Gates, Buffet to sell giving to China’s millionaires

Mangalore Today News Network

September 8: Microsoft Corp. co-founder Bill Gates and billionaire investor Warren Buffett plan to sell the art of giving to China’s super rich in a visit later this month that’s already sparked some soul searching among the world’s second-largest number of billionaires.

Reactions to Gates and Buffett’s trip have been swift and varied: One prominent Chinese philanthropist quickly pledged his entire fortune to charity, while the head of a private foundation said Chinese businesses should be leery of emulating American-style charity donations before essential corporate standards such as worker’s rights are improved.

Many have pointed to shortcomings in China’s charity system, which critics say lacks transparency.

The discussion underscores what experts say is the relatively immature state of philanthropy in China, where in just three decades economic reforms pulled hundreds of millions out of poverty and created a generation of newly minted millionaires.

Gates and Buffett have been campaigning to convince other American billionaires to give most of their fortunes to charity and hope to spread the idea of generosity on a trip to China later this month. Their campaign includes a private dinner in Beijing with a group of wealthy Chinese — and some are wary.

A "small number" of the more than 50 invited guests called to ask if they would be required to pledge a donation at the dinner, said Jing Zhang, press officer of the Bill & Melinda Gates Foundation, which is coordinating the Sept. 29 event. But Gates and Buffett just want to talk, Zhang said Tuesday.

Still, that hasn’t stopped one of their guests, multimillionaire philanthropist Chen Guangbiao, from declaring in an open letter to Gates and Buffett that he would donate all of his fortune upon his death.

"I’m a rich man, but I don’t want to be a miser," Chen told The Associated Press by phone. "China’s economic reform started only 30 years ago. For lots of people who became rich, they believe they earned their fortune through hard work. They don’t think about society and only want to leave their fortune to their children."

Chen, 42, a peasant-turned-chief executive of a renewable resources and recycling company in eastern Jiangsu province, has an estimated fortune of 3 billion yuan ($440 million) and is ranked 340th on the 2009 Hurun list of China’s wealthy.

"I want to set an example and influence more people’s perspectives on wealth and life, and get them to give back to society," Chen said.

Topping the Hurun rich list last year was auto and battery maker Wang Chuanfu, estimated to be worth $5.1 billion, who has been invited to the Gates-Buffett dinner according to state media. Buffett’s Berkshire Hathaway is an investor in Wang’s company, BYD Co. A company spokeswoman declined to say if Wang would attend.

There are at least 875,000 U.S. dollar millionaires in China, according to Shanghai-based analyst Rupert Hoogewerf, who studies China’s wealthy and puts together the Hurun list. Among them, 130 are billionaires, second only to the United States.

Hoogewerf said that at an average age of 39 years, the rich Chinese are generally 15 years younger than their foreign counterparts and are generating more wealth faster, in the service, property and manufacturing sectors. While philanthropy is becoming increasingly important, it isn’t often considered an immediate priority.

"You wouldn’t expect a 40-year-old to have the same time and energy to put into philanthropy as you would into wealth creation," Hoogewerf said.

China’s wealthy are often in a sensitive position amid a burgeoning rich-poor gap and long-standing public resentment against those believed to have reaped their massive fortunes through illegal or shady means, or run companies that compromise on public health and the environment.

The super rich also face growing scrutiny by authorities amid reports of more than a trillion dollars of undocumented money. Huang Guangyu, the founder and former chairman of the country’s biggest appliance chain and once the country’s richest businessman, is now serving a 14-year prison sentence for insider trading, bribery and other crimes. Huang was estimated in 2008 to be worth $6.3 billion.

Earlier this month, a Credit Suisse-sponsored report said China’s rich may be hiding up to $1.4 trillion in corruption-fueled "gray income" — an indication the income gap is much wider than official figures suggest.

Many rich Chinese prefer to keep low profiles and hide their fortunes for fear of attracting attention. Some have only vague ideas of how best to put their wealth back into society. Corruption, too, is pervasive in China, making the wealthy worry that donating their hard-earned fortunes might be a waste.

One of the invited dinner guests, Zhang Xin, co-founder of real estate developer SOHO China, said she expected discussions with Gates and Buffett to give her ideas on how to improve the efforts of her company’s foundation, which focuses on rural education.

Zhang, 45, said on her personal blog that donations alone were not the best way to give back to society, saying the country still hasn’t issued a charity law and does not have favorable taxation policies to encourage companies to make charitable donations.

"In China the accumulation of wealth is just beginning, and charity has also just kicked into motion. I believe simple donations in today’s China are not the best charitable approach," wrote Zhang, who at 14 worked in a Hong Kong sweatshop before a scholarship enabled her to study in Britain.

Xu Yongguang, the executive director of the private Narada Foundation, wrote on his website that wealthy Chinese should not rush to donate their fortunes, saying entrepreneurs still needed to focus on providing quality goods for consumers, protecting the basic rights of their employees, building profits for their shareholders, protecting the environment and paying their taxes.

"Only until companies meet these conditions can they be considered good, socially responsible enterprises," Xu wrote.