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Chinese Superrich Commit to Philanthropy

Warren Buffett and Bill Gates, the Rockefeller and Carnegie of this age, announced plans last month to invite about 50 of China's superrich to discuss their concept of philanthropy, which includes enlisting the world's wealthiest people to give away at least half their fortunes.

A growing number of China's corporate titans are open both about their wealth and about giving it away. The leading example is Yu Pengnian, an 88-year-old real estate baron who gave the last of his $1.3 billion fortune in April to a foundation he created to fund scholarships for poor Chinese students. The latest is Chen Guangbiao, 42, a Jiangsu Province recycling-company owner who has taken the Gates-Buffett pledge to give away his $440 million fortune when he dies.

"Wealth is not something that comes to you when you are born," he said in an interview last week. "It's like water. If you have only a cup, you keep it to yourself. If you have a barrel, you share it with your family. And if you have a river, you share it with everyone."

Actually, however, Chinese philanthropic tradition was being upended well before the Gates-Buffett dinner was even conceived. In barely a decade, the Chinese economy has created at least 117 billionaires, according to a Forbes magazine ranking, and hundreds of thousands of millionaires by the estimate of Hurun Report, a magazine based in Shanghai whose target audience is the rich. Only the United States has more billionaires.

While China's reported philanthropic donations are now comparatively tiny - about $8 billion last year, the government says, compared with $308 billion in the United States in 2008 - changes in China's economic structure and in government policies make that figure almost destined to rise quickly. And, in contrast to the past, riches are starting to flow to social and charitable causes.

"The Chinese have been very generous for a long period of time," Rupert Hoogewerf, who publishes Hurun Report, said by telephone. "The difference has been that they do it between families, and don't publicize it. What we're seeing now is a new era of transparency."

Excerpted from The New York Times on September 24, 2010.
 
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Over 250 years ago, Benjamin Franklin made visionary pronouncements about the mysterious Middle Kingdom, a place he never visited. True, Ambassador Franklin is rarely amongst the names that appear on any list of China experts, but in his day the great American patriot was intrigued and knowledgeable about China. Franklin remarked: "Forewarned is fore-armed", and this remains a befitting admonition for the 21st century, as well, when cautious due diligence and an awareness of history can help avoid costly mistakes and unnecessary missteps. Reading St. John University's Dr. Dave Wang's brilliant analysis of Benjamin Franklin's "Drawing Positive Elements from Chinese Civilization during the Formative Age of the United States" goes beyond its academic persuasiveness and reveals core beliefs shared by our two countries.

Fast forward nearly 250 years, and again we are seeking commonality between two countries that often seem a vast ocean apart. In working with Chinese management on a daily basis, not unlike Ambassador Franklin, GEP finds more similarities than differences in the goals and commitment of these Chinese partner companies. Yet, "forewarned is fore-armed" remains a tenet of the day. What about viewing the news from China not managed or filtered by the Central Government? With the advent of the social media in China, a historic event that has the government scrambling to scramble it, several prominent sites are working hard to stay ahead of the censors. Gen-X progressives and social activists rely on China's Forbidden News that is readily available--at least for now--both in China and globally.

As the world spun into the 21st century, it became the Chinese who've swum to the top in many ways. Even Warren Buffet may shift his power center from an Omaha posse to a Peking cadre, as detailed in The Wall Street Journal in late July 2010. Lest the tide of events be recognized, jingoists will be swept out to sea. To follow the ebb and flow of many China-based public companies, iChinaStock.com is amongst the most useful tools. To leap 40 years ahead, "The World in 2050", as forecast by the HSBC Bank, ranks the world economies, in order: China, the United States, India, Japan, and Germany.  As President Abraham Lincoln once observed:  "Nothing is as certain as change."  

To determine the wisdom in investing in China-based companies, a good debate would be between Warren Buffet (born 1930), who said: "[If] they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful", and John Maynard Keynes (1883-1946), who reminded us: "The market can stay irrational longer than you can stay solvent." What a pity that the Nebraskan was only 16-years-old when the Cambridge Brit met the Great Auditor for an eternal review.

 
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