seems to be evident, “We don’t need foreigners coming here to tell us how to be charitable,” sniffed one anonymous Chinese philanthropist.

Regardless of the reasons why more wealthy Chinese aren’t giving, they would do a tremendous amount of good in living up to their long-standing virtues of modesty and humility and learning from others with substantial philanthropy experience, regardless of race and nationality. After all, it was the Chinese who coined the term, “One World One Dream”. Perhaps its time that they start putting their money where their mouth is.

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0 thoughts on “Will Xenophobia and Cynicism Obstruct Chinese Philanthropy?”

  1. The giving issue, Chen Guangbiao in particular, is another one of those sensitive topics that certain authorities seem pretty leery of. From Sina Weibo this morning:

    @易艳刚:之前南方周末记者@东方愚 在微博说“陈光标同志的表演快结束了”,原以为周四的报纸会再次推倒一个“神”。后来他删了这条微博,现在又听说某部发通知“禁止炒作陈光标的负面新闻”,于是大体确认了之前的怀疑是正确的。

    Yi Yangang: Southern Weekly reporter Dongfang Yu once made a microblog update reading “Comrade Chen Guangbiao’s performance is nearly over,” and it looked like this Thursday’s newspaper would topple this “god.” But then he deleted that update, and now I’ve heard that a certain department has issued a notice “prohibiting playing up negative news about Chen Guangbiao,” which thus generally confirms that previous suspicions were correct.

    Dongfang Yu notes that he didn’t delete the update; it was harmonized.

    Chen’s been accused of being hypocritical (伪善; playing on “fake charity”) because of the source of his wealth and his possible motivations for giving. Still, “original sin” affects practically all of China’s rich these days, so it’s not really fair to make too much of that issue if an entrepreneur wants to give back; but by the same token, an ethic of charity is not going to be served by wiping out all dissent in order to fabricate a flawless model that doesn’t exist in reality.

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  2. The number of people at the Gates/Buffet dinner who actually end up giving will be a good indication of how prevalent these attitudes are- in that sense, one should reserve judgement…

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  3. I don’t know what does China have to learn from Western Philanthropy. Recently my company took over a lease of some Western Philanthropy which have endowments of 4 billion. Their address has a glitzy address and the offices are very nicely built. If this Philanthropy is in China, I am willing to bet that many Chinese netizens would be outraged.

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  4. Three things China can do to improve philanthropy from the rich:

    1. Raise higher tier income tax

    2. Tax deductions for donations

    3. Higher inheritance tax

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  5. Philanthropy has a looooong history in China. The system relied on local rich people/officials to take care of the local area, including donating money for schools, etc.

    It was the Communist revolution and later the cultural revolution, plus the sudden ease of mobility provided by modernization and transportation, that upended the traditional system.

    But nowadays, in more traditional areas, especially the countryside, they still retain that system, with rich people coming back and donating money to build schools, clinics, etc.

    It’s blatantly racist to say the Chinese are less philantropic as this article suggests. The old systems were largely destroyed (though functioning pretty well in some parts of the country), and the new one – the Western one – is still developing, with legitimate concerns such as corruption.

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  6. I agree with keisaat. I’d also add that development brings with it a whole new set of problems, and that is kind of the philanthropy that we are most likely to think of in the US. We don’t worry so much about schools in rural areas because, well, there are already schools there. China’s philanthropic base just may not be awakened to the specific needs of an urban civilization.

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  7. Perhaps the title of this post should have been “Will Xenophobia and Cynicism Obstruct the Development of Modern/Western Philanthropy in China?” This, of course, has it’s own problems as it could suggest the author believes the western system to be the only correct one,which certainly isn’t the case.

    The objective of the article was to point out some current obstacles to philanthropy developing further in China, such as misappropriation of funds, corruption, etc. I also wanted to point out that some Chinese and the media (due to strong nationalist sentiment?) write off western philanthropists purely because they are foreign. However, these types of issues, and others not mentioned here, are hardly unique to China, as Linda Polman has recently pointed out in her book, “The Crisis Caravan: What’s Wrong With Humanitarian Aid?”

    My overall suggestion, which it seems should have been worded more clearly, is that China should look to good models which already exist, namely those established by Gates and Buffet, as possible systems and solutions to contemporary Chinese problems. I strongly agree with both Gates and Buffet that China’s situation is very different from the West’s, and as such philanthropy will also be different.

    I take strong offense to being called a racist, seeing how I’ve spent over four years in China trying to better the lives of locals, and am married to a Chinese, with whom I have a one-year old son. If I’ve come across as being overly negative, however, that’s my fault. I’ll need to ensure I’m clearer with future posts.

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  8. Considering that China pegged their currency 2% higher on US debt of 2.5 trillion to China, China has already lost about 50 billion of their debt. Consider that a generous donation to the US.

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  9. Putz_ster: “Considering that China pegged their currency 2% higher on US debt of 2.5 trillion to China, China has already lost about 50 billion of their debt. Consider that a generous donation to the US.”

    Once again, Putz is peddling stupidity. The actual size of China’s foreign reserves is a state secret. The $2.5 trillion that Putz mentions here is an estimate of the total size of China’s foreign reserves, of which US$ dominated holdings are estimated to comprise no more than 60 percent (and perhaps as low as 50 percent). Likewise, when China agreed this past summer to allow a modest float of the yuan, it hardly did so out of a spirit of charitable giving. Any suggestion otherwise is assinine.

    Keisaat: “It’s blatantly racist to say the Chinese are less philantropic as this article suggests.”

    Please, desist with the accusations of racism. For sixty years and more, philanthropy/charity has enjoyed little public or official support in China. Those who know little about the history of philanthropy/charity in China can be excused for believing that it never existed – after all, it’s been awhile since we’ve seen any.

    Here’s a link to a recent essay in the NY Times (eat your heart out, Putz) in which the author explains that philanthropy does, in fact, have a long history in China:

    http://www.nytimes.com/2010/09/29/opinion/29iht-edfuller.html?_r=1&ref=global

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  10. Putz_ster: “Gan Lu, your childish name calling reflects your maturity and intelligence.”

    People who use the word “faggity” (you’ve used it twice) should refrain from attacking the maturity of others.

    As for my intelligence, I think it’s clear from the substance of my comments, as well as the quality of my written English, that I’m more intelligent than you.

    Have you found the time to read Charter 08 yet? When you do, don’t forget to write a post explaining: 1) Why you find it disagreeable, and 2) Why Liu Xiaobo deserves to be in prison. You might also consider explaining why you believe The Peking Duck is a hate site.

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  11. Gan Lu,

    Oh you mean when you use of profanity laced rant about me in your other thread makes you more mature, give me a break.

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  12. Putz_ster: “Oh you mean when you use of profanity laced rant about me in your other thread makes you more mature, give me a break.”

    In addition to everything I’ve ever said about you in the past, you are also thin-skinned and shameless.

    Have you read Charter 08 yet, Putz? If so, please substantively answer the following questions: 1) Describe your specific objections to Charter 08, and 2) Explain why you feel that Liu Xiaobo deserves to be in prison.

    Instead of getting your panties in a twist about how you’ve been the unfortunate victim of a hate crime here at CG, why not locate your backbone and answer the questions?

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  13. Putz_ster: “Whether I read Charter 08 or not is irrelevant because I won’t answer your question.”

    You’re a moral coward, Putz. You rant about the Western media, specialize in ignorant opinions that are generally unhelpful and often wildly off-topic, and avoid like the plague difficult questions that threaten to undermine your perverse worldview.

    Redeem yourself. Read Charter 08. Then, when you’re finished, write a post (over at Fool’s Mountain) explaining your objections to it and why you support Liu Xiaobo’s imprisonment. For the love of God, Putz, grow a spine. Answer the questions.

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  14. For one thing, Gates and Buffet are richer than anyone beyond their wildest dreams. Of course they can give back – they lose really nothing by doing so. And who’s to say that their giving back, doesn’t give their companies some enormous tax breaks? These are not stupid men.

    They give freely yes, but remember – yes all this money has done a tremendous amount of good – but always bear in mind that the money serves as double, if not triple, purposes.

    Try asking Foxconn’s CEO if he’s donated. Maybe he has, maybe he hasn’t. But if he has, it’s surely just as carefully thought out and considered, whether it be a cent or a million dollars.

    Giving money “for free” is a double-edged sword. You give to one man, the next man will ask “why none for me, am I not a man and a brother?” You’ll be deluged with phone calls from this charity or that. Also remember what Jet Li said. It’s true. Those sob story ads on starving Ethopians…for every dollar, how many pennies reach the people, after all the advertising and overhead is accounted for?

    Due to so many questions, best to not give out anything until all the facts are on the table.

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