Tech Tycoons Embrace Philanthropy as China Pushes for “Common Prosperity”
On August 24, Pinduoduo, China’s largest online consumer retailer, pledged to donate all of its net profit since going public and future earnings to support the country’s farmers and agriculture area until it’s given away a total of 10 billion yuan (about $1.542 billion).
“Agriculture has long been at the heart of Pinduoduo’s corporate mission and strategy,” said Chen Lei, the Chief Executive Officer. “We announced today that this is a way to strengthen our support for agricultural modernization and rural revitalization,” he said.
“Investment in agriculture pays off for everyone, because agriculture is the link between food security and quality, public health and environmental sustainability. We want to bring even more farmers on board and work with them to improve their lives and livelihood,” Chen Lei added.
Pinduoduo’s announcement was welcomed by investors, with its shares soaring 22% in U.S. trading. The move demonstrates the company’s willingness to be socially responsible, a concept that is linked to what the Chinese government has been repeatedly mentioning this year, that is, developing a “common prosperity” among people.
The word, first introduced in party documents by Chairman Mao Zedong, has now become a buzzword in China. According to Bloomberg, “common prosperity” has appeared 65 times in Chinese President Xi Jinping’s speeches or meetings this year. On August 17, Xi addressed the tenth meeting of the Central Committee for Financial and Economic Affairs, emphasizing the effort to support moderate wealth for all, namely a “common prosperity.” The meeting underlined efforts to increase the earnings for the low-income groups, adjust excessive incomes, and prohibit illicit income to promote social fairness and justice.
The idea has been applauded by most Chinese but has spooked the prosperous, especially the tech billionaires as they are at the brunt of the looming adjustment. Many western analysts believed it was this very concept that was behind the latest regulatory crackdown on tech companies. Instead of viewing the concept as a warning, some brilliant tech giants see it as the silver bullet amid a far-reaching regulatory attack on the sector. Even still, they have heeded the country’s call of common prosperity by pledging to give back more to society.
Although China’s technology giants have had hundreds of billions of dollars wiped out from their share values since their February peaks, they are ramping up voluntary donations. After the August 17 meeting, Tencent, a Shenzhen-based gaming and social media giant, plowed $7.7 billion into its “common prosperity program,” a social initiative that provides aids in areas such as education, building out medical infrastructure, and helping low-income communities. Four months before the announcement, the company had already launched a “sustainable social values” program, which included a pledge of 50 billion yuan for causes such as healthcare, rural revitalization, and scientific education.
“This new strategy of Tencent is a proactive answer to our nation’s strategy,” the company wrote in its official Wechat account.
Carrying out a high-profile philanthropic gesture has become an open secret in the tech sector. Previously, Xiaomi Corp. co-founder Lei Jun donated $2.2 billion in the smartphone maker’s shares to charity which put it among other Chinese Internet moguls who were giving back to society amid increased scrutiny on the industry. Zhang Yiming, the founder of Bytedance, donated 500 million yuan of his wealth to an education fund in his hometown. In the same month, billionaire Wang Xing, the founder of China’s Meituan, has donated shares in the food-delivery giant worth more than $2 billion to his philanthropic foundation.
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“More and more Chinese tech giants are embracing philanthropy and are shouldering their social responsibility as the nation is preparing to combat economic inequality by redistributing private wealth,” a source in the tech industry told Pandaily.