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  • Nov 1, 2014
  • Updated: 5:00am

The face of giving

PUBLISHED : Monday, 20 September, 2010, 12:00am
UPDATED : Monday, 20 September, 2010, 12:00am

Yu Pengnian is not the retiring sort. At 88, the president of Pengnian Industries still takes an active role in his business, and he is not shy about his achievements, either. Company vehicles at the entrance to his Peng Nian Hotel in Shenzhen are plastered with images of the entrepreneur involved in charitable activities. The marble wall behind his desk is inscribed with gold calligraphy outlining his insights on the joy of giving.

Already prominent in Hong Kong media, mainly for being the owner of Bruce Lee's former home, Yu made international headlines earlier this year when he became the first mainlander to pledge US$1 billion - almost his entire fortune - to charity.

'I have given all of my fortune to the people,' he says. 'You have to get rich first before you can help people.'

But surely charity starts at home? 'If my children are smart enough, they don't need my money,' he says. 'And if they are not, then the money will just bring harm to them. Of course, I have also made sure my children have comforts - they have houses, cars, medical insurance and sufficient money to send their children abroad.'

Microsoft founder Bill Gates and investment guru Warren Buffett have done it in the West, and are trying to raise the issue of giving at a banquet in Beijing on September 29, but such high-profile giving on the mainland is a new phenomenon.

In the '90s, anyone with personal wealth was assumed to have accrued it from corrupt sources, categorised by the 'five colours' of vice (red for the government; green, the army; blue, customs and excise; white, smuggling; or black, guns and drugs). Moreover, the custom in Chinese culture is to be modest about personal triumphs, including charitable contributions.

According to the official China Charity and Donation Information Centre, contributions reached US$4.87 billion last year. The total is 68.9 per cent down from 2008, when the Sichuan earthquake brought an unprecedented flood of aid, but it is 8.2 per cent higher than in 2007, when there were no major disasters.

Mainland donors accounted for 85.9 per cent of national contributions last year, nearly a third of which came from individuals. Before 2008, the ratio had never risen above one-fifth.

Successful businessmen are not only donating more of their wealth, they are also far more ready to publicise their charitable efforts - channelling Dale Carnegie as much as Andrew.

The 2008 earthquake was a major factor in shifting perceptions. The scale of the devastation - with 87,000 people killed, and millions injured and homeless - inspired an unprecedented outpouring of aid. It also hastened a relaxation of the tightly controlled charity sector and opened public discussion about how resources were deployed in the name of good works.

'Four years ago, no one talked about charity, and then came the Sichuan earthquake,' says Wang Liwei, chief editor of mainland philanthropy magazine Charitarian. 'From then on there was a lot more discussion on all sorts of charity works, individual and corporate, local and overseas, private and public.'

It gave entrepreneurs a chance to use their wealth to help others. At the same time, Chinese companies saw a PR opportunity that could put them in contact with high-ranking officials and media, who might otherwise be inaccessible.

Wang cites recycling tycoon Chen Guangbiao as an example of a successful businessman-philanthropist. The 42-year-old president of Jiangsu Huangpu Renewable Resources was among the first to reach the worst-hit areas of Sichuan after the 2008 earthquake, taking bulldozers and a team of 120 rescue workers. They extricated 131 survivors and thousands of bodies, and Chen also doled out 7.85 million yuan in cash and more than 90 million yuan in relief materials.

His effort caught the attention of Premier Wen Jiabao, who praised him as 'an entrepreneur with conscience', and Chen's subsequent trips to the disaster zone were made in the company of senior government officials and other successful businessmen. He was invited to attend the Chinese People's Political Consultative Conference meetings last year, appointed to the committee of the Chinese Red Cross, made vice-president of the China Charity Federation, and sought by 53 provinces and cities as an adviser on socio-economic development. Gates even called on him during a visit to the mainland last year.

As one of the most outspoken and high-profile entrepreneur-philanthropists, Chen has been critical on social issues, calling for a reform of charity regulations, and greater transparency over the earnings of officials and big enterprises. 'I can tell [my grandchildren] without regret that their grandfather has never done one bad thing in his life,' Chen says. 'I hope history will remember Chen Guangbiao as one of China's greatest philanthropists.'

Born to a poor family in rural Jiangsu, Chen saw his elder brother and sister die of malnutrition. Since making his fortune, he has donated 1.23 billion yuan to mainland and overseas disaster relief in the past 12 years, including to victims of the recent Gansu mudslides.

He believes it is important for philanthropists to seek publicity to spread a positive message. Chen says entrepreneurs who don't make philanthropic contributions will be left behind.

'Only one in 1,000 entrepreneurs in China is donating. At present, there is none as high-profile as me doing charity work, and I wish there were more people like me who would rise up. I think I'm not high-profile enough yet. I wish there was some wise person who could teach me how to further raise my profile,' he says.

'To run a successful business in China, you have to be technology and innovation-oriented ... and you have to be able to handle politics. However, you can't treat politics as a game. You must also understand the economics of your business. Doing one and ignoring the other will end in failure.'

Chen says time will tell whether he was only 'putting on a show', but if what he is doing is helping people, then there is no reason why he should not try his best to continue running the show.

The mainland is in an interesting phase of its social welfare development, says Rupert Hoogewerf, creator of the Hurun Rich List and the Hurun Philanthropy List.

'The line where the state and private sector take responsibility is shifting in China, much like in the US and Europe,' he says. 'China's government is stepping back to allow the private sector to do more.'

At the same time, many of the nouveau riche are desperate to boost their social status to enter the ranks of the xinguizu, or new aristocracy, Hoogewerf says. Ditching the traditional baijiu rice liquor for expensive red wine to present a more sophisticated image is one way, well-publicised good works is another.

Some high-profile donors may have mixed motives and view philanthropy as a way to wield greater influence, 'but at least they are giving money to do good,' he says. 'And they are not hidden - they come out and talk to the media, talk to the public and dare to speak.'

This helps improve the transparency of the philanthropy sector, which is dominated by government officials, he says.

Existing regulations do not require NGOs and charities to report to donors on how their money is spent, and the use of funds is dictated more by political goals than the needs of recipients. But because media-savvy donors have no qualms about weighing in on social problems on camera, they open an avenue for the public to influence - or even monitor - how the authorities handle charitable funds.

'It is difficult to do good things in China. So I am personally in charge of all projects to make sure the goods and services are delivered,' Yu says. 'I have also chosen [a Hong Kong bank] to manage my money because I know it won't go astray.'

The relationship NGOs and donors have with officialdom is subtle but essential, Wang says, because 'the government is everywhere'. Wang himself is the vice-mayor of Guan county in Shandong province, and his magazine compiled its 'compassionate rich' list from official sources, including the Ministry of Civil Affairs. However, he declined government funding in order to maintain his magazine's independence and avoid 'long, useless meetings'.

'It is difficult for charities. If you don't work with the government, you can't do fund-raising and get tax relief. But if you get too close, you face operational problems because it is very bureaucratic, very slow.'

NGOs must be affiliated to a government department in order to register as a charity with the Ministry of Civil Affairs. To organise any fund-raising activities, they must also accept official supervision. Yet charities and foundations are not obliged to publish their accounts to donors. And it is the officials who decide what proportion of funds will go towards a project and how much to government coffers.

Corporate and private foundations may be spared official supervision of operations, but they still need to go through local governments to implement their work. Yu complains, for instance, that the 10 vehicles he donated in 1988 to Hunan for use as ambulances were seized by local officials for personal use. The contribution was prompted by his memories of seeing patients dying en route to hospital because of a lack of transport in the impoverished village where he grew up. Because of mistrust due to the lack of transparency and professional management, a draft law was submitted to the State Council last year to tighten the administration of charitable funds.

Wang says the strong government presence in philanthropic activities gives rise to a strange, dual system in private institutions. They typically set up a public charity under the auspices of a government-operated non-government organisation (Gongo) and maintain a private institution under the same name. Money is raised through the former then transferred to the latter to minimise government influence.

However, disputes can arise if the foundation's relationship with government officials sours. If the founder decides to call it quits, officials usually claim all funds as belonging to the Gongo-linked charity even if it was the founder who raised the money.

'It all depends on your relationship with the government, which has the right to check and question your programmes. The NGOs that are totally independent are only poor, small grass-roots groups. They have no supervision because they only have a little money,' Wang says. 'If you don't operate under a licence, it is difficult to raise money. But if you do, then you have to work out how to share the funds with the authorities. or example, 10 per cent might go to the government and 90 per cent to the projects. There are no set rules; there is only negotiation.'

The government is in a tricky position, though. 'On one hand, it wants to encourage the private sector to do more, but it is afraid of losing control. In the end, it depends on the organisation and who the leaders are. It is a matter of trust. We don't want China's philanthropic work to be like the national soccer team - always losing, but with a lot of fans. Charitable causes get a lot of support and big players are involved. But management is a disaster.'

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