If you flick through the 29 chapters of The Great Thoughts of China you will find no mention of the word ‘philanthropy’.
A book of quotations, Great Thoughts bills itself as encapsulating “the 3,000 years of wisdom that shaped a civilisation”.
But nowhere in its pages do Mencius, Shang Yang or Zhu Xi advise donating 45% of your personal assets to a charitable foundation. This is probably indicative: the book quotes Xunzi (296-236 BC) as saying, “The nature of man is such that he is born with a fondness for profit.”
So the idea that a Chinese billionaire is voluntarily giving away almost half his wealth has sparked much debate. Many are of the view that it is as an unthinkable choice or impute less honourable motives, like evading tax. Others think it’s a PR stunt, or an elaborate corporate finance trick.
The tycoon in question is Chen Fashu, who WiC featured in its Chinese Characters column in issue 16.
To recap: Chen is reckoned to be Fujian province’s richest man, with a net worth of over $3.7 billion. Born in 1961, he started out dealing timber in the city of Quanzhou. Via grocery stores and shopping malls, he then built the New Huadu Industrial Group into a diversified conglomerate.
But the teetotal, non-smoker’s big break came in 1999 when he was asked by local government officials to invest in Zijin Mining. After listing the gold miner in Hong Kong and Shanghai, Chen’s 20% stake surged in value to around $600 million. He divested some of his stake to buy 12% of the Chinese medicine firm, Yunnan Baiyao. In May he also bought 7% of the nation’s best known brewer, Tsingtao, for $235 million.
Chen – who likes a midday nap – is not your conventional Chinese billionaire. According to China Business News he is punctual, avoids big society events and eschews flaunting his money. In fact, he has long been called China’s Warren Buffett.
And that being the case, his decision to donate 45% of his assets to a new foundation resembles the Sage of Omaha – who made headlines in 2006 when he donated $31 billion of his own fortune to the Bill and Melinda Gates Foundation.
Chen’s New Huadu Philanthropic Foundation will be the largest non-governmental charity ever set up in China. The foundation’s director Tang Jun says it will be modelled on the Gates Foundation with an initial focus on providing education in impoverished areas of the country, but will also look to support environmental and health initiatives.
This is also where Tang’s own background becomes of interest. Aside from his role at the foundation, Tang works for Chen at New Huadu as CEO. Another of China’s richest men in his own right, he had previously run the online video game firm Shanda and spent a decade as head of Microsoft’s China operations. Tang’s relationship with Gates is a plus. It also makes Chen’s ambition to emulate the Gates Foundation look all the more credible.
Online reaction to Chen’s generosity – after some initial cynicism – has turned more positive. On the FTChinese website, one Shanghai-based netizen commented: “The relevant government departments should adopt a welcoming attitude to this – rather than a bureaucratic attitude. China now has a large gap between the rich and the poor and people are very dissatisfied with this. What Chen has done should be greatly promoted so others donate too. There are few people like Chen and we should welcome what he has done.”
But is it all some tax dodge?
The tax evasion accusation comes in light of reports from the Securities Journal, which claimed last month that the fiscal authorities were looking into Chen’s sale of Rmb3 billion worth of Zijin stock.
Tang dismisses the controversy, telling the Financial Times that under current Chinese law Chen was not required to pay tax on his share sales. “If the government asks us to pay [tax] we will be the first to do so, but there is no such regulation at the moment,” he told the newspaper. “The public should not doubt us.”
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