EFTA01256197.pdf

J iifeTIrt Tsinghua SENI 0 roummikulq.Pr [Ai 1.14 Create leading "Family Heritage and Development Center" to guide the growth of China Wealth Society October 2010 SDNY_GM_00078012 Conk:ande! Treatment Requested by JPMorgan Chase JPM-SDNY-00001139 EFTA_00189479 EFTA01256197  Content ■ Context - Introduction - The state of wealth development - Introduction of family heritage — Importance of improving family heritage in China — Family heritage education status quo and areas for improvement - Strengths of Tsinghua and Kaifeng Foundation ■ Business plan — Mission and vision — Organization — Program high-level plan — Guidelines for program and faculty plan — Preliminary plan on program and faculty — Next steps ■ Appendix : — Family business centers in leading universities/ business schools 2 SDNY_GM_00078013 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001140 EFTA_OOI 88480 EFTA01256198  Background SDNY_GM_00078014 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001141 EFTA_00188481 EFTA01256199  Introduction ■ With economics developments and social reform, the wealth group grow very fast and become an increasingly important social force in China. On the other hand, as China is in the economic and social transformation stage, there are many prominent social issues, including wealth inequity and laggards in the social benefits system such as in areas of medicare, housing, and eduction. In addition to this, some "second generation" of the wealth group do not establish an positive model image, instead, leave a image of being "irresponsible, indulgence, and arrogant". This results in "resentment of the rich" and worsen social conflict. In such context, it is of great significance to lead the growth of China wealth society to maximize their positive social influence, and exert positive impact to wider community. ■ Kai Feng Foundation's aim is to advance social progress and harmonious development. In such regards, Kai Feng would like to contribute to the development of China wealth society through promoting the heritage and development of wealth family. ■ Family heritage and development is an old and emerging issue. China and even Asia are lacking mature framework and experience. In addition, there are unique challenges in its social transformation period in China, especially in the area of how to develop and inherit spiritual wealth. Even in leading international universities/business schools, family heritage and development is a young session. By establishing a world class "family heritage and development centre", Tsinghua will further strengthen its social and academic status and influence. 4 SDNY_GM_00078015 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001142 EFTA_00 188482 EFTA01256200  The state of wealth development ■ Globally, wealth class as a powerful and resourceful group is taking a critical role in propelling growth of each society — In the past century's evolution of Western world, wealth class has been a powerful driving force in promoting society development • Donation and charity contributes to 10-60% of funding for US public and private universities, most of which were grants from wealth families • Among them. the leading ones i.e. Carnegie Foundation, Rockefeller Foundation and the recent Bill and Melinda Gates Foundation have made great impact in various aspects such as eliminating poverty and improving education — In recent years, wealth leading society has been making philanthropic endeavors in developing NGO to promote society progress and civilization — With globalization, wealth class taking greater social responsibility is widely accepted as a shared value and practice around the global rich class to promote social harmony 5 SDNY_GM_00078016 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001143 EFTA_00 188483 EFTA01256201  The state of wealth development (continued) • China has witnessed fast growth of wealth following the strong economic development in past decades. Directing and leading the wealth society is critical to future development of China goo) Number of Wealth Families in China 1 600 30%CAGR 400 (2003-09) 200 0 2003 2004 2005 2006 2007 2008 2009 AUM (USD Trillion) 0.45 0.58 0.76 1.07 1.62 1.56 2.55 1 — AUM above 1MN US Source: Wealth Markets in China Report' by BCG 6 SDNY_GM_00078017 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001144 EFTA_OOI 88484 EFTA01256202  Introduction of family heritage ■ Family heritage and development is to inherit and develop both spiritual and material wealth to enhance social and economic influence thus to realize family values. To achive this, family leaders need to address both humanitarian and management issues Contents of family heritage Key issues to address (humanitarian) : • Self-related • Family related • Social related Key issues to address Family business, (management) : Wealth • Family business management transition and governance Material 7 wealth • Wealth management SDNY_GM_00078018 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001145 EFTA_00188485 EFTA01256203  Importance of improving family heritage in China ■ At macro level, family heritage and development is corner stone to social stability and harmony. At the micro level, family heritage and development is an essential part of wealth family's role to maximize their contribution to the society — China's thousand years of history has demonstrated that family heritage is critical to foster social value and behavior system and promot social stability and harmony — For wealth families, wealth accumulation without family heritage and transfer limit their social influence and abilities to make greater contribution ■ At micro level, family heritage and development is fundamental to family business growth and wealth preservation and hence critical to wealth generation of a society - 80% of global enterprises are family business, 37% of global Top 500 are run or owned by families. No country can develop without participation from private business — Family business transfer and development, especially transfer from 15' generation to next generations, and separation of ownership from business management, are key issues to the success of family businesses ■ At micro level, family heritage and development is a critical part of individual's happiness and life value - "Self-improvement and family development" are regarded as the best recipe for a happy life in Chinese culture 8 SDNY_GM_00078019 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001146 EFTA_00 188486 EFTA01256204  Challenges in Chinese family heritage and development ■ Limited experience to learn from Asia families given short history in shaping family value, legacy and transfer structure ■ Unique challenges facing Chinese families: - Social stability: With drastic social and political changes in the past century, the top priority for Chinese families were stability and conformity with social trend — Single child policy: Birth control policy and practice bring about unique challenges and complexities in family development. Tolerance to failure and risks is low for Chinese families — Impact from Western world and cross-culture collision: Along with globalization, Chinese culture and value system are facing challenges from western world, i.e. the priority of country, family and individual in Chinese tradition vs. individualism from western culture needs to be addressed properly at family level Addressing these challenges require learing from western experience and making efforts from multi-discipline to embark on a road right for Chinese families 9 SDNY_GM_00078020 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001147 EFTA_00 188487 EFTA01256205  Family heritage education status quo and areas for improvement ■ Education in China on family heritage and development is at infant stage : — Due to historical reasons and drastic changes in economic and political aspects in the past decades, education on Chinese traditional family heritage was disrupted and misplaced — In the past twenty years China has seen fast generation of wealth, but beneficial families have yet to realize the importance of family heritage and development — In general, family heritage and development is a new subject for universities/business schools. Chinese universities/business schools have not yet start a systemtic research and education in this area • Some leadng universities/business schools, such as Wharton, IMD, The University of British Columbia, and Chinese Universities of Hong Kong have built family business centers for research and education and developed it into a differentiation subject 10 SDNY_GM_00078021 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001148 EFTA_001/18488 EFTA01256206  Family heritage education status quo and areas for improvement (Cont'd) ■ There is significant room for improvement for Chinese universities in this field in content and faculty provision — Programs focus primarily on material wealth transfer and growth, i.e. family business and wealth management, with limit access to family heritage and growing spiritual wealth, such as family mission, value and social responsibilities — Faculty is mainly from internal resource or investment community, lack of participation of representatives from experienced successful families ■ Due to weakness in contents, faculty, target audience and fee level etc, these programs mainly attract participants from small-medium sized families, with limit influence over leading families in China 11 SDNY_GM_00078022 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001149 EFTA_OOI 88489 EFTA01256207  Strengths of Tsinghua and Kaifeng Foundation ■ Strength of Tsinghua ■ Strength of Kaifeng - With 100 years of history Tsinghua Foundation is highly respectable in China - Mission to propel social — Tsinghua Economic and development Management School has also built — Leadership and board members its leading position in China and with global perspectives Asia — Founder representing 15, — Outstanding and rich resource in generation of successful family alumni and entrepreneurial in China community — Well connected and resourceful — Top quality faculty team in China ---"------------„— Through developing family heritage and development center, Tsinghua will expand its influence among China wealth group, and through its leading role, create greater positive impact to China's social progress 12 SDNY_GM_00078023 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001150 EFTA_OOI 88490 EFTA01256208  Business Plan 13 SDNY_GM_00078024 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001151 EFTA_00188491 EFTA01256209  Mission and vision ■ Starting point: Be responsible to yourself. to family. and to the society." ■ Mission: Promote family heritage and guide growth of Chinese wealth socity ■ Main tasks : — To promote wealth family heritage and development in China through providing high-standard. targeted educational program To support formulating matured wealth attitudes. and balanced view in responsibilities and challenges associated with wealth — To promote communication between wealth families and scholars. to resolve real world issues in area of family heritage and development To develop research platform to advance the study and practice of family heritage development in China 14 SDNY_GM_00078025 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001152 EFTA 00188492 EFTA01256210  Overall plan and organization setup ■ Near term plan and organization setup: - At first stage, the center will focus on providing leading short-term program to first generation wealth creator Organization setup include 1 director. 2 deputy directors, and several staff. Advisory board comprised of highly credible experts, scholars. and key members from leading families and practitioners ■ Future plan To launch program to second generation of wealth families To conduct research, communication, and promotion work, such as China family heritage case development and orginizing seminars etc To expand organization accordingly 15 SDNY_GM_00078026 Confidential Treatment Requested by JPMorgan Chase JPIM-SDNY-00001153 EFTA_Ohl 88493 EFTA01256211  Program overall plan ■ Format : — Two modules. 3-5 days learning course and 5-day overseas exchanging trip — During the 3-month interval between modules. other activities such as salon and forum will be arranged for social and exchanging purpose — Audience: Top 500 rich people in China ■ Size : — 15-20 people per class ■ Tuition: — RMB 500.000 per person. all tuition will be donated for the centre's operation and development 16 SDNY_GM_00078027 Confidential Treatment Requested by JPMorgan Chase JPIM-SDNY-00001154 EFTA (()188494 EFTA01256212  Guideline for program and faculty setup ■ High standard: Both students and faculty are highly credible and influential in relevant field ■ Multi-discipline: Combining insights from humanitarian and management sources, with a unique focus on culture and humanitarian topics ■ Theoretical analysis complemented with practice expertise: Reps from successful families will share their experience on how to perpetuate families ■ Learning from both Eastern and Western: Tapping into long-standing tradition of Western' families, acknowledging the cross-culture difference and the uniqueness of Eastern families ■ Teaching via sharing: Sharing between peers is equally important to teaching, and to enhancing communication among families 17 SDNY_GM_00078028 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001155 EFTA_00I 88495 EFTA01256213  Program and faculty plan (preliminary) ■ Spiritual wealth aspect : "For yourself" "For next generation" "For society" Pro- a Family mission and . Family learnin, value and . Social transformation and gram goals heritage family change . Source of happiness . Education management . Social responsibilities . Value for wealth . Successor plan (Development . Philanthropy management . Longevity and health psychology ) . Family social resource . Family communication and management conflicts resolution . How to expand social . Family governance influence Faculty . Culture and humanity (Chinese culture, History, Psychology, Philosophy, Education) : Influential scholars . Key members from successful families (e.g. Rothschild, Rockfeller, Ford, Guggenheim, and TATA families) Note: representative only, may change based on interest from target audience 18 SDNY_GM_00078029 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001156 EFTA_(()188496 EFTA01256214  Program and faculty plan (preliminary) ■ Material wealth aspect : Family enterprise : family business Wealth management transition and development Pro- . Family and family business . Investment advisory and management gram . Family business transfer and strategy . Private bank and family wealth management . Family business governance . Risk management . Family members and professional . Tax management managers . Chinese traditional culture and family business governance Faculty . Key members from successful families (e.g. Rothschild, Rockfeller, Ford, Guggenheim, and TATA families) . Financial, legal and taxation experts from global leading family office . Leading scholars from domestic and overseas university (Harvard, Wharton, IMD etc) 19 SDNY_GM_00078030 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001157 EFTA_00I 88497 EFTA01256215  Representative faculty and members of advisory board"' • Important members of well-known families, which include: — Europe: The Rothschild Family • The Rothschild family is a famous European dynasty of German Jewish origin that established European banking and finance houses from the late 18th century. Rothschild family keeps dynasty alive through seven generations. Their family banks now include, amongst others, Compagnie Financiere Edmond de Rothschild and Banque privee Edmond de Rothschild, La Compagnie Benjamin de Rothschild S.A., and COGIFRANCE. • Social activities: The Rothschild family has a long tradition of philanthropy. Today, a wide range of Rothschild foundations, operating throughout Europe and Middle-east region, in fields as diverse as medical science, housing and education, provide opportunities for individual and social development. — US: The Rockefeller Family • Rockefeller family is on their sixth generation now, and till very successful. • Social activities: The Rockefeller Foundation is endowed by John D. Rockefeller and chartered in 1913 for the well-being of people throughout the world. By year-end 2008 assets were tallied at $3.1 billion from $4.6 billion in 2007, with annual grants of $137 million. The family members of the main foundations, adhere to the original donation, a traditional concerns education, health and rights and urban and rural poverty alleviation. 1- Representative and may be adjusted 20 SDNY_GM_00078031 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001158 EFTA_OOI 88498 EFTA01256216  Representative faculty and members of advisory board1(Cont'd) ■ Important members of well-known families, which include: - US: The Ford Family • The Ford Motor Company was founded by Henry Ford and incorporated on June 16, 1903. Ford family keeps dynasty alive through five generations. • Social activities: In fiscal year 2007, The Ford Family Foundation reported assets of $13.7 billion and approved $530 million in grants for projects that focused on strengthening democratic values, community and economic development, education, media, arts and culture, and human rights. The Ford Foundation's grant making teams work in three broad program areas. strengthen democractic values, reduce poverty and injustice, promote international cooperation and advance human achievement. — The Guggenheim Family • The Guggenheim family refers to a number of descendants of Meyer Guggenheim who were known for their global successes in mining and smelting • Social activities: The Guggenheim Family has been an example of those who have amassed great wealth creating and influencing culture thorough philanthropic contributions. - The Solomon R. Guggenheim Foundation funds the Guggenheim Museums. — The John Simon Guggenheim Memorial Foundation awards grants to scientists, scholars and artists. — The Harry Frank Guggenheim Foundation supports scholarly research on violence. — The Daniel and Florence Guggenheim Foundation awards grants in the field of 21 criminal justice. SDNY_GM_00078032 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001159 EFTA_00I 88499 EFTA01256217  Representative faculty and members of advisory board1(Cont'd) ■ Important members of well-known families — India: The Tata Family • The Tatas are a wealthy Parsi family in India. Originally a priestly family in Naysari, they have been active in industry and philanthropy since the nineteenth century. The Tata Group, founded by Jamsetji Tata, is one of the largest private employers in India. The annual income of Tata Group is more than 20 billion USD. It has interests in steel, automobiles, information technology, communication, power, tea and hospitality. The company is currently in its fourth generation of family stewardship • Social activities: From the 19th century, Tata family has been active in industry and philanthropy, their tradition is to donate most of their fortune to the foundations to help the society. There are two main foundations of Tata family, Sir Ratan Tata Trust and Dorabji Tata unite trust. Their projects include supporting NGO, individual and other institutions to solve problems in rural matters, medical, education, art, culture, society management, etc. 22 SDNY_GM_00078033 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001160 EFTA_OOI 88500 EFTA01256218  Representative faculty and members of advisory board1(Cont'd) ■ Influential experts and scholars of humanities: — Charles W.Collier : Charles is the senior philanthropic adviser at Harvard University and a nationally recognized expert on planning giving, family philanthropy ,and wealth psychology. In 2004, he was named to the Nonprofit Times Power & Influence Top 50 over the past 30 years. He has worked with hundreds of individuals and families to help them think through the family questions. He graduated from Phillips Academy, Andover, and holds an AB from Dartmouth college and an MTS from Harvard Divinity School. — David Servan-Schreiber: M.D., Ph.D. is a French physician, neuroscientist and author. He is a clinical Professor of Psychiatry, University of Pittsburgh School of Medicine. He was co- founder and then director of the Centre for Integrative Medicine at the University of Pittsburgh Medical Center. He was one of the founders of the US branch of Medecins Sans Frontieres, the international organization that was awarded the Nobel Peace Prize in 1999. He also served as volunteer in Guatemala, Kurdistan, Tajikistan, India and Kosovo. He is the author of Healing Without Freud or Prozac (translated in 29 languages, 1.3 million copies sold), and Anticancer, a New Way of Life (translated in 35 languages, New York Times and international best-seller, 1 million copies in print) — Lee Hausner : Lee served nineteen years as the senior psychologist for the Beverly Hills Unified School District to families around the world. She is the co-author of a leading treatise on business succession planning, Hats Off to You: Balancing Roles and Creating Success in Family Business Succession. and co-author of The Founders' Guide to Family Foundations. She wrote the definitive work: Children of Paradise: Successful Parenting for Prosperous Fa is a graduate of Northwestern University, San Francisco State University and University (Dr. Psychology) 23 1- May be adjusted SDNY_GM_00078034 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001161 EFTA_00188501 EFTA01256219 Arna. %.,„mair t.„•, 23 SDNY_GM_00078035 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001162 EFTA_00188502 EFTA01256220  Representative faculty and members of advisory board1(Cont'd) ■ Influential experts and scholars of humanities (Cont'd): - Liu Dong: : Mr. Liu is the vice dean of The Tsinghua Academy of Chinese Learning. He host the Wang Guo Wei Memorial Lecture. Mr. Liu graduated from Nanjin University in 1981 and was taught by famous philosopher Li Ze-hou when he joined Chinese Academy of Social Science in 1985. Mr. Liu is the author of Theory and Mind, Tao and the World, and The Road Paved by Books etc, and is the translator of Max Weber and Ludwig Wittgenstein: An Introduction to His philosophy. ■ Financial, legal, and taxation experts from world leading family offices: — Philip Marcovici: Philip is the founder and CEO of LawlnContext and was a partner of Baker & McKenzie. He is the former chair of the European tax practice of Baker & McKenzie and of the steering committee of the Firm's international wealth management practice. He holds law degrees from each of Harvard Law School and the University of Ottawa (magna cum laude) and is admitted to practice in Hong Kong, the State of New York, the Province of British Columbia, Canada, England and Wales 24 1- May be adjusted SDNY_GM_00078036 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001163 EFTA_00 188503 EFTA01256221 Arna. %.,„mair t.„•, 24 SDNY_GM_00078037 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001164 EFTA_OOI 88504 EFTA01256222  Representative faculty and members of advisory board1(Cont'd) ■ Senior faculty from leading schools: — Roger King is an Adjunct Professor of Finance, the Co-Director of the Center for Asian Family Business Studies and the Director of the Center for Business Case Studies at Hong Kong University of Science and Technology. His past executive positions include the Managing Director and Chief Operating Officer of Orient Overseas (Holdings) Limited, Executive Chairman and founder of ODS System-Pro Computers Limited, Chairman of Euro-Asia Shipyard Limited, President and Chief Executive of Sa Sa International Holdings Limited, and a member of the Standing Committee of the Zhejiang Province People's Political Consultative Conference.. — John L. Ward : John is a Clinical Professor of Family Enterprises at Kellogg School of Management. He is author of the leading books on family business: Keeping the Family Business Healthy, Creating Effective Boards for Private Enterprises, Strategic Planning for the Family Business (with Randel Carlock), Perpetuating the Family Business: 50 Lessons Learned from Long-Lasting Successful Families in Business and Unconventional Wisdom: Counterintuitive Insights for Family Business Success. He currently serves on the boards of four companies in the U.S. and Europe. - Joseph Fan: Chairman of the Department of Finance, Co-Director of Institute of Economics and Finance, Deputy Director of Center for Institutions and Governance, Professor at the School of Accountancy & Department of Finance, The Chinese University of Hong Kong (CUHK). Joseph's main research areas are corporate governance, corporate finance, and organizational economics. He has presented his research in numerous educational institutions and leading international conferences, and has published his works in world top international academic journals, including the Journal of Accounting and Economics, Journal of Accounting Research. Journal of Business, Journal of Corporate Finance. Journal of 25 Finance, and Journal of Financial Economics. SDNY_GM_00078038 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001165 EFTA_00188505 EFTA01256223  Next step ■ Finalize organization setup and personnel ■ Finalize program and faculty plan — To conduct a survey over program and faculty setup 26 SDNY_GM_00078039 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001166 EFTA_00I88506 EFTA01256224  Appendix : Family business centers in leading universities /business schools ST SarTI_GIVI_00078060 Confidential Treatment Requested by SPItnorpan Chase SPIA-SONT-OCC01167 EFT,0018ES07 EFTA01256225  Wharton Global Family Alliance ■ History: Founded in 2004 between Wharton and CCC Alliance ■ Focus: — Advance the Study of Family Business (esp. areas of governance, philanthropy, and wealth management) — Engage Families Globally ■ Mission: — To create groundbreaking knowledge at a high standard of scholarship that can have positive real-world impact. — Focuses its research in key issues affecting family businesses, combining two highly credible and complementary sources of insight - practical expertise of highly successful global families and rigorous scholarly analysis from Wharton faculty. ■ Research organization — Research committee: faculty from several disciplines, including entrepreneurship, legal study and business ethics, international management, finance, public policy, and economics — Research council: ■ Research output: Paper/case study/projects ■ Global reach: Wharton Entrepreneurship & Family Business Research Centre at CERT in Abu Dhabi, UAE. ■ Outreach: Supporting the Wharton Societal Wealth Program Sources: Wharton Global Family Alliance website 28 SDNY_GM_00078041 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY-00001168 EFTA_00188508 EFTA01256226  The University of British Columbia ■ Background: Founded in 2001 as a first-of-its-kind resource centre for business families, the Business Families Centre (BFC) is now a one-of-a-kind support network for all things business- family related. ■ Vision: Healthy families and successful businesses for multiple generations. ■ Mission: Facilitate the success of business families through research, education and service. ■ Research: Research is the cornerstone of the work the Business Families Centre does in pursuit of our ultimate goal of illuminating families in business, their unique nature and challenges, and their important contributions to our economy and communities. From academic research studies that examine the specific attributes of the family and business dynamics, the Centre contributes to both academic and community education. ■ Programs — For families • Family Leadership Courses • Individual Education — For professionals • Certificate in Business Family Advising ■ Canadian Association of Family Enterprise (CAFE) The Canadian Association of Family Enterprise (CAFE) is a national organization with chapters across the country and is Canada's only not-for-profit organization dedicated exclusively to promoting the well-being, understanding and success of families in business. Managed by Business family center 29 http://www.sauder.ubc.ca/Programs/Business Families Centre SDNY_GM_00078042 Confidential Treatment Requested by JPMorgan Chase JPM-SDNY