Wenzhou wants businesses to look to charity

City allows private schools to be transformed into enterprises

Wenzhou, the country's entrepreneurial hub, has continuously issued policies to encourage local capital to flow into charity work.

The latest measure, allowing private schools to be transformed into enterprises, was launched by the city government of Wenzhou in late August.

Wenzhou, in Zhejiang province, was the first city in the country to implement a policy to attract more private capital to build schools for residents' children, allowing them to earn a profit.

However, the measure, which is part of Wenzhou's new regulations on privately run nonenterprise units, may be in conflict with a national regulation.

According to the regulation released by the central government in 1998, privately run nonenterprise units are nongovernmental organizations registered under related civil administration departments in China while their assets don't belong to any department or individual.

Most of those privately run nonenterprise units were registered in the fields of education, medical treatment and nursing services for the elderly and attracted major investments. But concerns were raised that private capital might shy away if profits were not forthcoming.

In fact, Wenzhou had chosen to challenge the regulation in October 2012 by allowing the registered investor to sell, inherit or give the organization to others and obtain certain returns excluding all costs after running it for five years.

The city recognized the privately run nonenterprise unit as a long-term charity work, while acknowledging it has been hard to encourage more enterprise owners to invest without any profit, said Zheng Yijun, senior official of Wenzhou Civil Affairs Bureau, which is in charge of privately run nonenterprise units.

"Transforming private schools to enterprises will enable the school founders to have more options to offer diverse courses and educational events for students," said Zheng.

Up to the end of 2012, 252 of 430 private schools in Wenzhou were registered as private institutions while 85 were willing to transform into private enterprises.

Those schools that apply for the transformation will be re-registered after asset settlement, and the net assets will be held by Wenzhou's private education charity foundation.

Certain local business people have already been encouraged to make plans to register privately owned schools as a company unit, said Zheng.

Xia Guangyao, chairman of Wenzhou Jialunte Textile Finery Co Ltd, believes it is a direct way to help ethnic groups.

He wanted to launch a private school equipped with experienced teachers and advanced learning facilities particularly for children of those people who were not born in Wenzhou but chose to live and work in the city.

"I am not sure whether I will apply for the enterprise unit as I need to consider tax payments if I run it as an enterprise, which probably needs more money than a private nonenterprise unit," said Xia.

Xia added that he would probably start from a small school for the employees at the company and then expand it gradually.

There are 2,805 privately run nonenterprise units among 4,957 social communities registered in Wenzhou up to the end of March 2013, statistics provided by Wenzhou Civil Affairs Bureau showed.

It took nearly one year for Li Jianmin, chairman of Zhejiang Electric Appliance and Switchgear, to get his nonprofit nursing home fully licensed and equipped with safety facilities to be ready for the official opening.

"I know it is still quite rare for individuals or private enterprises to contribute to charity projects with a large amount of money for very low returns, which is common in Western countries," said Li, who started planning to set up a high-standard nursing home for local residents in 2005 and finally had the project done by mid-September.

Located near the city center, Li's Yatai nursing home was redecorated from an old four-floor factory building with over 80 beds for the retired over 50 years old.

There are three-, two- and single-bed rooms priced from 1,380 yuan ($225) to 1,780 yuan per month with daily dining costs of 20 yuan per person.

Since the trial opening in early July, the nursing home has accepted over 30 people and it will allow a maximum of five people to move in every week to ensure the 20-some employees spend enough time with the new residents.

Detailed information of the nursing home residents is listed in a notebook with their favorite food, previous occupation, hobbies, daily habits, personalities, relations with their children and so on. Every person is equipped with a pager in case of emergency.

So far, Li spent at least 700,000 yuan on decorations, equipment and salaries.

"I am delighted to have spent the money in ensuring the home's residents with better lives in their autumn years. It is my way of giving back after being successful in the booming economy," said Li.

Li added that he had never thought of receiving any returns from the nursing home but he presumed that more people would be willing to follow his footsteps if the government can give more subsidies.