Tony Lee

03/08/2016

A Reflection on The Rise of Corporate Philanthropy in China

I. Introduction

Corporate philanthropy might sound costly and not so appealing to most. But it actually

provides benefits to a firm by connecting communities and employees. Companies may

financially support communities on projects and create jobs for residents, boosting local

economy. Companies can also create better images of themselves through volunteering

programs. Employees who volunteered abreast with community residents will work together

and strengthen the bond between them. Aside from that, philanthropic companies have an edge

of recruiting employees who share the same values. People with related experience would first

consider the company when seeking a position.

Roughly five years ago, donations toward charities made by corporates in China were

estimated to be somewhere near seven billion US dollars, according to China Charity

Information Centre. This year, the figure is projected to hit eleven billion US dollars.

Statistically, we see a 57 percent growth in donations spanning across these five years. This

may not catch the attention of most people, unless we pay closer

look into it. In 2010, Warren Buffet and Bill Gates held a

banquet for Chinese billionaires, hoping the wealthy could play

their roles in the development of philanthropy. To their dismay,

most of the wealthy industrialists turned down the proposal and

none of which signed the “Giving Pledge”. Fast-forwarding to earlier this month, another

similar banquet was held in Beijing but had a drastically different outcome. Mainland bosses

in the latter occasion were enthusiastic about sharing their wealth. That given, we may now

turn to the question of how philanthropy among corporates has taken a steady rise these years.

The discussion will be focused on what has resulted in this phenomenon, and what must be

done to enable a wider and deeper spread of good deeds.

II. Corporate Philanthropy in China

In light of the two banquets that took place, it is not hard to observe the shift in how Chinese

entrepreneurs poise themselves. One of the major reasons for such change in their stance is the

shift in their attitude. In the past, most donations were made by property tycoons. The money

oftentimes goes to education institutions, especially the top universities in their home provinces

along the coast. Benign as one may make of it, this act is often ensued by two problems. One

is the expanding gap among coastal and countryside schools, and the other is overtly affluent

profit sectors.

a. Education Gap

The lack of resources for pupils in the inner part of China is already a long persisting fact

for most people and little has been done to address the issue. Worse yet, the donors were

channeling funds away from those who need it most and towards the coastal areas. It only

widened the existing education gap when the money could have brought much greater margin

utility to the poor. This scenario can also be seen in many countries, but mostly in those that

are still developing. China, as it claims itself to be not only the head of Asia, but also the giant

of the world, should be more aware of this fact if it plans to compete with the west.

b. Affluent Profit Sectors

Profit sectors having more than enough, while non-profit sectors are being left to dry out is

a scene rarely seen in other places outside China. The outcome is quite straightforward. Entities

in this sector always have a hand full of funds, they then throw them at whatever seem profiting,

regardless of the following risk. If the project pays off, the return normally does not flow to the

inner provinces, but stays in their own pockets and awaits its next dive. What if the project

does not end up well? They would not care much. It was not their money from the very

beginning. Besides, tycoons will always bring more to them. To them, they having nothing to

lose.

III. Cause for The Rise

The two problems mentioned above are now, however, being alleviated to some extent. Such

twist can be attributed chiefly to the generational change and the western influence.

a. Generational Change

Over these years, many young entrepreneurs have arisen and claimed their own spots in the

market. Jack Ma, boss of Alibaba, has donated options worth about 2 percent of the firm’s

equity to a charitable trust two years ago. This April, Pony Ma, founder of Tencent, promised

to donate shares worth over 2 billion dollars to the firm’s charitable foundation. Their

appearance brought a wave of new ideology and spirit to the sordid atmosphere that had

clouded the industry. Interestingly, this younger generation is less bound by the political

dynamic, and more keen to approach areas where people consider sensitive. Unlike their

predecessors, they place more focus on environmental and public health issues. Meanwhile,

non-profit sectors start to receive more funds from the public, due to the nature of such issues.

Nevertheless, one is fallible to conclude that tycoons aforementioned are nearsighted or

unwise in terms of philanthropy, which is incorrect. We must not overlook the pressure this

younger generation is exerting on the Chinese government. From the government’s perspective,

a rapid development in the non-profit sector sends a signal to the general public, telling people

that the administration is inept and incompetent at providing a better life. The elders know and

fear the consequences of putting the government on the spot, thus they chose to make donations

to less sensitive sectors, education institutions.

b. Western Influence

As China grows ever more influential worldwide, it is impossible to block western forces

from its land. While opening up the commercial passage to export its commodities, China also

inevitably invites capitalism in. Previous generations may have had little contact with western

culture, but that is quite the opposite for the youngsters. The young ones grew up in a rather

diversified environment, allowing them to dabble in an assortment of different practices. They

are more exposed to the world, especially the west, and more acceptable of new thoughts. This

is what nurtures these young technology billionaires.

The young may still maintain their recognition of identity, but the ideology of practicing

business in China has called for a new page. With new business models being implemented,

they have successfully attained their own share of the market, proving their western-based

methods and know-hows to be of great efficacy. Onward, they will question, if not challenge,

other peripheral issues, such as industrial pollution, social welfare, labor insurance and

women’s rights. Notably, these notions were first raised and enforced in the west. It was not

until late 90’s that some Asian countries followed the trail, while many voices have still fallen

unheard and ignored. In this case, we can see the progression of western influence, as it reaches

in and over the Chinese fence of conservatism, seeding thoughts in the young minds.

IV. What should be done

Though a group of young entrepreneurs have surfaced and redirected some of the donation

flows towards non-profit sectors, their efforts merely make up the smaller portion of the entire

funds. The philanthropy industry has only walked one step out of infancy, leaving yet still

much to be done. One of the most significant step to be taken falls on the shoulder of the

government, which is to loosen unnecessary regulations for donations. Would-be-donors have

been thwarted by such regulations, fearing that they might catch unwanted attention from the

officials by giving money away. Therefore, they either keep the money to themselves or donate

it to sectors that have been safe-zoned. This calls for a renovation within the administration,

who throttles the development of philanthropy, and, worse yet, diminishes the possibility of

having a decent living for those who struggle. The existing law itself was enacted out of good

intents, by preventing malicious politicians from laundering or conducting unlawful affairs.

Yet the grip turned out to be so tight that good deeds from philanthropists are nearly

inaccessible. People in desperate need could have received the help they wanted had law

enforcements not stepped in and cut off the resources.

Also, the Chinese government should and must face its inability of tackling social and

environmental issues. Viewing philanthropy with suspicion does not make its political dynamic

better off, but hampers the formation of a free and fluid philanthropy industry, which then

wipes out the opportunity of invigorating local economy. Only by letting loose of its

restrictions will people at the bottom of the pyramid be given the quality life they deserve.

Perhaps China will truly live up to the dream it has always aspired to by then.

V. Reference

The Economist Magazine, July 16th – 22nd , 2016 edition

http://smallbusiness.chron.com/importance-corporate-philanthropy-33810.html