Chinese internet majors use regular charity events to market · TechNode

All September, major Chinese technology companies launched a series of charity events, such as Alibaba’s Charity Week on September 5, and Tencent’s Giving Day on September 9. As this tradition of “Charity Month” in China was pioneered eight years ago by Tencent, peer-to-peer fundraising campaigns have become the primary way that the general public in China participates in charitable donations to non-profit organizations.

Similar to the popular Alibaba Singles Day shopping festival, these massive campaigns are led and hosted by Internet companies and their own platforms. The platforms often offer generous money-matching policies and incentives to encourage donations.

However, the past year was not known as an easy year for most Chinese tech companies. Internet giants including Tencent and Alibaba reported slowing year-over-year revenue growth, while ByteDance reportedly cut a slew of staff across departments, including in sectors like education technology and games that were growing strongly before being hit by regulatory changes.

Amid an economic slowdown, weak spending and regulatory pressures, what attracts Chinese tech companies’ spending on charitable events?

Why do Chinese technology companies allocate bidding events?

Although the philanthropy frenzy typically decreases after the promotional period, it still creates significant traffic in the short term for the platforms at a time when user acquisition and retention is difficult. According to Tencent’s published data, more than 58.16 million donors participated in the Giving Day on September 9 this year and the total public donation reached 3.3 billion yuan (476 million US dollars). “Charity festivals look good to the public in a time of trouble, and it’s a very obvious way of CSR,” said Rui Ma, a technology analyst and investor in China.

It is an important period for NGOs as well. Jenny Yu, a volunteer with a Beijing-based charity organization, said, “Every September has become an informal carnival for non-profit workers, marking the most active time for Chinese non-profit professionals and an informal team-building experience.”

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Yue mentioned that the pandemic has hit NGOs hard, with many initiatives fading away and funds greatly diminished for those that remain. So efforts during Philanthropy Month become paramount to building a strong donor base and, for some, survival. “Sept. 9 has almost become a ‘must-have’ rather than an option for nonprofits.” The ubiquitous promotion from the platforms, including Tencent’s super app WeChat, is helping to attract more attention than these enterprises could get otherwise. Thus, NGO workers tend to use all available resources to get the most out of the festival. They recruit volunteers who care about the cause and specifically train them on how to use the platforms and navigate their monthly charity campaigns in order to increase their impact during the festival.

However, the platform’s rules, while enhancing the process of giving to charity, also create barriers for fundraisers, especially at the grassroots level. Some small nonprofits that lack organizational capacity or digital literacy tend to get left behind during this period. ByteDance’s DOU Love Charity Day reportedly sparked some controversy regarding its fundraising matching mechanism — fundraisers can only get promotional codes and rewards based on the number of new users attracted to the platform.

However, with the rise of internet companies as major players in the field of philanthropy, the considered posts are expected to change decades-old philanthropic practices in China.

The state of philanthropy in China

Unlike the United States, where 80% of charitable giving comes from individuals, in China 80% of charitable giving comes from the corporate sector, according to charitable research platform Global Giving. This data reflects the challenge of fundraising in China: The country’s modern philanthropy ecosystem only began to take shape after the market reforms of the 1980s, and it took hits ranging from executive and corruption scandals to complex bureaucracy and digital revolutions before it really had a chance to thrive.

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Thus, peer-to-peer social fundraising has become a fertile ground for Chinese social media giants to establish dominance and differentiate themselves. In 2018, China’s Ministry of Civil Affairs announced a list of 10 authorized fundraisers, leaving the Internet mega-corporations as the only players allowed to do online charity fundraising along with a few government-backed organizations. “Social media is the perfect pool of traffic that leads to the donation process,” said Jonathan Ye, a China internet analyst. “WeChat-based September 9th Giving Day is uniquely beneficial when it comes to fundraising by mobilizing individual volunteers and their social circle.”

This year, Tencent has upgraded its “small safflower” social token game to encourage wider participation in the annual campaign. Contributors can collect “small safflower” not only by donating money, but also by participating in charitable activities, such as collecting running miles and doing other good deeds on Tencent platforms, all of which add up to the final number of “small safflower” and the corresponding donation. “The chain of sharing, donating and sharing anchors itself in a network of acquaintances and forms a virtuous circle,” Ye said.

The same goes for Douyin, another social app that relies on human interaction, an existing user habit on which charitable donations can be built. In 2020, ByteDance was finally approved by the Ministry of Civil Affairs as an authorized online donation platform. However, unlike WeChat, which maintains regular social interactions, Douyin leans heavily towards the creator-consumer relationship. And so the platform designed its matching fund policy to attract new users: donations from newly registered users are multiplied by 20 and matched by the platform.

This isn’t the first time ByteDance has tried to leverage its apps’ social functionality for charity. In the global version of TikTok, creators can choose a charity of their choice to display on their profile, not just a call to action but a sense of identity.

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Differentiation through giving

Tencent, which boasts the longest running and most widely participated charity festival, is moving beyond mere donations and has begun to strengthen its comprehensive ecosystem in business fields. The Digital Toolbox, a bundle of a wide range of Tencent services including Tencent Cloud, Tencent Doc and Tencent Meeting, was a Tencent initiative designed to help NGOs go digital. The Chinese tech giant has also launched an accessible version of a full suite of products including WeChat, QQ Mailbox, QQ Music and Tencent News to support individuals with disabilities.

On the other hand, Alibaba, as an e-commerce platform, has made it a priority to empower small merchants. Starting in 2019, Taobao enabled merchants to designate some of their items as “charity products,” meaning that a portion of the proceeds would go to a charitable cause of the shopkeeper’s choice. In 2022, 2.2 million Taobao merchants will participate in this campaign, while 500 million consumers will support the initiative.

Although its education unit is undergoing a major reorganization, ByteDance is still actively working to build an educational empire outside of its influence. In its 2021 ESG report, the company listed “equity in education” as the highest “critical” value, ahead of “technological innovation” and “protecting originality”. This year, ByteDance has initiated several education-related initiatives, including one dedicated to helping Fujian elementary schools in rural areas access digital education.

conclusion

Despite the economic downturn, it is unlikely that major Chinese tech companies will stop hosting charity festivals. In fact, they may rely more on peer-to-peer donations and extend their influence further into the daily lives of users. At a time when large Internet companies are trying to cut costs and increase efficiency, regular charity events can become another form of marketing for them.

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