Solving The Puzzle Of Chinese Charity Champion Chen Guangbiao
(China Business) Solving The Puzzle Of Chinese Chinese Champion Chen Guangbiao. April 23, 2010.
On April 21, 2011, the temperature plunged in Nanjing (Jiangsu province). The entire city became enveloped by a thick fog.
Two days ago, Forbes and Hu Run announced their lists of top charity givers in China. Chen Guangbiao, who has been called the "Charity Champion of China," made the lists. Once again, this stellar celebrity has become the talk of the town.
The Nanjing Huangpu Disaster Prevention/Relief Training Center on Victory Road, Jiangning District, Nanjing City was especially desolate. This is the headquarters of the Jiangxu Huangpu Renewable Resources Limited Company that Chen Guangbiao runs. On this day, our reporter saw that this 6-storey building was peppered with red flags on the top and the courtyard had personal promotional billboards for Chen Guangbiao everywhere.
The Hu Run Charity Committee showed that Chen Guangbiao had donated 220 million yuan in 2010 and that gave him the eighth-ranked position on their chart. The Forbes charity list data showed that Chen gave 71.71 million yuan at 22nd place. Chen Guangbiao had achieved fame because in 2008 and 2010, he was ranked number one on the charity list compiled by the Civil Affairs Bureau/China Social Work Association. That was how he became the "Charity Champion" of China.
But the investigation of our reporter over many days showed that there were questions behind the high-profiled charity work of Chen Guangbiao. Over the past several years, many of his promised donations were exaggerated and his business (Jiangsu Huangpu) is in trouble.
Tiangang Lake town, Sihong county, Suqian city, Jiangsu province is known as an "impoverished" county. This was where Cheng Guangbiao was born on July 19, 1968.
Many years have passed since. The town is still impoverished. After becoming rich, Chen Guangbiao contributed two major projects to his hometown. One of them was a senior citizen center that occupied more than 30 mu of land. The other was a large-scale agricultural trade market which occupied more than 20 mu of land. According to Chen Guangbiao himself, these two projects cost as much as 26 million yuan, and they were one reason why he became the charity champion.
On April 19, our reporter went to the agricultural market on Wangji Street, Tiangang Lake Town. It was around noon, but there were very few people around. A stall operator told our reporter that the market was only open in the morning. On both sides of the market were commercial buildings that totaled 2,520 square meters. The business renters pay between 5,000 to 6,000 yuan per year. According to many of these businesses, the rent is personally delivered to the parents of Chen Guangbiao. This was how Chen Guangbiao supports his parents financially.
Across from the agricultural market is the senior citizen center that Chen Guangbiao donated. The building was a fake ancient building. There was a "Guangcai Kindergarten" inside. There were also several store fronts. When our reporter got there, the senior citizen center and the kindergarten were both shuttered. A village resdient said that the center was rarely opened during the day. In the evening, people held dancing sessions in front of the building. The kindergarten was set up by the younger brother of Chen Guangbiao, Chen Jingbiao, who is a vice-president of the Huangpu Company. The kindergarten is presently still in the planning phase.
Our reporter inquired about the parents of Chen Guangbiao. A citizen pointed to an ancient house by the senior citizen center. He said that the senior citizen center was a back garden for the Chen family house. At this time, our reporter encountered the father of Chen Guangbiao. He looked spritely, but he said that he knew nothing about Chen Guangbiao's charitable activities: "He is usually very busy down in Nanjing. We rarely see each other."
According to information obtained by our reporter, the owner of the agricultural market and the senior citizen center is Chen Jingbiao. According to the Tiangang Lake town government, the Chen family owns these two places. In the view of one public interest foundation, "All public interest projects are non-profit in nature. It appears that the Chen family own these two projects and they collect rent payments. In this sense, these two projects are nominally 'donations' but they are actually investments."
After 2007, Chen Guangbiao became famous as the charity champion. Early this year, he announced his achievements publicly with more than 300 million yuan in donations during 2010. But our reporter found that many of these donations were vague and some of the recipients did not even exist.
Chen Guangbiao said that he had donated 1 million yuan on January 13, 2010 through the China Human Rights Foundation for the Haiti earthquake. Our reporter found that there was no such entity as the China Human Rights Foundation. Our reporter checked with the China Human Rights Development Foundation but they said that they had not received any donations from Chen Guangbiao for the Haiti earthquake disaster zone.
Chen Guangbiao's "report card" showed that on Feburary 28, 2010, he went through the China Red Cross to donate 1 million yuan to the Chile earthquake disaster zone. In late April, our reporter checked with the China Red Cross website and could not find that particular donation. According to the website, one of the reasons why a donation is missing is because the money has not yet arrived.
In May 2010, Chen Guangbiao said that he donated 10 million yuan to the Jiangsu Guangcai Business Promotion Association to support education in western Jiangsu. Our reporter learned through reliable channels that the donation was returned because a charity-deductible receipt could not be issued.
On September 28, 2010, Chen Guangbiao promised to donate 1.3 million yuan to repair the Nanjing city Zhijin Mountain trail. Our reporter learned that only 500,000 yuan has been remitted in April and the construction of the trail had been completed long since.
Chen Guangbiao claimed to to have donated 8 million yuan to the China Youth Foundation. Our reporter found that the China Youth Foundation does not exist. At present, there are only the China Youth Development Foundation and the China Youth Employment/Business Development Foundation. Both foundations denied having received 8 million yuan from Chen Guangbiao during 2010.
In the two major donations to fight drought in southwestern China and to relieve earthquake in Yushu, the "report card" of Chen Guangbiao contained contributions by others being assigned to his own name.
According to the "report card," Chen Guangbiao donated 63 million yuan in materials to fight drought in southwestern China in 2010, of which 5,300 tonnes of mineral water was valued at 13 million yuna. Our reporter found out that this 5,300 tonnes of mineral water was jointly donated with Beijing Boyou Group chairman Ding Shumiao.
For the Yushu earthquake relief, the "report card" of Chen Guangbiao showed that he contributed materials worth 43 million yuan. Our reporter found out that the charitable donations did not come solely from himself or his company. Instead, he worked with Beijing Boyou Group and Ordos Yonglong Trading Company. Among the 43 million yuan, Beijing Boyou Group president Ding Shumiao contributed 10 million yuan and Ordos Yonglong Trading Company chairman Li Lin contributed more than 5 million yuan.
Even as Chen Guangbiao became famous for his charity donations, his company business also grew.
Over the past two years, Chen Guangbiao has claimed to have the largest environmentally safe demolition company in China. His Huangpu Company got major projects such as the expansion of Chang'an Avenue to receive the 60th National Day celebrations, the demolition of the old Ministry of Commerce building, the clearance of Olympics buildings afterwards, the removal of the fire-torn CCTV building, etc.
According to a person in charge of a demolition company, Chen Guangbiao has gotten business opportunities because of his fame as a charity donor. Being the charity champion of China, many local governments will give him "face." The Beijing projects are politically significant and among their many factors of consideration, the reputation of Chen as charity champion was one decisive factor.
On April 20, our reporter came to the north gate of the CCTV park. The demolition project was coming to an end. The burnt northern building was covered with steel frames and the new construction material was being installed.
Several workers wearing "Huangpu" camouflage uniforms told our reporter that the work has been completed. At the time, the few workers left were mainly packing their machines for shipping. The construction project has been going on for eight months. Several workers said that they did not know the scope of the project: "There must have been several tens of thousands of square meters in area, but only Chairman Chen knows the specifics."
Neither the Beijing City Construction Group nor the Jiangsu Huangpu Company was able to provide the details about the demolition project. An industry insider told our reporter that the area should be around 25,000 square meters.
As for the demolition fees, our reporter learned that the Jiangsu Huangpu Company is trading the "removed material" for labor cost. Previously, Chen Guangbiao said that the building would be torn down and the removed material would be worth about 20 million yuan. Our reporter was unable to obtain the specific figures from Jiangsu Huangpu.
According to a person familiar with the demolition industry, Chen Guangbiao is garnering both fame and business from his charitable activities. A handsome contribution brings him closer to local authorities. It was easier for Chen to win local projects on account of his connections and charitable activities. Chen has been able to win a number of large-scale projects because he has connections that other ordinary competitors did not have.
On September 18, 2010, the assets of the Sihong County Chemical Industrial Accompany were put on auction. The starting price was 24.5 million yuan. This project was successfully won by Jiangsu Huangpu vice-president Chen Jingbiao for 20.2 million yuan. According to an informed source, Chen Jingbiao subsequently sold the company to another company for 27 million yuan.
According to what our reporter learned, the local government interfered with this auction. The Suqian city Mousheng Auction Company told our reporter that this was not an open-market auction. The government had said so before. So even though many people were present, only Chen Jingbiao offered a bid.
According to a participant in this auction, the company which eventually bought the assets from Chen Jingbiao was actually present at the scene but did not bid. Instead, they waited for Chen Jingbiao to win his bid and then offered to buy it from him. This was a fixed auction, and it shows how influential Chen Jingbiao is with the local government.
So far, the largest donation by Chen Guangbiao has been to the Nanjing Huangpu Disaster Prevention/Relief Center in 2009 to the tune of 130 million yuan. This was one of the major reasons why Chen was rated as the "charity champion" of 2010. According to Chen Guangbiao, he donated several tens of millions more for infrastructure after the center was completed.
After the center was completed, the Jiangsu Huangpu Company moved from the Jinying BUilding at Number 89, Hanzhong Road, Nanjing City 23rd floor C to here. According to a reporter who interviewed Chen Guangbiao previously, Chen's office is located here. "It is big and luxurious."
Our reporter saw that the Jiangsu Huangpu Company did not have a sign out at the center. The official website did not list a precise address. According to what our reporter found out, the land is owned by the Jiangsu Electric Power Company. The land was temporarily assigned to Jiangsu Huangpu Company on the basis of public interest. According to information from a person within the Nanjing State Land Resources Bureau, Chen Guangbiao has recently asked the bureau about an expeditious land title transfer.
According to a Nanjing real estate insider, land prices have been soaring crazily in Nanjing over the past two years. The center is within 10 meters from the new Number 3 Subway Line. The land is worth several thousands of millions already. So it seemed that Chen Guangbiao has planned well. "As soon as the center was completed, Chen Guangbiao moved the company in and now he is looking to effect the land transfer. There is no way that this looks like a normal donation. It is more appropriate to call this real estate speculation."
There is an office of just over 10 square meters on the 21st floor of the Yiyuan Buiding, 121 Hongwu North Road, Nanjing City. This is where Chen Guangbiao first became successful. In 1997, Chen established the Nanjing Jinweili Medical Equipment Company and made his first bucket of gold.
In 2000, Chen formed the Jiangsu Huangpo Investment Group which bought bad assets from banks, re-organized and re-sold them. At the time, the Jiangsu Exposition Center was due for demolition in anticipation of the World Chinese Businesses Exposition. Chen Guangbiao took on the project. A demolition project is a "rich mine" because the demolished material can be re-sold to steel factories, etc. From that point on, Chen Guangbiao turned to focus on demolition totally.
On April 4, 2003, Chen Guangbiao set up the Nanjing Huangpu Renewable Resources Limited Company with a registered capital of 2 million yuan. Chen Guangbiao owned a controlling interest of 1.8 million yuan (90% share). The remaining 200,000 yuan (10%) came from Li Defeng. In 2010, the company's registered capital was 50 million yuan, of which 49.8 million yuan came from Chen Guangbiao.
Our reporter checked the business/commerce data and learned that in 2003, the Huangpu Company earned 7.83 million yuan with profits of 3.09 million yuan. But during the six years from 2004 to 2009, the company was running at a loss. In 2009 the losses amounted to 16.96 million yuan. The business/commerce data showed that company sales had never exceeded 100 million: in 2007, the sales amount was 9.2 million yuan; in 2008, sales were 42.29 million yuan; in 2009, sales were 32.96 million yuan.
One of the danger signals was that in 2009, the company had assets of 105 million yuan but debts of 99.69 million yuan. The debt ratio of the company is almost 95%.
Previously, Cheng Guangbiao had claimed that he was the chairman of the Jiangsu Huangpu Investment Group. But our reporter checked with the Jiangsu province Ministry of Industry And Commerce and found out that neither the "Jiangsu Huangpu Investment Group" nor the "Jiangsu Huangpu Investment Group Limited Company" were registered with them.
The fishy thing is that Chen Guangbiao had publicly said many times that Jiangsu Huangpu had sales of more than 10 billion yuan. In 2009, the company had net profits of 410 million yuan of which 313 million yuan were donated. As a company, Jiangsu Huangpu has donated 134 million yuan cumulatively over more than a decade. When the Forbes and Hu Run lists came out, Chen Guangbiao told the media that their figures were inaccurate because he had donated more than 300 million yuan in 2010.
But the problem is where did the money come from when the company is in such bad shape?
Chen Guangbiao had previously indicated that 95% of his company's project are second-handed ones. According to a former partner of his, second-hand projects only have profit margins between 5% to 8%, less than the 10% to 20% for first-hand projects. Even with the metal electric appliances, automobile accessories and other businesses of Jiangsu Huangpu Company, it is hard to exceed 100 million in profits.
Since early 2011, Jiangsu Huangpu has been in difficulties. Chen Guangbiao has publicly stated that his company has not gained any new business for more than six months already. He said that he had been putting 70% of his attention to charity and that was why the company is in difficulties. "Based upon the accumulated savings, we can keep going for another two years."
According to someone familiar with Chen Guangbiao, this was a signal from Chen to the government to get more orders. "He is a moral icon; he is the charity champion of China; the government must not let him get into trouble."
Because his generous donations have accorded him such a high social standing, he has been appointed to the Standing Committee of the 10th Communist Party Political Consultative Conference in Jiangsu, the vice-president of the China Charity Association and 57 other city and county senior economic advisor positions.
According to this person, he has benefitted from this as well as being burdened by the same thing. He may have wanted more or less to obtain various government projects because of his reputation in charity, and the local governments wanted his reputation to draw investments from other entrepreneurs. So far Chen Guangbiao has led many groups of entrepreneurs to places like Liaoning, Ningxia to inspect the investment conditions and the local government leaders are grateful to him. "Even if the company is facing hardship, Chen Guangbiao has not ceased to make charity donations. For him, this is an investment to maintain good relations with local governments. His losses are temporary, but money will start rolling in with the connections in place."
According to a Jiangsu person involved in charities: At first, Chen Guangbiao really did a lot of work. Later on, his activities tended more to be promotional gimmicks, which contained a lot of exaggeration. He said: "Why does Chen Guangbiao want to distribute cash and goods now? Because it is hard to estimate the total amount and value. Only he knows how much he donated."
Our reporter has repeatedly called Jiangsu Huangpu Corporate Publicity Planning Department director Cai Wen. We have also sent faxes to ask to the interview Chen Guangbiao. With respect to our various questions, Cai Wen told us over the telephone: "You shouldn't ask me anything. Chairman Chen is the sole company spokesperson." Our reporter contacted Chen Guangbiao for an interview. Up to our deadline, Chen Guangbiao did not take our interview.