Does China have a “Giving Season” ?
Phil Nelson, Anthony Gao and Yinuo Li
This is an edited version of one of my “Get Smart on China” emails sent to colleagues on Nov 18th 2015.
With Halloween a distant memory and Thanksgiving on the horizon, there’s no question that the run up to the holiday season has started. For most people this means shopping, especially for deals on Black Friday and Cyber Monday. The US is not alone in going bargain-crazy at this time of year; in China the whole of November has developed into a festival of shopping, with reductions and special offers galore. The shopping fever really reaches its height, however, on November 11; this particular day is known in China as 双11, or Double 11, but it has another name — Singles’ Day (also derived from all the 1s in 11/11), the origin of which is said to lie with single students looking for an excuse to treat themselves to something nice. In recent years it has been marketed hard as an alternative to Valentine’s Day, when lonely singletons can alleviate their sorrow by going on an online buying binge.
It was Alibaba, the internet retail giant founded by Jack Ma, that first transformed Singles’ Day into a commercial phenomenon back in 2009, using hefty discounts to draw in the online crowds, and other online e-commerce giants such as JD.com have since jostled to get in on the action. Alibaba continues to dominate the event, however, this year hosting a four-hour television spectacular to count down the start of the shopping gala, which featured Chinese celebrities as well as international stars such as Daniel Craig and Kevin Spacey.
This year’s online buying bonanza was the biggest yet, with consumers spending RMB 91.2 billion ($14.3 billion) in 24 hours, surpassing last year’s record of $9.3 billion after just 12 hours. A huge 68 percent of these online purchases were made through mobile devices. Alibaba reported that its logistical division needed 1.7 million employees to deliver 7.6 billion parcels. It’s interesting to compare that to the US market where online buying last Cyber Monday reached a mere $2.68 billion and mobile devices accounted for 22 percent of sales. These are more than just impressive numbers though; the enormous levels of consumption around Singles’ Day are playing a vital role in the Chinese economy as it undergoes a difficult rebalancing process. As production and construction have slowed, lowering GDP growth to below 7 percent, consumers are taking up the slack. The Chinese government’s desire to promote a consumption-driven growth model is underlined by the fact that Alibaba’s Jack Ma received a phone call from Chinese Premier Li Keqiang’s office a few hours before Singles’ Day began, “congratulating and encouraging the creation and achievement of the 11.11 event”.
But just as in the US, where Giving Tuesday is rapidly growing in popularity and inspiring ever more people to donate after the excesses of Black Friday and Cyber Monday, so a similar movement has started to take hold in China. Tencent, Asia’s largest internet company, has established an annual day for giving on September 9. The so-called 9.9 Charity Day has been remarkably successful in driving online charitable giving in a culture with no (recent) tradition of philanthropy and is a good example of the growing willingness among Chinese people to donate.
Charity Day itself is in reality three giving days, from September 7–9, when people can donate to any of the 95 different participating charities, in the knowledge that Tencent has pledged to match every donation, yuan for yuan. Within the first 15 minutes of September 7, donors had already raised RMB 10 million ($1.6 million) and the money continued to pour in. By the end of the three days, RMB 127.9 million ($20.1 million) had been donated by 2.05 million donors using Tencent’s WeChat fundraising platform (WeChat is a massively popular Chinese app, owned by Tencent, that is a combination of WhatsApp, Facebook and Twitter, and it has over 600 million monthly users.
The fact that these donations were made via a mobile device demonstrates the potential of digital technology for philanthropy, something that the rest of the world is only slowly catching on to. While China’s recent history prevented the development of the kind of giving culture to be found in the west, modern Chinese donors are leap-frogging traditional forms of donation (e.g. giving directly to street collectors or through postal donations) and turning to the most technologically advanced methods available. In terms of technology, it is now the rest of the world that needs to play catch up.
Tencent’s permanent online donation platform, which hosts the annual Charity Day, is another demonstration of the power of technology for philanthropy. Launched in 2008, by 2013 it had raised a modest RMB 100 million ($15.7 million). But over the past two years, boosted by the rise of mobile internet and social networking through smart phones, total online donations have soared to over RMB 684 million ($107.1 million). Significantly, 79 percent of the 40 million donors to Tencent’s online platform are aged 30 or younger.
Taken on their own, these numbers may look fairly impressive, but if we consider the size of the Chinese population, and particularly the enormity of wealth that has been accrued by many Chinese entrepreneurs, it is clear that China’s philanthropic development still has a long way to go. Compared with the United States, where giving amounts to more than 2 percent of GDP, China’s giving is still about a fifth of 1 percent of GDP. Just think how many resources would be available to address social challenges in China if levels of giving could reach those in the US.
It has to be emphasized that there is nothing inherently against philanthropy in Chinese culture. On the contrary, China has a long tradition of encouraging giving; the ancient philosopher Mencius declared that, “达则兼济天下”, which means when you are rich, you should help everybody to benefit from it. So why does China’s philanthropy still lag behind today?
First, current policy in China is simply not conducive to philanthropy. In addition to stringent controls over NGO registration and activities, the tax benefits of large-scale giving are limited, and hard to obtain because of a maze of red tape. To make things even harder, there’s no estate tax to encourage the wealthy to give before they pass away.
Second, a number of infamous scandals have undermined the fragile public trust in charitable organizations. Guo Meimei, a 20-year-old woman who displayed her lavish lifestyle across social media, falsely proclaimed herself to be a manager of the Red Cross Society of China, drawing questions about the misuse of public donations. Even after it was proven that she had no links to the Red Cross, the image of the government-organized charity has remained severely damaged, and the public is more willing to believe in scandal due to the insufficient level of oversight.
Third, as nobody in China was rich 30 years ago, all wealth has been accumulated recently, and most businesses are still controlled by the first generation of businesspeople. They tend to be more reluctant to let go of their hard-earned money, and many do not like the scrutiny they would receive if they were to donate, especially as some of that money might be a result of their close and often dubious connections with the government. The cultural tendency to avoid discussions of death also prevents them from thinking about how to use their fortunes before it’s too late.
Fourth, the philanthropic sector suffers from an extremely poor image. Income is low for people working in charitable organizations, and it is generally believed that people work in this sector because they have no better alternatives in the private or public sectors. Living in an ever more competent society, almost no one from the top universities is willing to forsake high-income jobs to work in positions that are not held in high esteem.
China is one of the focuses of the Bill and Melinda Gates Foundation’s Philanthropy Sector work, and the foundation has been been engaging Chinese stakeholders to address these challenges. Just last week on 11/12, Bill Gates was in Beijing, where he attended the launch ceremony of the China Global Philanthropy Institute, the first of its kind in the country and entirely dedicated to philanthropy education in China. The Gates Foundation will provide funding for the new Institute together with Ray Dalio and three Chinese philanthropists. As Bill mentioned in his keynote speech, he believes the Institute will help lay the groundwork for a new era of philanthropy in China.
Edited by: Joanne Zeng
