CKGSB Dean Xiang Bing and Professor Li Haitao shed light on common prosperity and family business succession at the impactful hybrid Forum.
[December 13, 2021] On December 13, CKGSB Founding Dean and Professor of China Business and Globalization, Xiang Bing, spoke at the 5th Business and Philanthropy Forum, organized by Alliance for Good in Singapore and online. Speaking virtually, Dean Xiang shed light on the ways through which we can achieve common prosperity to over 700 philanthropic family members, impact investors, corporate venture capitals, foundations, trusts, and policy makers in the audience, who are actively exploring synergies across wealth, investment, philanthropy, and purpose.
At this exclusive hybrid event, to which CKGSB served as a Knowledge Partner, Dean Xiang joined a Fireside Chat with the Lee Kuan Yew School of Public Policy Dean Danny Quah to explore how we can advance society through common prosperity. The lively dialogue explored what we can do to improve the state of the world, so that the weak and vulnerable are better off and, in doing so, we can lift ourselves, too.
Dean Xiang first explained where the issue with common prosperity comes from. “Since 1979,” he said, “Margaret Thatcher’s notion of neoliberalism has produced unprecedented wealth, prosperity and economic development. President Reagan was a supporter of Thatcher’s concept of neoliberalism and followed with a series of deregulations beginning in 1981, such as in airlines, financial services, telecoms and other sectors. Neoliberalism has also shaped China’s reform and opening up in certain ways. In fact, China and the US may have embraced neoliberalism more fully than other economies, and both countries are confronted with serious income gaps as reflected by their measures of the Gini Coefficient.”
Dean Xiang pointed particularly to the income and wealth divide resulting from neoliberalism and the imbalance in development models (new liberalism in China and the US on one hand, and social democracy as exemplified by Western European countries on the other hand) —as being the root causes for some of the most pressing problems that we see today, such as populism, nationalism and the push-back against globalization. “If we don’t address the income and wealth gap within the major economies (like Brazil, China, India and the US) and the imbalance of development models at the global level,” he urged, “it will be very difficult for many liberal democracies to ‘sell’ the idea of globalization in domestic politics.”
Referring to successful examples of common prosperity worldwide, such as in Scandinavian countries, Switzerland, France and Germany, Dean Xiang pointed to two notable common elements: 1) the rule of law and well-established, mature economies that lay the foundation for a sufficiently high level of GDP per capita; and 2) proper management of the income and wealth inequality issue through taxation and advanced comprehensive social security systems. In this regard, the US may not be the best example of achieving common prosperity, despite that the country boats an advanced market economy, the most innovative companies and unmatched philanthropic giving.
For the purpose of debate, Dean Quah questioned whether neoliberalism that led to globalization is necessarily bad. “Globalization simply means that anything made anywhere on our planet by anyone is now available to everyone everywhere else on Earth. We get to enjoy the fruits of labor and creativity from our fellow human beings. Globalization and neoliberalism have been part of the landscape that have allowed hundreds of millions of people in Asia to be lifted out of poverty. Neoliberalism and the workings of the globalized economy are what allowed China to boost its manufacturing sector, export to the rest of the world and, in doing that, lift over 650 million Chinese out of the absolute depths of extreme poverty.” While Dean Quah acknowledged that the world is now viewing inequality with suspicion and even blaming it for worsening the global climate crisis, he questioned: “What if inequality has unfairly become the go-to figure that we blame for all of our challenges, when it actually may not be? What if many of the ills that we identify in the world are actually the results not of the disparity between the rich and poor but of the fact that the poor do not have enough resources? Perhaps humanity sees of the world as a zero sum game, and the only way we can image the poor getting lifted is by making the rich less rich, when in fact, we may need to transform our perception and think of the world as a positive sum game, where what we do by helping those around us we also lift ourselves.”
Dean Xiang agreed in part, explaining that, unfortunately, in Western societies, globalization and China’s rise have become scapegoats for many of the world’s problems. Hence, he is a strong supporter of a reformed and modified version of neoliberalism and globalization which can promote inclusive growth within major economies and address the issue of imbalance in development models at the global level.
“In China, we need to make a series of adjustments in several fronts,” said Dean Xiang. “Firstly, we need to strengthen the social purpose of enterprises. Although, it is increasingly more common for large companies to outline their social purposes convincingly in order to survive and thrive. Secondly, I see some of the potential limitations of our past ways of dealing with social issues, in terms of income inequality and diminishing social mobility.” Dean Xiang traced the evolution of CSR from the 1950s to the more recently talked-about ESG and SDGs. “While companies, governments and international organizations have made a great deal of efforts,” he explained, “when we look at the actual performance, we do not necessarily see significant progress. Perhaps we need to bring all of the parties together to address these issues.” He offered a concrete example from CKGSB since 5 years ago, when the School approached the Ji’an local government in Jiangxi province—one of the most improvised areas of China—to conduct training for 25 entrepreneurs nominated by the government in the first intake in 2017. CKGSB also offered managerial training and one-on-one mentoring program for participants by the School’s alumni on addressing managerial issues. This program, which has had five intakes so far, played an important role in contributing to the alleviation of poverty across 5 counties in Ji’an, proving to be a great example of how academia, local businesses, local and central governments, and alumni organizations can work together to address poverty alleviation through social innovation. “In the future, it is important to go beyond CSR and SDGs and call for social innovation that convenes all parties together to affectively address society’s issues. If more economies can do so, the ideas of neoliberalism and globalization will be much more acceptable,” explained Dean Xiang.
Dean Quah, who applauded this example from CKGSB, drew on the role that education plays in narrowing inequality, particularly in the Asian narrative. “Asia makes up 60% of the world’s population, but generates 50% of the world’s income,” said Dean Quah. “Moreover, only 1/6th of the world’s impact giving happens in Asia.” He went on to explain that although Asians are lagging behind in philanthropic giving, there are wonderful success stories from Asia, which are built on the idea of social mobility and education, rather than focusing on the current inequality, that make them more impactful and transformative. “While in China, the inequality between the rich and poor has increased 20 times in the last three decades,” explained Dean Quah, “the incomes of the bottom 20% has also increased 6 times, which is a faster rate of increase than the rate of increase of the richest 10% in the West.” Dean Quah explained how, at the Lee Kuan Yew School of Public Policy, the philanthropic giving received from Singaporeans and East Asians have allowed the School to offer scholarships and extend its service across the region. “Our school has a simple mission to inspire leadership and transformative change, help improve the wellbeing of people, not only where we are but of the people around us, and to transform Asia,” said Dean Quah. “Prof Xiang’s story of CKGSB’s social innovation efforts in Ji’an is a wonderful example of how we can work together to do so.”
Following the debate, Dean Xiang also delivered a keynote speech over a private dinner on December 14th at the 5th Business and Philanthropy Forum, right after Mr. Masagos Zulkifli, Minister for Social and Family Development and Second Minister for Health of Singapore. In his remarks, Dean Xiang emphasized the serious income gaps in China and the US, despite the advanced market economy and philanthropic giving in the US. “Having served for seven years as a board member for United Way Worldwide, the largest charitable organization in the world,” said Dean Xiang, “I have had the privilege to witness the generosity of the American people.” In fact, giving in the US in 2020 made up 2.1% of the country’s GDP, meanwhile, in China this figure is at 0.15%. However, these are not sufficient to address the challenges preventing common prosperity.
Dean Xiang urged to go beyond philanthropy, CSR and ESG, and called for social innovation. He defines social innovation as the collaboration among corporations, governments, social enterprises, civil society and international organizations to address income and wealth inequality, social mobility and sustainability. Social innovation is embedded in CKGSB’s origins and mission to cultivate transformative business leaders with a global vision, social responsibility, innovative mindset, and ability to lead with empathy and compassion. In 2017, CKGSB began offering social innovation as an elective module for degree students, which then became a mandatory program from 2018 onwards. In his speech Dean Xiang expressed his wish of replicating CKGSB’s experiments with social innovation to other places in China and countries in Africa and ASEAN.
Yet, Dean Xiang stressed that social innovation is also insufficient to address pertinent issues like social mobility, for which he underlined the importance of economic disruption. Looking back at China’s growth in the past two decades, Dean Xiang explained that the country has generated more large-scale companies as measured by global Fortune 500 lists than other countries. In 2001, China only had 11 companies making the list, while in 2021 China contributed 135 companies, representing the largest number globally. According to Forbes, in 2001, China had 1 billionaire, while in 2021, China had 745 billionaires, exceeding that of the US. In terms of the third data set Dean Xiang offered, that of unicorn companies, the US still dominates with about 50% of the unicorn companies globally, while China represents between 20-25%. “If you look at these three data sets together,” said Dean Xiang, “you may consider China the most disruptive economy on Earth for the past 20-30 years, which is one of the reasons why China has done so well in economic performance. To generate economic disruptions—especially unicorn and unicorn-companies-to-be—it is essential to give young people a better chance of moving up and foster social mobility.” In 2015, CKGSB partnered with several top companies in China and globally, including Tencent, Baidu, JD.com, Microsoft, Softbank, ByteDance and Alibaba, to set up an ecosystem that cultivates next-generation economic disruptions with an emphasis on social innovation. To date, 39 unicorn companies listed by CB Insights are founded or run by CKGSB alumni. “Last year, we worked with Churchill College of Cambridge University and Institute for Manufacturing to replicate this program in Europe,” explained Dean Xiang, “Next year, we will work with UNESCO to apply this program in Africa and help the continent to generate more unicorn and unicorn-companies-to-be.”
Dean Xiang ended his keynote speech with his hope that “through the two pillars of social innovation and economic disruption, we can help build an ecosystem that can give better chances to young people to advance, so that a new generation of business leaders can be more socially-minded, socially-responsible and socially-innovative.”
On the third day of the 5th Business and Philanthropy Forum, December 15, CKGSB’s Associate Dean and Dean’s Distinguished Chair Professor of Finance, Li Haitao, delivered a Master Class on ‘Family Business Succession and Common Prosperity in China.’ Drawing on CKGSB’s exploration and experience in fostering entrepreneurs and helping family business succession in China, Professor Li’s Master Class guided next-generation leaders, especially family successors, to grasp opportunities and cope with the challenges of today’s world, understand policy implications, hone leadership skills and embrace a long-term vision. “As businesses develop, succession will become one of the biggest concerns of Chinese entrepreneurs.” said Professor Li Haitao at the Master Class based on his on-the-ground research and concrete examples of family businesses in China and abroad. Family businesses of today and tomorrow will need to figure out their solutions to issues that might hinder their long-term development. To weather through policy redirection and new business trends, Professor Li Haitao believes that it is of great importance for family businesses to embrace a long-term and altruistic attitude in order to sustain. His Master Class was positively received by 100+ family business successors and family office members from Southeast Asia and China.
The 5th Business and Philanthropy Forum also offered insights from Camilla Rockefeller and Lukas Haynes, CEO of David Rockefeller Fund, who shared how philanthropy can better engage business leaders, build family resiliency and cohesion for multi-generational succession. Howard Warren Buffett, adjunct Associate Professor at Columbia University, and William B. Eimicke, Professor of Columbia University School of International and Public Affairs (SIPA), spoke on social value investing, while two of the most prominent ESG and Impact fund managers John Goldstein, Head of Sustainable Financial Group(SFC) at Goldman Sachs, and Eric M. Rice, Head of Impact Investing of BlackRock, shed light on how impact investment could lead to high impact and high returns. The iconic global nonprofit leader and social entrepreneur, Wendy Kopp, CEO and Co-Founder of Teach for All, also spoke about her inspirational journey of achieving global impact.