Corporate Social Responsibility in China

The following sections are included:

• Contents
• Foreword
• Acknowledgments
• Introduction

Though the definition and implementation of CSR practices raise similar questions in China as in other parts of the world, it remains true that practical issues and priorities differ from one national or cultural context to another. Besides, the very size of China and its impact on the global economy make a number of issues more acute. This first part of the book will sketch and progressively enrich an approach to CSR that balances a global vision with an appreciation of the Chinese context in its legal, social and cultural dimensions. Through recapping how CSR and related concepts developed in the last decades, it will examine how these developments may help us to reinterpret Chinese cultural and social resources relevant for entrepreneurial activities. It will also investigate how corruption and misbehaviors adversely affect the understanding and implementation of a company's social responsibility. Finally, it will try to integrate a China-based understanding of the CSR imperative into corporate strategies.

The following sections are included:

• A Pragmatic Approach to CSR
• The Company as an Interdependent Self
• Specific Dimensions of CSR
• Related Concepts

As we have already seen, the exercise of CSR presupposes compliance to the legal framework of a country. A legal framework applies to a range of issues: environmental protection, employers' rights, or safety norms. This framework, which may be open to juridical and prudential interpretation, also provides the company with references on the priorities and general principles devised by state authorities when it comes to the role of companies and businesses in the overall social development. Taken globally, laws and norms provide companies with an interpretative outlook through which they can assess how their social responsibility is conceived and monitored in a given national context. It is in this light that we recall here some legal provisions that influence the implementation of CSR in China. We will detail specific dispositions later in this study.

As we have already noted, CSR is anchored into cultural values and traditions that inspire corporate ways of proceeding — and these ways of proceeding are sometimes hard to translate from one national environment to another. This may create distress for managers and employees alike, as misunderstandings and distrust are then prone to arise. However, striving for mutual awareness of one another's cultural background and values helps the protagonists to forge new languages and modes of communication through which they can elaborate codes of cooperation and conduct. Cultural communication is of particular importance for putting into application CSR-related issues and policies, as business in China involves actors coming from very different backgrounds. Furthermore, China's practices and regulations themselves reflect the cross-breeding and globalization process through which the Chinese economy and society have been evolving during the last three decades or so.

This chapter intends to frame into a whole the rationale for actively implementing CSR in the present Chinese context. At such, it serves as a transition between the approach defined in the course of our first three chapters and the study of the various CSR-related fields of action that we will be dealing with in Part Two. However, before examining these fields of action, the present chapter will first analyze how CSR can be incorporated into the corporate strategy, by examining its benefits, its links with philanthropy and how research in the area of CSR can help in its implementation. Chapter 5 will further illustrate this with a focus on combating corruption. Taken together, Chapters 4 and 5 will sketch the tenets that determine a corporation's day-to-day exercise of CSR in the Chinese context.

Assessing the conditions under which CSR-values and practices can be implemented in China requires at some point an evaluation of the extent to which corruption may weigh on business activities. For sure, corruption is a phenomenon that affects, at various degrees, all countries in the world, taking different shapes according to social, political and cultural prevailing conditions. The Chinese government has made the struggle against corruption one of its top priorities, while recognizing the pervasive character of the phenomenon and how difficult it would be to eradicate it. President Xi Jinping has exhorted fellow leaders to learn from the experience of other countries where corruption has played a “big role in conflicts that grew over lengthy periods”, and led to “popular discontent, social unrest and the overthrow of the political power”. The new leadership describes the challenge created by corruption practices with striking expressions: “Combating corruption and promoting political integrity, which is a major political issue of great concern to the people, is a clear-cut and long-term political commitment of the Party. If we fail to handle this issue well, it could prove fatal to the Party, and even cause the collapse of the Party and the fall of the state … We must maintain a tough position in cracking down on corruption at all times, conduct thorough investigations into major corruption cases and work hard to resolve problems of corruption that directly affect the people. All those who violate Party discipline and state laws, whoever they are and whatever power or official positions they have, must be brought to justice without mercy.” And indeed, corruption generates much public discontent. According to an online survey jointly conducted in February 2011 by Xinhuanet.com and Sina.com, the top five concerns expressed by the public were: (a) housing prices; (b) income distribution; (c) inflation and commodity prices; (d) combating corruption; as well as (e) employment promotion and equal employment opportunities. The importance that the topic conveys for public opinion is evidenced by other surveys as well as by the traffic and comments that corruption cases trigger on the Chinese internet.

Corporate social responsibility, we have seen, is embedded into ever-evolving social and cultural practices and concerns. Its priorities and modes of implementation reflect both the consciousness that the company has of itself and of its mission, and the expectations expressed by its stakeholders and notably, those by the state. CSR-related norms and practices vary according to the cultural contexts in which the company operates. This being said, it should be stressed that: (a) every cultural context — and China in particular — provides the company, its employees and the public with specific resources for implementing CSR as long as cultural resources are dynamically and positively used and interpreted; (b) furthermore, this work of creative reinterpretation takes place in a context where values and attitudes are cross-fertilized, creating new corporate cultures that reflect the diversity of the companies' operational settings.

The importance taken by environmental concerns in China makes this area the keystone of CSR practices in the view of the public and the state alike. It is thus necessary to examine in some detail what makes such preoccupations so crucial both for companies and society at large. Reasons specific to China lend environmental concerns a prominence that goes even beyond the one they have reached in Western countries — for very good reasons.

In China, safety is probably the most volatile of all CSR-related topics. Issues and stories linked to food or product safety, environmental hazards, or work-related deaths and injuries are exposed daily on the internet and in the media. Public complaints frequently point to a low level of implementation of the existing regulations, to the difficulties met when trying to assert a chain of responsibility in the production process, and to the disregard of standards, which may be caused by greed or by a mere “devil-may-care” attitude. Scandals and major accidents have gravely tarnished the reputation of companies (see Box 7.1 for an example) or even full sectors of production. Accidents and malfunctions have also generated an atmosphere of suspicion now deeply ingrained within the consumers' mentality. Conversely, companies establishing an excellent record on safety issues enjoy a strong comparative advantage over their competitors.

The sense of CSR developed within an organization does not only apply to agents exterior to it. In fact, the employees of the corporation should be seen as its first stakeholders. It would be impossible to implement CSR toward consumers and the general public without first taking into account the well-being and sense of fulfillment of the persons working within the corporation. Textbooks on business ethics and CSR, when identifying issues internal to the organization, generally focus on the following issues:

• Downsizing and layoffs: employees' job security;
• Working conditions and employees' rights;
• Discrimination and affirmative action; and
• Women in the workplace.

In the previous chapter, we discussed an array of issues that are largely framed by a body of regulations. While legal imperatives remain very much a factor in the issues we are now going to examine, this section focuses on cutting-edge questions, which are becoming part of CSR-related concerns and strategies. In other words, this section is more “experimental” in nature. At the same time, it is precisely on experimental and rapidly emerging issues that a company's corporate culture can deploy its inventiveness.

The way to manage tensions and conflicts within the organization, the measures taken for preventing their appearance, the style of dialogue and communication fostered in a given corporate culture, all of these are definitely part of CSR, insofar as we define it — as we have consistently done — as a regulation mechanism through which an organization monitors its conformity to laws and regulations and optimizes its behavior towards its stakeholders. There is, as everyone knows, a strong cultural dimension to conflict and bargaining, shaped by dominant values, styles of communication and historical memories that facilitate or impede the expression of disagreement. There are also different legal, social and political frameworks channeling these expressions. Conflict prevention and bargaining is certainly one area in which the knowledge of Chinese context and culture is of particular importance for any company that wants to both act ethically and work in accordance with local conditions and mores.

Part One has defined the scope and rationale of a company's CSR commitment, specified its implications in the Chinese context, and tried to identify resources specific to China that may help companies to implement CSR-based practices. Part Two has focused on areas of application, analyzing concerns and strategies linked to environmental issues, safety, social standards, gender equality, well-being and training in the workplace, and conflict management and prevention. Part Three turns the focus to transversal issues: it aims at helping companies and other stakeholders to appropriate the questions and resources gathered in the course of the preceding chapters by analyzing ways of proceeding and tools of discernment conducive to the efficacious implementation of a CSR strategy. It will thus discuss: (a) ways of engaging sound ethical assessments; (b) the relationship between CSR concerns and corporate governance; (c) the setting up of instruments such as codes, foundations, pilot projects and networks; (d) the opportunities offered by the development of social entrepreneurship; and it will conclude with (e) an overall vision of the role that corporations are called to play in tomorrow's China.

We have seen that the expression “Corporate Social Responsibility” refers to an array of behaviors, choices and practices that goes beyond the field of “business ethics”. Though the two largely overlap, it can be said that the reference to “CSR” leads one to preferentially examine the policies set up by a corporation for proactively making its operations consistent with a social vision inspired both by its own corporate culture and public expectations, while “business ethics” refers to a set of principles through which a company may be led to correct such policies or such aspects of its management practices. The use of one term rather than the other is determined by focus rather than by content. This chapter will try to offer a way of tackling corporate ethical concerns, firstly by suggesting an approach to the art of “discernment”, secondly by centering on two fields of special importance, namely finance and engineering, and thirdly by devoting attention to “conflicts of interests” as they may be lived and solved at different levels of a corporation's operations.

The exercise of corporate ethical discernment is fostered by codes that anchor business ethics into a company's culture. If the corporate culture is subsequently permeated by the principles and mechanisms these codes define, CSR would have been infused into all aspects of a corporate culture: the understanding of the company's vision and ultimate objectives; its decision-making process; allocation of resources and strategic priorities. In practice, however, CSR often remains in one sector of the company's organizational chart, which does not allow for the creative feedbacks that a more synergic approach would foster. The question raised in this chapter is thus about the ways to make CSR an integral part of corporate governance.

This chapter deals with the strategic tools that companies commonly utilize for enhancing their corporate image: reports, foundations, pilot projects and participation in networks. The stress here is on what companies may learn through a thoughtful use of such tools, going beyond mere image building, so as to incorporate the humane and financial investment consented into an organization's overall corporate self-understanding and strategy.

Still an emerging concept in China, social entrepreneurship may be defined as private business ventures primarily aiming at solving some of societies' most pressing issues; or — otherwise said — business ventures organized around a social or collective purpose rather than the search for profit. Although “social enterprise” (SE) came out as a specific concept as late as the 1970s, pioneering endeavors could be found in Europe at a much earlier date (Florence Nightingale and the first nurse schools in the UK). The movement has since become a global trend, which is now reaching China. SEs can be developed through the effort and investment of private entrepreneurs, through support from private sector financing (Danone social fund, Grameen Bank) or, in a few cases, through governmental support.

We now intend to mobilize resources that may help companies operating in China to enrich and further the corporate vision governing their CSR strategies and practices. These resources come mainly from taskforces or from international institutions working together with the Chinese government. Though the scope of vision of the reports and analyses we build upon may seem to go beyond the corporate field of action, the interconnectedness of the issues that China and the international community are dealing with makes it necessary for all actors to engage in a global assessment of their priorities and means of action.

Throughout this book we have tried to articulate as a whole a number of findings, the most important of which can be summarized as follows:

• A sense of CSR is a regulating mechanism through which a company asserts the degree of consistency existing between its vision and values on the one hand, and its actual practices on the other, and tries accordingly to optimize the effect of its operations on all its stakeholders.

CSR should be understood and implemented not only as a specific dimension of the corporate strategy but also — and more importantly — as an internal driving force nurtured by the contribution of the individual team members of the corporation. The objective of these recommendations is to foster, in the Chinese context, the emergence of a self-adapting CSR engine capable of delivering better insights for tackling corporate and developmental challenges.

The following sections are included:

• Bibliography
• Index