The younger generation changing China’s giving culture

A new and younger generation of Chinese entrepreneurs have created great wealth for themselves — and now wish to give back
In Asia, there is a firm belief that philanthropy starts with the family, village and community and gradually builds out © Bloomberg

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When Yale president Peter Salovey visited Hong Kong and Beijing in March, he found himself the beneficiary of rivalry among mainland Chinese alumni. But rather than fighting for admission, this time it was for a good cause — donating to the university.

Ivy League schools have made headlines in recent years for educating Chinese “princelings” — children of Communist party heavyweights ranging from President Xi Jinping and vice-president Li Yuanchao to disgraced politician Bo Xilai. But some of China’s best-known investors have also passed through the system.

Yale’s graduates, for example, include Neil Shen, founder of Sequoia China, and Zhang Lei, who established Hillhouse Capital with seed money from the Yale endowment and named his multibillion-dollar fund after a street on campus. Both were among those who vied to host Salovey and raise money for their alma mater during the visit.

Shen and Zhang are among the most visible of a new generation of mainland entrepreneurs, some but not all of whom studied overseas and then returned home. They have created great wealth for themselves — and now wish to give back.

As a group they are mostly too young to have borne the scars of the Cultural Revolution and can afford to undertake generous philanthropic initiatives. “We are the second generation,” says Chen Yidan, one of the five founders of internet company Tencent and among the biggest donors in China. “We are less desperate than our parents. We have known more stable lives.”

Despite China’s breakneck economic growth over the past few decades, the country’s strong philanthropic culture, effectively dismantled during Mao Zedong’s radical socialism despite a strong tradition of giving, had until recently struggled to re-establish itself. Shawn Shieh, a Hong Kong-based expert on Chinese civil society and philanthropy, says that until a decade ago, charitable giving was a state-controlled process focused almost solely on Communist party priorities such as poverty reduction and disaster relief. But since then things have changed — and the shift is gathering pace.

“Over the last 10 years, you’ve seen new philanthropic influences that are strongly influenced by the west and are changing the Communist tradition of philanthropy,” he says. “You can see these influences reflected in the new charity law, which defines charity more broadly than traditional notions.”

The broad new set of rules, which analysts expect to cause a seismic shift in the country’s philanthropic landscape, aim to make giving easier and more appealing, partly through improved tax incentives and confirming the legal status of charities, but also by making it simpler for wealthy people to launch foundations.

Neil Shen, founder of Sequoia China © Reuters

While per capita rates of giving remain a fraction of the levels seen in the west, absolute amounts are rising rapidly, with some experts saying Chinese people will soon be giving more money away than nationals of any other country except the US. It is tempting to ascribe that purely to the astounding wealth that Chinese have generated in recent years and their rise up the world’s rich lists (there are now 335 domestic dollar billionaires in the country, according to Forbes, while China’s homegrown Hurun ranking puts the number at 470).

However, wealth and giving do not always go in tandem in Asia. When Japanese billionaires dominated the tables during the bubble years, for example, there was no such comparable wave of generosity. And in the Charities Aid Foundation’s 2015 World Giving Index, which ranks nations by the proportion of citizens who have recently performed acts of altruism, economic powerhouse China comes a dismal 144th out of 145, while top place in the global rankings is occupied by relative minnow Myanmar.

So, perhaps even more so than in the west, it is the super-rich who dominate the Chinese field. The country’s top 100 donors in the year to August 2015 gave away a combined $3.8bn, according to a recent study by Harvard’s China Philanthropy Project. Localism was a striking trend among these donations, with almost 60 per cent of the money targeted in the same province as the donor’s corporate headquarters.

Zhang Lei, established Hillhouse Capital © Reuters

“In Asia, there is a firm belief that philanthropy starts with the family, village and community and gradually builds out,” says Dien Yuen, managing director of San Francisco-based consultants Kordant Philanthropy Advisors. However, she says, the business and personal ties that have grown along with donors’ fortunes have led many to target their giving outside the country. Beijing Normal University’s China Philanthropy Research Institute believes 80 per cent of donations by wealthy Chinese go overseas.

While most of China’s new generation of donors inhabit an urban tech world, there are a few exceptions. One is Niu Gensheng, the founder of Mengniu Dairy, China’s biggest dairy company. Niu established family foundation Lao Niu in 2004, which he funded by donating all of his shares and most of his dividends when Mengniu went public. He is now fostering ties with his US counterparts in organisations from the Bill and Melinda Gates Foundation to the Nature Conservancy.

“At the time, everybody including my family thought I was crazy,” he recalls. “Even Bill Gates told me, ‘you were ahead of me’. I was the first when I did this. But in 20 years everyone in China will do this.” Lao Niu now has Rmb4bn ($600m) to disburse.

The rise of mainland philanthropy is particularly interesting because in many parts of Asia there is tension between governments and the culture of giving. From Japan to Singapore, authorities take pride in their paternalistic approach, regarding philanthropic causes as a form of self-indulgence. In China, too, the government has historically regarded many charitable initiatives with suspicion, believing they challenge its dominance and that donors often harbour private agendas.

Education, for example, has historically been the exclusive domain of the state. With university presidents generally having very senior status in the Communist party, receiving research grants, even in the pure sciences where ideology has little relevance, is a function of party loyalty rather than the merits of the proposal, according to mainland professors now teaching in US universities.

In a way, the reverence for education is part of the Confucian edict that it is better to give a man a fishing rod than a fish — education is the means to self-sufficiency. “Chinese have always respected knowledge to an extent that is inconceivable in the west,” says Chen Zhiwu, a professor at the Yale School of Management who has taught many of the most famous of the mainland alumni.

Almost all of the young mainland entrepreneurs and investors have chosen to focus on education, citing a mix of traditional and personal philosophy for doing so. Alibaba’s founder Jack Ma, who says that in his mind the title of chief executive really stands for chief education officer, gives to both educational and environmental causes — priorities he shares with Niu.

“Education has been so critical to our careers and our lives. For everyone who gets to go to university, tens of thousands of others don’t have that opportunity,” says Shen. “And when we were abroad, we were exposed to the culture of giving and we want to give back to our alma mater as well. ” Shen has given $10m to the Yale China Center in Beijing and Sequoia will help shape a programme for local executives. But he is giving to Shanghai’s Jiao Tong University as well, which he attended. He has also contributed to programmes in medical research that will bind his two alma maters more closely.

“I can’t change the system,” he says, referring to the emphasis on examinations which are a part of the educational system. “But at least I can encourage innovation.”

Low-key driver behind Tencent’s foundation

Charles Chen Yidan waited three years before telling his parents that he had quit his secure government job inspecting materials being imported into China to join four of his classmates from middle school and Shenzhen University to form Tencent Holdings in 1998, writes Henny Sender.

Fifteen years later, in 2013, he exchanged his job as Tencent’s chief administrative officer for the role of adviser emeritus. But Chen is far prouder that he remains honorary chairman of the Tencent Charitable Foundation, which was set up in 2007 and which he says was the first charitable foundation founded by a Chinese internet company.

He also established the Chen Yidan Foundation, “a private charitable foundation . . . to promote, rejuvenate and develop the Chinese traditional culture and education”, says its website.

Chen’s first experience of giving though was not entirely voluntary. It came when the Shenzhen government asked Tencent to donate old computers to rural schools. Since then, both he and his company’s philanthropic arm have come a long way, thanks to the fact that Tencent, with its market capitalisation of $200bn, has made its founders among the wealthiest billionaires in China.

To this day, the charitable foundation receives a percentage of Tencent’s annual profit.

Few would recognise the low-key Chen, however. One of his rare public appearances abroad was at Harvard in March to address students at the law school. Yet his most important undertaking to date is to singlehandedly endow Wuhan College, the first private non-profit school, in central China. Chen founded it with Rmb400m ($61.7m) but has since given the school a total of Rmb2.2bn.

Like many of his peers, Chen believes education can change peoples’ lives. “I first thought of education as an investment opportunity,” he recalls. “Later I realised I should focus on it as a charity. I want to . . . use the entrepreneurial spirit for education, not just to donate money.”

Wipro’s wave-maker in India’s education

Azim Premji is behind Wipro, india’s third largest software company © Bloomberg

As a businessman, Azim Premji transformed his father’s small cooking oil and detergent business into India’s third-largest software company, Wipro, with revenues of $7.8bn in the year ending March 2015. Along the way, he became India’s third-richest person, with a fortune estimated at $13bn last year, writes Amy Kazmin in New Delhi

More recently, Premji, now 70, has made waves by giving his wealth away. Today, 39 per cent of Wipro’s shares, worth about $7.8bn, are owned, by charitable trusts that he established to grapple with one of India’s biggest public policy challenges: strengthening weak government primary schools.

“I strongly believe that those of us who are privileged to have wealth should contribute significantly to try and create a better world for the millions who are far less privileged,” Premji wrote in 2013, after becoming the first Indian signatory to the Giving Pledge, the philanthropic campaign led by Warren Buffett and Bill Gates.

About 70 per cent of Indian children attend government primary schools, but these schools are often unable to successfully teach even basic skills, as teachers juggle pupils of multiple age and ability levels, and a big load of mandatory administrative work.

Initially set up in 2001 with $125m worth of Wipro shares, the Azim Premji Foundation is working with eight Indian states to strengthen their school systems, focusing on teachers, administrators, curriculums, assessment and management.

Premji’s commitment is not merely financial. While many Indian entrepreneurs avoid open critiques of decision-makers, he is outspoken in his beliefs about what ails Indian public education and the remedies possible.

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