Turning down Gates & Buffett: Philanthropy in China requires For-Profit Social Enterprises

Posted: October 3rd, 2010 | Author: | Filed under: Kev's Thoughts On... | Tags: , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

A few days ago we witnessed two momentous occasions: 1) Bill Gates and Warren Buffett took their much anticipated trip to China to encourage philanthropy among China’s super rich, and 2) Many of these Chinese super rich turned down their invitations to meet with Gates & Buffett, because of their unwillingness to give away part of their wealth and participate in philanthropy.

Media have been hotly debating what happened, and many are asking: Where is China’s philanthropist? Why are China’s super-rich so reluctant to help others? Why don’t they follow the examples led by Bill and Warren?

China is not completely devoid of rich, individual philanthropists. Jet Lee has for some years been very active in seeing his charity, the One Foundation, succeed. Guangdong province recently had one of its richest citizens, Yu Pengnian, commit all of his wealth, USD$1.2B, to charity. And there were the few who did pledge to come along side Bill and Warren during their visit. But these examples are the exceptions, not the norm. The broader implications why we do not yet see the rise of a philanthropy class/culture in China can be viewed in three driving factors: No religious precedent, no cultural precedent, and no historical precedent in China for Philanthropy.

No Religious Precedent: While religion is not the only factor to birth philanthropy, it is an effective driver of the philanthropic mindset. The most famous philanthropists in history, and indeed the forefathers of the modern (post Industrial Revolution) philanthropic model such as Andrew Carnegie, Henry Ford, and John D Rockefeller were rooted in their spiritual motivations. These pioneering philanthropists ascribed to the American philanthropic spirit, a cultural legacy from America””””s forefathers: Benjamin Franklin, Thomas Jefferson, and George Washington, Christians in the Age of Enlightenment.

China, a State that for many generations has had as its official religion Atheism, continues to be widely criticized for its lack of religious freedom. As a result of its policies, China has bred a general population that today is mainly faithless. The spiritual motivations and drivers that helped give rise to philanthropy in other nations are not present in China.

No Cultural Precedent: Even with all of China’s recent industrialization, urbanization, and modernization, China is still in an agrarian popular culture. More than half of China’s population continues to live in villages based on an agrarian economy. The other half of China’s population is mostly one generation removed from the same agrarian reality. Agricultural society is based on harvest and storage. Hoarding is a very strong cultural imprint that has lasted for many millennia. Even now with economic development, the hoarding culture — which is engrained in familial norms and passed-down by generational lessons — endures even beyond the first and second ‘moneyed’ generations. China will need at least one or two more generations of continued economic development and consistent education of its lower classes before the hoarding imprint can begin fading. Having a hoarding culture is a direct limitation to any rise of philanthropy in China.

No Historical Precedent: China’s history is based, in one perspective, on familial wealth & power via heirlooms, bequeathments and hereditary titles. China comes from an Imperial, agrarian society, where power and social status is based on familial wealth. Modern Chinese society continues to have many aspects that still emphasizes family wealth. We see this today in the continued inadequacy of China’s social welfare system, where Chinese parents still need to save all their wealth in order to pay for the education, and buy real estate later generations. Bill Gates and Warren Buffett have not been explicitly religious in their motivations for philanthropy. But they have had historical precedent from such past American philanthropists as Carnegie, Rockefeller, and Ford. China does not have philanthropic heroes in its own history.

The classic philanthropy model (the super rich who devote the rest of their lives to the effective distribution and use of their wealth to alleviate societal ills) is still a long way away for China as it needs to overcome the lack of religious, cultural and historical precedents to philanthropy that is so evident in western countries.

Luckily for us, philanthropy in China is starting to come in different shapes and sizes:

Micro-Philanthropy has potential, perhaps later:

Wokai.com, 51give.com and other micro-finance sites in China have gotten a lot of coverage lately as they are doing admirable, pioneering work. China is experiencing an increased social consciousness and activism, especially from the younger generations. However, China’s stagnant social structure and the turbulent overheated economic bubbles mean this young, socially aspirational generation does not have the economic power or wealth to ‘put their money where their mouth is’. So while Micro-Philanthropy mechanisms might be a useful model that fits with the motivations of this young socially driven class, unfortunately this group does not yet have the mass economic ability to participate even in micro-philanthropy to make it a market-changing force. What these young people can offer instead, is their time. We continue to see a rise in volunteerism in recent years. But even with volunteers, there still needs to be capital to fund and sustain any operation or project. Micro-philanthropy at this point cannot provide this.

Corporate-Philanthropy in China is currently inept:

High competition and continuing immature industry structure in China means businesses are almost completely focused on reinvestment of capital on development of their own direct competitive advantages. In addition, unlike in Western countries where advocate groups, and a socially-active older baby-boomer generation place increasing demand on corporations for social corporate responsibility, China’s public demand for such initiatives is still extremely immature and shallow. Therefore China’s corporations have little incentive to be involved with philanthropic endeavours.

NGOs & Non-Profit FDI valuable but inadequate:

Foreign direct investment into developing China’s social solutions is valuable, but a blunt tool for a complex and highly nuanced field. A local community knows best and is the first to recognize what are the most pressing social issues for that community. For money coming from outside sources, funding requirements and measurements of success may not be aligned with what is optimal and beneficial for the local community. Also, foreign funding is precarious because it is dependent on external factors such as the fluctuating enthusiasm of the foreign funding community. This risk is compounded if the projects are time-sensitive. Funding is always most aligned, most precise and has greatest potential coming from the domestic community.

With these philanthropic methods falling short, I believe the time and the environment is right for another kind of model, the For-Profit Social Enterprise.

The Case for China’s For-Profit Social Enterprise:

Social enterprises and social entrepreneurs are still buzzwords and novel concepts in most markets. But there is a clear fit and synergy for this model in China’s present context:

1) An up-and-coming generation of young, energetic, socially conscious workers/participants who have the heart for, and the time to, be involved in a socially conscious endeavour.

2) The lack of funding options from traditional philanthropic models: Individual wealth estates and corporate philanthropy

3) The need for locally-sensitive, locally-active, and locally-innovative solutions that only a private, local enterprise can offer.

4) The ability for Chinese pragmatism to shine yet again: The ability to accept a for-profit solution to social problems. Organizations can build a profit center that powers a non-for-profit objective.

Isaac Mao, a prominent China blogger and a critical voice on China’s inter-nets wrote a popular and widely re-posted article earlier this year entitled ‘Sharism(read the essay here), espousing that an open-source mindset established in a community will bring greater benefits than the protection of private information and property. Isaac posits that Sharism should be primed and applied to multiple industries to disruptively create greater value. People are buying into this ‘Sharism’ mindset, and courageous businesses can do it as well. Companies need to have faith: Investing in the community is profitable in the long-term for the business. A sharing business is an integral component and catalyst of a sharing ecosystem, an ecosystem that will eventually share back with that business.

Being socially-minded is not just profitable, but it is an emerging paradigm that may sooner or later not just be a luxury, but a necessity: each subsequent generation entering the workforce, even in China, yearns for visionary companies, companies with a larger purpose. Speaking specifically to the rising need of Chinese Youth, this new generation is seeking to go beyond monetary profit: they seek the pursuit of Truth. As Chinese youth continue to evolve in their individualities, they are looking for companies, organizations, and work environments that can support, add, and inspire their continued identity development. Visionary companies that care about more than the profit motive are built to deliver on this need.

Being a for-profit business on a social endeavour also enables two critical factors required for the China context:

1) For-profits have the benefit of trial & error. Responsible for their own money, businesses can define their own future. NGOs cannot, because they are answerable to their donors, and were sold on one original objective. They have no room to pivot. But ‘pivoting’ is exactly what is needed in a social condition like China’s, that continues to change, evolve and develop new or adapted social issues. For-profit social enterprises have the ability to adapt with the problem.

2) For-profits have the viability appropriate for a staunch pragmatic nation. While young people want to take part in social issues, they do not have the social or economic luxury to pursue such altruistic goals – often the social risks for them and their families are too great. If a for-profit company could offer them a tangible, sustainable option both financially and ideologically, you would see young people flock to that kind of organization. A for-profit social enterprise can do just that.

———-

In complete disclosure, the research and consulting company that I help lead, China Youthology, is pursuing exactly this course. As a For-Profit Social Enterprise, we’ve outlined our company spirit and values by placing our priorities and measures of success on social impact. We’ve aligned our for-profit business lines with Sharism for the community through a social platform that we’ve canonized as Open Youthology.

Our young, post-80’s and almost post 90’s staff have always loved our company’s DNA of self-discovery through cultural research. But they are even more empowered and captivated with our core purpose and group mission of social impact. As tweeted by one of our staff on China’s version of Twitter, Sina Weibo a few weeks ago:

“@SummerXia?Developing some anti-commercial emotion inside of me…only excited when in that part of OPEN YOUTHOLOGY and providing value to as many people as possible… Unhealthy? Shall I do something about this emerging feeling?”

Indeed, she’ll do something. She and her colleagues have gone above and beyond and will continue to do so, because they believe in what we are all about. The truth is, it is what they are all about.

Philanthropy in China today won’t come from the super-rich and follow the classic model that we’ve seen promoted by Bill Gates and Warren Buffett. The one model with real potential for substantial social impact and viable for today’s China context is the For-Profit Social Enterprise.


What the Media won’t to tell you about China’s Youth.

Posted: August 23rd, 2010 | Author: | Filed under: Kev's Thoughts On... | Tags: , , , , , , , , , | 3 Comments »

As China continues its emergence on the world stage and gains evermore influence and power, more and more interest is being cast upon today’s China youth – a segment of the population that controls a growing portion of China’s domestic economy and will in the coming years control China’s industrial and economic agendas.

With such importance placed on the youth, the media, both international and domestic, are trying their best to help us understand who these people really are, and what we can expect from them. However in the media’s never-ending quest for the perfect sound-bite/headline that will turn heads and provoke public reaction, they skew the portrayal of China’s youth and miss the point.

Often media will begin an article by saying “China has over 400 million young people. These youth are…” and start using adjectives or an individual’s story to describe this whole group. Next time you’re reading any article on China youth, try to remember some of these points so you don’t get misled:

1) Is the media talking about China’s wealthy youth or the rest?

If you read an article that describes young Chinese’s consumption power, or the fact that these youth have ‘grown up only knowing prosperity’, remember that like in every country, the Have versus Have-Nots is a reality. In China this fact is hyper inflated. Do Chinese youth drive expensive Italian sports cars and buy luxury brands? Yes. Does this segment of the Chinese youth make up a very tiny small percentage of the whole group? Yes. While the large majority of young Chinese have indeed experienced prosperity for much of their lives, the term ‘prosperity’ takes on a different meaning for different Chinese youth. To some prosperity means having more than one set of clothing. To others it means owning their first digital mobile phone. To others it means buying a separate apartment for their dog. When the media is telling you Chinese youth have consumption power, put it into context and think of an upside-down funnel. Which part of the funnel are they talking about? Because it certainly isn’t the whole thing.

2) Is the media talking about big city youth or small city youth? Edgy youth or mainstream youth?

Media will find fantastic stories of some really inspirational Chinese youth who have a unique view of life, sense of style, and sub-culture group they belong to. While they are authentic Chinese young people with authentic stories, again we need to put it in the correct context. Big cities, like all big cities in the world, offer more opportunities for subcultures to develop. Access to disparate international and domestic music, movies, literature, and ideas are greater in big cities than in small. Entrepreneurs and grass-roots initiatives have greater acceptance and greater support in big cities versus small. So it is no surprise that we find greater variety and most pioneering youth in bigger cities. Again, do they make up a very small percentage of the total China youth population? Yes. Edgy youth have a similar, but uncorrelated upside funnel to China youth’s consumption power distribution. Which part of this funnel is the media showing you?

3) The majority of Chinese youth are happy – or at least content

Media focus a lot on stories of angst or stories that cause panic or shock. They do this primarily because that””s what mostly constitutes ‘news’. Unfortunately that means we get stories about Chinese youth that seek to illustrate how different they are from the rest of us, or make us very concerned about them. The fact is, the large majority of Chinese youth are happy, or at least content. There is no burning desire or excruciating pain being experienced. When we interact with youth, when our researchers and ethnographers do deep-dive immersions, time and again we find stories and personal accounts of young people who can’t come up with too many complaints. Fairly irregardless of their economic status or whether they are living in a 1st or 4th tier city, we find many youth who are patiently living in the roles and positions allotted to them. Many accept and do not question their current path in life; many, while indulging in some misdemeanors or escapes, are not driven by negative impulses. Certainly the caveat to this lack of discontentment is that through our research we also find there is a lack of excitement as well. But, for the media, a majority that is neither discontent nor excited is not compelling enough to be reported.

4) The majority of Chinese youth are not rebellious

Those youth stories that the media does find about discontentment or frustration is often implied to as instigation for rebelliousness. Not true. Most Chinese youth, while having many frustrations (but still content), do not naturally resolve to rebel when engaging their frustrations. Although having different values than their parents, teachers, or older generation, this does not mean Chinese youth will rebel. This has to do in part with contemporary Chinese culture and the social + societal construct that youth find themselves. Responsibility to the family unit still holds extreme importance to Chinese youth. It is an intrinsic part of their character. The acts that result from discontentment or frustration are not in reaction to the family, the parents or to authority. It is an engagement and exploration of a different value system. Rebellion and exercising a different value system are very separate and distinct things. The actions of Chinese youth are the latter. Media, especially international media, likes to characterize Chinese youth as rebellious because this is the context, culture and experience of those foreign nations. And when the viewers/readers of the story are primarily from that foreign culture, it is much easier to write to something they can understand and relate to. However this minute but important discrepancy has already been seeded.

5) Chinese youth do not want rebellion

Another instance of foreign context and understanding being superimposed onto the Chinese youth experience, media will sometimes talk or wonder about this generation having the potential for open rebellion. In the years I’ve been in China, in the numerous projects our teams have conducted, I have not once met a Chinese youth who has mentioned, let alone contemplated mass rebellion. Then again, I’ve never personally met any Chinese citizen who has entertained the idea. While rebellions have been in the legacies and histories of almost all nations, including China, it is not in the thought processes of today’s Chinese, and especially the youth.

6) There is no longer ‘mass’ Chinese youth

Part of the reason why mass rebellion is not an option for Chinese youth, is because ‘mass’ youth is no longer valid. The concept of banding together as one glorious generation or group of people to stand up and make one common statement does not hold sway with this generation of young people. It is also not attractive to this group if one leader were to rise up and call for everyone’s support. Chinese youth today are experiencing a rapidly evolving sense of individuality and identity. We do see multitudes of youth taking part in causes, such as leaving school and work to volunteer in aid of the 2008 Sichuan earthquake victims, or volunteering to support the 2008 Beijing Olympics or the 2010 Shanghai Expo. But it is not for a common cause or a group statement that they do these things. When asked why they volunteered, young people commonly responded it was first and foremost because they personally felt they could learn and explore something new in themselves from the experience. The fact that there are so many young people following their own self-motivated direction speaks to the strength and reality of this generation’s evolving individuality. The subcultures that have emerged, the creative and edgy youth that share their unique stories, the different ways which youth are engaging their frustrations; these are all examples of individual youth wrestling and trying to resolve who they are in their world. Media won’t tell you about this, because it doesn’t make for compelling news. Media will use one individual youth’s story to draw out one thematic experience that they use to represent the entire China Youth generation. It makes for good sensation, but couldn’t be farther from the truth.


Is this China’s Woodstock?

Posted: June 21st, 2010 | Author: | Filed under: Kev's Thoughts On... | Tags: , , , , , | 4 Comments »

The beginning of May each year marks the start of the festival season in Beijing. During the 3-day May holiday in China, Beijing is host to a number of cultural events, from live music, theatre, and visual arts.

This past May holiday I spent three straight days at Modern Sky’s Strawberry Music Festival. Modern Sky is one of China’s most successful and pioneering independent music labels. They have, over the course of over 10 years, built a portfolio of some of the most influential, original and popular Chinese indie bands. The Strawberry Festival is an assembly of many of Modern Sky’s own bands, plus a number of international music acts. This was the second year they’ve done the Strawberry Festival, billed as a ‘Folksy’ music and art festival. And indeed it was.

I attended with my partners at China Youthology. As we took in the entire experience, we made many observations. Here are some snippets of what we discussed:

1. The music scene is alive and kicking, and in a big way that only China can do. The most obvious observation is the sheer number of people attending these festivals. While it does not compare to the reportedly 500,000 people that showed up to Woodstock, the Strawberry Fest had about 20,000 to 30,000 attendees each day for 3 days. Some people may scoff at Strawberry Fest’s paltry numbers when compared to Woodstock, but here’s an extra detail: Strawberry Fest was only one of three music festivals going on in Beijing simultaneously during that long weekend. Each of the other music festivals MIDI, Ditan also had thousands of attendees, and in MIDI’s case, tens of thousands of attendees like Strawberry Fest. For a country where to many foreigners the only image of mass public gathering also involves tanks to suppress, having three outdoor festivals with tens of thousands of participants is no small feat.

2. Strawberry v. MIDI: Shifting cultural tastes. MIDI is a hardcore punk rock and metal music festival. It has been the premier music festival in Beijing for over ten years. Strawberry, an Indie-pop, music and art festival, emerged just two years ago and has already equaled if not surpassed MIDI in numbers. What does this say about the changing tastes of Chinese youth? Or perhaps more insightfully, are we seeing a new wave of young people discovering the music of their generation, in juxtaposition to the music of the youth that preceded them? Even while at the music festivals, we met many patrons who would swear by one of these festivals while shunning the other. It is clear that Indie-Pop, with the free-flowing hippy fashions, funky retro-electro-rock influences, and geeky, cute, graphic designs are on the rise, while Angst-Rockers, black shirts, and grunge may have an uncertain future. Only successive music festivals will reveal.

3. Rising quality: It was immensely impressive the quality displayed by some of the bands. Aside from the fact that a number of the bands are multi-ethnic, these contemporary Chinese indie bands are showing an intense exposure to world influences. They are incorporating innovative elements that define the best of world-class musicians. These bands are also exhibiting a refinement in sound quality and production that only comes from long experience touring overseas. Indeed, many of these groups have toured Europe, North America and other important musical melting pots, multiple times. They come back with best-in-class musical standards. One aspect that surprised me the most was the large majority of original songs by Chinese indie bands that are all written and performed in English. In contemplating why this is, I could think of two reasons: 1) The bands are so highly influenced by international music standards that they are creating, processing original music in the same language, 2) The bands are strategic-enough to expect their music has the ability to cross over to other international markets, thus making English songs would improve the probability of success exponentially. I think the reason is a combination of both, but I’d like to believe it is the former that drives this phenomenon.

4. Performance-ship: Another outcome of Chinese bands touring abroad is that their performances become more sophisticated. Understanding the power of audience interaction, the best bands are intimately conscious of their performance. They understand their performance experience is intricately related to their brand. From costumes to props to audience participation, Chinese bands are creating interactive experiences with their patrons never seen before in China.

5. Commercialization: Strawberry Festival was also impressive because of the strides it took in commercialization. While there wasn’t any new commercial inventions, the pervasiveness of commercialization within the festival was impressive. From Volkswagen cars enjoying product placement on the performance stages, to a fully-branded vodka bar beside the electronica stage, sponsorship and product placements were fully optimized at every opportunity. What is more though, it was not overbearing or intrusive to the experience, in fact, all the attendees accepted the brand presence and took it as part of the identity of Strawberry Fest. What does this say about the Chinese and their acceptance and embracing of brands as an integral part of the cultural experience? I think many marketers and media specialists are thinking actively about this question today.

6. Creating shared collective memories: Perhaps the most important take-away from these cultural festivals, in their size, experience and novelty for this young generation, is that they are creative key milestones of shared collective memories. Sooner or later some of the youth that attended these events will realize, recognize, or characterize some aspect of the experience and it will germinate into an artifact of this generation’s identity. What this artifact will stand for, what it will mean for the constituents at ascribe to this generation, and what it signifies for everyone else, is the job of researchers and anthropologists. Much like Woodstock, Beatle-Mania, or Elvis on national TV, it is these events and experiences that are happening right now, molding the mindsets and perspectives of China’s youth.

7. Cultural trends, nuisances, icons will start here: If these festivals continue, you’ll see that these events will be the genesis for new trends, icons and generational habits. The Strawberry Festival invites and encourages an open market where independent shop owners, artists, and aspiring entrepreneurs can set up shop to sell and exhibit their wares. This year we already saw white ‘Jabawaki’ style face mask become virally popular. I can foresee that as these festivals and markets grow bigger, the markets will become just as important if not perhaps more, than the musical performances. Certainly for trend watchers, the markets may be where the real insights will be.

Of course, this is all dependant on the government’s good graces in allowing these mass congregation of young people continue to happen. It is always a risky endeavour, and China’s track record with these kinds of events has been haphazard to say the least.

So is Strawberry Festival China’s own Woodstock. It could be. Or perhaps more accurately the whole consortium of festivals together, their compounded effect on this generation, could be the beginning of an experience that helps anchor a generation’s identity and provides a place for new generational artifacts to emerge. If you haven’t yet been to one of China’s music festivals, maybe you should thinking about coming next time. If you missed America’s Woodstock, make sure you don’t miss China’s.

Update: Archie from China Music Radar wrote a wonderful post on the music festivals as well, draw different conclusions. I encourage you to read his post. I understand there are a lot of people with differing points of view, especially on such a passionate subject such as music. I say, Good! Lets keep discussing and debating!