Charles Chen Yidan: China’s most charitable man

Shafi Musaddique
Education and fate

The year was 1998 when five classmates came together to form an embryonic company that would take advantage of the early internet. Both Ma Huateng, nicknamed Pony Ma, and Zhang Zhidong, also known as Tony Zhang, brought their experience of working in a pager company and an online firm to form what was effectively an instant messaging service for pagers, a wireless communication device pre-dating smartphones. Xu Chenye, Zeng Liqing and Charles Chen Yidan, a student with a major in chemistry, made up the rest of the five founding fathers of Tencent.

Twenty years later, that same company has a market value close to Facebook’s — just shy of $500 billion. Yet beyond China, Tencent is still relatively unknown. Likewise, little publicity can be found on Charles Chen, a driving force behind the tech giant and considered China’s most charitable man.

Tencent was the first Asian firm to surpass a market value of $500 billion
(Source: CNBC)
“Education not only belongs to a country, it belongs to humanity.”
Charles Chen

Forbes ranked Chen as China’s top philanthropist after he gave away 2.3 billion Chinese yuan ($359 million) of donations in 2017. No longer at Tencent, the man behind China’s tech behemoth has funneled vast sums of his personal money into charitable educational projects, but even that sum represents just the tip of his passion for education.

Chen’s journey starts with his illiterate grandmother, who helped his father go from rural poverty to university graduate. Chen’s father went on to meet his mother as a result of moving to the city to pursue a degree. A generation later, Chen met his wife while studying chemistry at Shenzhen University and became friends with a classmate who would go onto become, alongside Chen, a future co-founder of Tencent.

“Education changed my family fate,” Chen told CNBC’s Tania Bryer. “I am one of a million lives that were transformed by the power of education.”

Chen credits his fortune to one particular moment in his life: failing an entrance exam. Despite the “look of expectation” his grandmother would persistently give, Chen failed to pass a Chinese language test ahead of entering Shenzhen University. Luckily, he scored enough in other subjects to gain admission.

“I promised myself that I need to work hard,” said Chen.

“This failure made me put more time on student services (in the student union). Through this service, I met a girl in chemistry, who is now my wife. I thank chemistry and I thank examination failure.”

Chen has kept a positive attitude in the face of uncertainty throughout his adult life.

In the unstable world of tech start-ups and the dotcom boom of the 1990s, Chen’s wife would consistently give “a simple answer from her heart” on business problems, he said. That was a trait that counterbalanced against Chen’s meticulous and methodical approach.

“I still remember when I started Tencent with my co-founders, I knew that I would go out to face an unstable start-up business. What’s the future?”

He would need her due diligence in a move that would not only change his career, but also alter the course of Chinese technology.

The birth of the internet and Tencent

All five of Tencent’s founders had juggled stable jobs along with their start-up in 1998. For Chen, delving into a world of unknowns came with complicated risks. He had only been married for just two years and saw income fluctuate from the new business.

“The first project we set up, that got revenue of 500,000 yuan. But one year later, this reduced to 50,000 yuan.”

Just when Tencent began to grow, the tide had turned. Tencent had relied on the popularity of pagers, small wireless devices used to receive instant messages in the 1990s. Suddenly, they were of no use as mobile phones became increasingly sophisticated. The market had altered and Tencent — at an embryonic stage in its life — was in danger of falling behind before it had started to make progress.

“In the early years, it wasn’t a success,” said Chen.

The pressure to succeed had put “big pressure” on him. And yet, there were even bigger pressures for Chen.

“The future was unstable,” he said. “I didn’t dare to tell my parents.”

He had maintained a government administration job after graduating but soon decided to put all his efforts into growing Tencent. His parents would worry if they ever knew and so he maintained the illusion of having a stable job for up to two years. They eventually found out through friends and accepted his idea after Chen and his co-founders secured venture capital funding.

Tencent co-founder Ma Huateng (Pony Ma) was briefly richer than the founders of Google, valued at $48.3 billion in November 2017.
(Source: Forbes)

“At one time, we were all happy saying, ‘Wow, users are increasing!’ And I had no money. Luckily, at that time, VC (venture capital) occurred in China. Before that, where did money (for investment) come from? Loans from the bank.”

The founders have ridden the crest of a wave since the birth of the internet, especially in China.

Tencent ranked eighth in the most valuable global brands for 2018, the highest of any Asian tech company and only just behind Silicon Valley giants Microsoft, Amazon, Apple and Google.

Chen credits Tencent’s “open” culture and the co-founders’ ability to “express an open mind” for putting it on a par with U.S. tech rivals. Yet compared to the likes of Apple and Microsoft, Tencent has gone about its business quietly.

How many people in China are now connected to the internet?
Click or tap for the answer
Three quarters of a billion people, more than the entire population of all 27 European Union countries.
(Source: China Internet Network Information Center)

Chen’s original intention was to create an internet product and service that “can engage people’s lives, like (offering services for) water and electricity.” The tech giant today dominates the daily lives of its Chinese users. It has seamlessly integrated its WeChat messaging app with payment services that can be used for anything from booking a reservation at a restaurant to paying for a takeaway.

The company has stakes in Snapchat, Tesla and Spotify. It’s now on par with Silicon Valley rivals due to a combination of its messaging app WeChat, used by over 1 billion people each month; its video streaming service, covering exclusive NFL games and HBO content such as “Game of Thrones;” and its domination of the world of mobile gaming.

Certainly, the company looks much different now than it did when Chen and others were looking to capitalize on pagers.

Chinese philanthropy

China is in the midst of a “golden age” for philanthropy. And Chen is right in the middle of that.

In 2007, he and his fellow co-founders opened the Tencent Foundation with the aim of investing some of their profits into charitable projects. Anywhere else in the developed world and this would have been easy. Not so in China, where the door had yet to open for private companies looking to register as a charitable foundation.

“We became the first non-profit charity foundation of the internet,” said Chen.

The tech company blazed a trail in China for businesses looking to push into philanthropy. The law has only caught up with Tencent in recent years. In 2016, China’s government formally established a legal framework for organizations wanting to open their own charitable projects.

Tencent has 1 billion accounts subscribed to its messaging app WeChat
(Source: Tencent)
“It's a developing time for China’s philanthropy. What if people find out an efficient way to donate and get donations?”
Charles Chen

Although philanthropy in China remains relatively low compared to the West, the country has seen significant growth since 2005. According to Robin Carey, a specialist in China’s economy at the University of Central Lancashire, U.K., China’s charitable giving is just 0.1 percent of gross domestic product (GDP), compared to around 2 percent of GDP in the U.S.

“By Chinese standards, the nation is certainly experiencing a ‘Golden Age’ of philanthropy, though the driving force behind this hasn’t just been the growing middle class — it is also down to the rise of China’s super rich,” said Carey.

Chen believes that while China is catching up with the “mature” history of charity and foundations in the U.S. and Europe, the country can draw from its own heritage to help it advance philanthropy.

“Chinese traditional culture encourages people to benefit the world. Many ideas from Chinese culture encourage people to give more, have more and also encourage people in that if you do a good thing, you will have a good result. So it’s in every Chinese person’s mind. But how to do it?”

For Tencent, the answer was obvious — use payment services already provided using the WeChat messaging app to allow people to donate without any hassle. In merging technology with philanthropy, Chen and his co-founders had moulded tradition with modernity. Since its launch 11 years ago, Tencent’s charitable platform has raked in 1.5 billion yuan from 140 million individual donations. Three years ago, the tech giant decided it would encourage users to browse 6,500 other charitable projects and organizations using the Tencent platform.

When a 2008 earthquake killed tens of thousands in the province of Sichuan, Tencent raised more than 20 million yuan through individuals using its online platforms.

For Chen, the key to maintaining public trust and continuing China’s golden age of philanthropy is corporate “transparency.”

Venturing alone

In 2013, Chen decided to step down from Tencent to focus on philanthropy and education — only after he implemented a two-year succession plan at the company he calls his “baby.”

“When I stepped down, in the first half year, I would still go into the office. The difference? I didn’t get paid!”

After much thought, Chen decided that he would focus his efforts on improving one area of society. It’s a word he repeats time and time again, and one that has left a deep imprint on his own family: education.

“Education is the ultimate answer to social progress,” Chen said.

“We think it is just a function of society.”

Chen set up the Yidan Prize in 2016, given to individuals every year who have made a contribution to developing education. Prize winners can receive a reward of $3.9 million. The idea came to him at night, when he wrote “a wish” in his diary.

“I had a wish, to establish a global prize, beyond religion, race and nationality. To help people realize the universe and the distribution of humanity.”

China’s charitable giving is just 0.1% of GDP, compared to around 2% of GDP in the United States
(Source: Ash Center for Democratic Governance and Innovation)

He hopes that hundreds of projects across the globe can benefit from funding from the Yidan Prize and the next generation of thinkers his award backs.

Last year, Carol Dweck, a professor of psychology at Stanford University, received the prize for her theory on “growth mindset” — the theory that we can improve the brain’s capacity to learn. The other 2017 prize winner was Vicky Colbert, an influential figure in the “new school” movement in South America that challenges a teacher-centric view of education. Through funding her initiatives, Chen hopes to replicate child-centric schools for Asia and Africa.

Chen also believes that artificial intelligence (AI) could be a force for good in education.

“Education systems will be changed by technology, whether it is automation, big data or artificial intelligence.”
Charles Chen

“Why are we worried? Why are we anxious (about AI)?” Chen said in reference to predictions made by Tesla’s Elon Musk that robots could create a third world war.

“Education systems will be changed by technology, whether it is automation, big data or artificial intelligence,” Chen said.

In China’s poorest villages and towns, schools are still similar to what they were a century ago with blackboards and a table. The Tencent co-founder is adamant that a “tide of change” is sweeping China’s education system.

“Maybe technology companies and schools will combine together some day.”

Writer: Shafi Musaddique
Design and code: Tim Shepherd and Bryn Bache
Editor: Everett Rosenfeld
Presenter and Executive Producer, CNBC Meets: Tania Bryer
Executive Producer, CNBC Meets: Martin Conroy
Series Producer, CNBC Meets: Jen Northam
Associate Producer, CNBC Meets: Michelle Blackwell
Images: CNBC and Getty Images
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