Alibaba Foundation, the charity backed by the world’s largest e-commerce group, has updated its philanthropic strategy to align with the Chinese government’s call for “common prosperity” and help narrow the nation’s wealth gap.
The 10-year-old foundation, backed by this newspaper’s owner Alibaba Group Holding, will focus on promoting the goal of equality by helping rural revitalisation and environmental protection, according to a statement published on Saturday, a day after Alibaba set aside 100 billion yuan (US$15.5 billion), the biggest single corporate pledge, towards promoting “common prosperity” in China.
“Alibaba is a beneficiary of the strong social and economic progress in China over the past 22 years,” Alibaba’s chairman and chief executive Daniel Zhang said in a statement. “We firmly believe that if society is doing well and the economy is doing well, then Alibaba will do well. We are eager to do our part to support the realisation of common prosperity through high-quality development.”
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The move follows the call by Chinese President Xi Jinping for companies to “adjust” their high income levels to prod wealthy individuals and companies to “give back to society”. The drive for profitability and service to investors’ interests had become increasingly dangerous because these can become misaligned with the government’s priority, said Feng Chucheng, a partner at the research firm Plenum, in Beijing.
“The recent actions by many of the tech firms including Alibaba to contribute to “common prosperity” are clearly hedges against potential punitive actions taken by the government” against the unfettered action of capitalist interests, Feng said.
The Alibaba Foundation was established with 0.3 per cent of Alibaba’s revenue. The company’s common prosperity pledge, will be disbursed before 2025 to promote investments in technology, support small businesses, foster development in rural areas, help small businesses expand overseas and improve the welfare among gig-economy workers, including delivery men and drivers.
Alibaba will set up a permanent unit to roll out the programmes. To support small businesses, the funds will be used to lower daily operating expenses and provide subsidies.
In addition, the funds will be used to narrow the quality-of-life gap between urban and rural residents and to support grass roots health care services.
The contribution also includes a 20-billion yuan fund earmarked for a common prosperity “demonstration zone”, which the report did not define.
Tencent Holdings, the world’s largest games publisher and Asia’s most valuable company by market capitalisation, earmarked US$7.7 billion last month following a similar pledge in March towards its common prosperity fund. The fund will be used to help lift low-income groups, improve health care coverage, contribute to rural economic development and support grass roots education.
Chen Lei, the chairman and chief executive of e-commerce giant Pinduoduo, said during his company’s second-quarter earnings call that the firm launched a 10 billion yuan agriculture initiative to help rural residents whose average income was a third that of urban residents.
Wang Xing, the founder of food delivery giant Meituan who has a net worth of US$20 billion, said during the company’s second-quarter earnings call on Monday that common prosperity is “built into the genes of Meituan”. The evidence, Wang explained, is in the company’s name, which means “better together” in Chinese.
Alibaba, was the first technology giant to receive an antitrust investigation from Beijing and was fined a record 18.2 billion yuan in April for breaching antitrust regulations.
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