For Gates Foundation, Philanthropy is a Two-Way Street

Bill Gates visited a HIV/AIDS prevention center in Beijing

Six years after setting up a China office, billionaire philanthropist Bill Gates' foundation is exploring a new way of helping: exporting the country's innovations in health and agriculture to help other countries.

This is a shift from the foundation's previous China focus, which mostly provided grants to help solve health issues such as with vaccinations and HIV/AIDS prevention and treatment.

The Bill and Melinda Gates Foundation's new strategy is two-fold: reduce project funding while beefing up research and using Chinese innovations to benefit the world. Many international philanthropy organizations besides the Gates Foundation have adjusted their China strategy in recent years.

"Now we are balancing our domestically focused work by partnering with China to take Chinese innovation in many different areas, including rice, to use it to the benefit of much poorer countries," Gates said in an interview with Caixin in Mexico City on February 12.

Ye Lei, director of the Gates Foundation's China office, said "China not only enjoys the advantage of being a manufacturing base, but also has an edge in technology in certain areas."

In 2009, the mega foundation signed a three-year, US$ 18 million agreement with the Chinese Academy of Agricultural Sciences to fund the research of "Green Super Rice," a project that seeks to adapt rice to African conditions

"The goal is to help 20 million poor rice farmers — most of whom are women — increase their productivity by more than 20 percent in the next 10 years," Gates said. "It involves countries in Africa, China and us, a three-way partnership."

'Venture Capital'

A similar strategy has already yielded results in vaccine production. Seven years ago the Gates Foundation started to support China's largest manufacturer of vaccine and blood products, China National Biotec Group, conduct research on a new vaccine.

It also encouraged the company to apply for approval from the U.S. Food and Drug Administration and the World Health Organization. Once licensed, the vaccine will be exported to developing countries lacking health resources, such as India.

Ye said the Gates Foundation got involved in the project because it found out that China's medical products largely cater to the domestic market, despite the fact that many, with some improvement, have the potential to meet international standards. Once a company's medical product enters the world stage, it will increase world production and lower the market price, Ye said.

The pneumonia vaccine was usually priced at about US$ 100 per shot, Ye said, but companies whose cost on research and production were partly covered by the Gates Foundation could cut this to as low as US$ 3, making it more affordable to poor regions in South Asia, Africa and western China.

Ye likened the foundation to a venture capital firm, saying it was willing to take risk that technology hurdles or other difficulties present to companies. However, once a project succeeds, it can have a huge social impact. Then the foundation can exit when a project becomes commercially self-sustainable.