The Development Of CSR In China Commerce Essay

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Nowadays, Corporate and Social Responsibility (CSR) become popular. Business schools offer CSR classes, conferences abound, and companies pay increasing attention to their CSR departments. The European Parliament passed a resolution affirming the importance of CSR, and business leaders increasingly understand that corporations are not just responsible to shareholders, but rather, to society as a whole.[1]. In China, CSR has moved from study to implementation for years. The administration and corporations consider CSR as the important part in their business.

THE EVOLUTION OF CSR IN CHINA

The development of CSR in China has gone through three stages:

The first stage was from the mid 1990s to the early 21st century, during which the CSR requirements were mainly applied to the international supply chain. In this stage, driven by the consumer market, international retailers and brand owners began to pay attention to the CSR issue, establish and implement CSR codes of conduct, standards or systems. Some Chinese enterprises, which had joined the global supply chain, began to accept factory auditing by multinational corporations. The management of these export-oriented enterprises was the first social group contacting CSR concept.

The second stage was from the early 21st century to 2003, during which the CSR concept was introduced to the society, drawing wide attention and debate. At that time, Chinese academic institutions, non-government organizations and international organization in China began to systematically introduce this concept and carry out extensive study and discussions. Under the background of global economic integration and fast growing foreign trade, trade authorities called on all interest parties to pay attention to CSR, so as to avoid the negative impact it may bring to trade. At the same time, government departments began to show concerns to the development of CSR among enterprises. The Ministry of Labor, the Ministry of Commerce and the Chinese Enterprise Confederation (CEC) all created CSR investigation committees to study the development of CSR in China.

The third stage began from 2004. It is a stage of active actions. Chinese government departments, industries and enterprises all have realized that developing CSR is an effective means to build a harmonious society, carry out the scientific approach to development and realize sustainable development. Accordingly, they have taken a series of positive measures to promote the maturity of CSR movement.

THE MATURITY OF CHINESE CSR

According to Mr Gefei Yin, Director and Vice-President of China WTO Tribune and the Development Center for Chinese CSR, the maturity of CSR in Chinese could be summarized as follow :

Firstly, with the development of the concept of CSR, many enterprises consider CSR not only as philanthropy but also responsibility to stakeholders. Responsible competitiveness means that enterprises help solve some social problems by using their professional advantages and finally increase their competitiveness. The Chinese CSR award scheme 'GoldenBee CSR Honor Roll', which will publish its 2008 edition on 5 June 2009, was established in compliance with the concept of responsible competitiveness. One criteria in the ranking system is to see if the candidate enterprise can provide a persuading business case of responsible competitiveness. The evaluation of the business case will contribute 40% to the final score of the enterprise.

Secondly, the CSR practice of Chinese enterprises has greatly improved in three aspects : . First of all, some leading enterprises already integrate CSR into their strategy. For example, Bao Steel has its CSR system, and State Grid publishes the Guideline for State Grid to Implement CSR and takes action. With a comprehensive CSR roadmap, these enterprises present their CSR concept in a systematic way and guarantee the capacity of CSR implementation. Second, the development of the concept makes more enterprises integrate CSR into their daily operations - which responsibilities should be implemented and how to implement them are all clarified and updated accordingly. Third, the professional department in charge of CSR affairs is established within the enterprise. For example, COSCO has its office of sustainable development and risk management.

Thirdly, CSR information disclosure is prominent. The establishment of CSR departments contribute to the information disclosure. According to statistics, from January 2008 to April 2009, there were in total 542 CSR reports published by Chinese enterprises.  

At last, Chinese enterprises have started to take their global responsibilities. There are about 202 Chinese enterprises have already joined the UN Global Compact. Chinese enterprises with business operations abroad are also taking their responsibilities in third countries seriously. For instance, PetroChina actively responds to the policy of Kazakhstan government and contributes a lot to their sustainable development. In addition to PetroChina's CSR report, Sino Steel Group also published their Sustainable Development Report-Africa.

GOVERNMENT ROLE IN CSR DEVELOPMENT

The Chinese government take CSR seriously. It is also said that the government is the key driver of CSR in China. It is aligned with President Hu Jintao's 'harmonious society' policy and this kind of political support has stimulated great progress. The role of Chinese government in CSR could be expressed as followed :

The Chinese government places greater emphasis on safeguarding the legal rights and interests of citizens and has established a well-founded and complete legal system, in which, many laws and regulations, such as "Labor Law of the People's Republic of China", "Trade Union Law of the People's Republic of China", "Law of the People's Republic of China on the Protection of Rights and Interests of Women", "Provisions on Special Protection for Juvenile Workers", "Production Safety Law of the People's Republic of China", "Code of Occupational Disease Prevention of the People's Republic of China", "Cleaner Production Promotion Law of the People's Republic of China" and "Regulations on Enterprise Minimum Wage", all contain CSR elements and requirements. However, China is still in the initial stage of developing a standardized, systematic and widely participated CSR social movement.

In 2005 the British Consulate sponsored a visionary programme to train academics at the national Party School in Shanghai (the China Executive Leadership Academy, Pudong or CELAP) in CSR. Since then, CSR has been integral to the training programmes for senior officials (from Director General up to provincial governor and minister level) and SOE directors from all over China. In May 2008 Prof Jeremy Moon, Director of the International Centre for CSR at Nottingham University, delivered a lecture on CSR to 50 district mayors at CELAP and engaged in a lively debate with course participants. Corporate activity in CSR was initially led by multinationals but increasingly large SOEs are becoming involved.

In fact, The government has set up numerous initiatives to research and promote CSR, and has told managers of state-owned enterprises to "understand the importance of CSR" within the context of current Party ideology. In the result, State Grid has launched the first CSR implementation guide for Chinese enterprises. Anh in 2006 the China CSR Alliance was established involving both domestic and foreign companies such as China Merchants Bank, Vanke Group, Nokia and Hewlett-Packard. Their first project was the 'Six 100 Project' funding 100 teachers for rural schools, 100 children in rural areas to visit Beijing, 100 new schools in remote rural areas etc.

As with all global practices, these trends suggest that CSR will most likely eventually develop unique "Chinese characteristics".

THE MAIN DRIVER OF CSR IN CHINA

In China, the key drivers at present are government and business customers. CSR only really came onto the radar in China in 2005, but it has undergone a period of rapid development since then. Before this time, it was viewed with a certain degree of suspicion by the government, who perhaps saw it as a new potential market barrier to Chinese products.

Initially the key driver for CSR in China was pressure from western corporates on their supply chain, for example in the textiles sector. These western corporates themselves were facing pressure from NGOs and consumers. Product safety has been a headline issue - not just internationally (toys and toothpaste) but also domestically (baby milk) - that has affected the "Made in China" brand.

In the last few years CSR has been strongly promoted by the Chinese government. It is aligned with President Hu Jintao's 'harmonious society' policy and this kind of political support has stimulated great progress. In 2005 the British Consulate sponsored a visionary programme to train academics at the national Party School in Shanghai (the China Executive Leadership Academy, Pudong or CELAP) in CSR. Since then, CSR has been integral to the training programmes for senior officials (from Director General up to provincial governor and minister level) and SOE directors from all over China. In May 2008 Prof Jeremy Moon, Director of the International Centre for CSR at Nottingham University, delivered a lecture on CSR to 50 district mayors at CELAP and engaged in a lively debate with course participants. Corporate activity in CSR was initially led by multinationals but increasingly large SOEs are becoming involved. State Grid has launched the first CSR implementation guide for Chinese enterprises. In 2006 the China CSR Alliance was established involving both domestic and foreign companies such as China Merchants Bank, Vanke Group, Nokia and Hewlett-Packard. Their first project was the 'Six 100 Project' funding 100 teachers for rural schools, 100 children in rural areas to visit Beijing, 100 new schools in remote rural areas etc.

CHALLENGE OF CSR IN CHINA

According to China's Corporate Social Responsibility Report 2009, the overall level of China's CSR is still in a low stage. Approximately one fifth of China's top 100 corporations are in the start stage of CSR without sound idea and system. Roughly 40% of China's top 100 corporations had little awareness of CSR as bystanders. That because the companies are convinced that the "business of business is business" and so they want NGOs do their community development work and the government to fund schools, colleges, clinics and hospitals - after all that's why they pay their company taxes and VAT.

Besides, many Chinese companies think that CSR is only for the largest and richest foreign companies accompanied by the belief that CSR has no relevance in China for SMEs or small traders or for workshops employing only a few people.

In fact, companies need a stable society in which to trade. They need healthy, well educated and compliant workers. It's in the long term interests of the business sector in China to improve their corporate futures by investing in the community - in their workers and their communities - if they are to be able to manufacture and sell increasing volumes of their products in China.

IMPROVE THE CSR IN CHINA

According Dr WANG Qin, School of Economics and Management, Wuhan University, CSR, the Chinese enterprises need to undertake social responsibility from the following three aspects.

Firstly, the government should adjust the mode of economic growth and establish the goals of sustainable development and help the enterprises to set up the regulation institution of CSR, making in agreement corporate objectives, macroeconomic objectives, and social objectives. The government regulator needs to strengthen the supervision modes continuously and to speed up the construction of faith system, which will provide positive environment for the enterprises to develop and carry out CSR. And the government should set up and perfect the related regulations to propel the development of CSR practices and to extend the platform of CSR.

Secondly, in terms of Western experiences, promoting CSR is a combination of from-bottom-to-up and from-up-to-bottom. Accordingly, in China, speeding up the construction of CSR needs the common efforts of NGO, NPO, mass media and consumers. The function of NGO lies in the fact that it increases

the pressure and enhances the attraction. The enterprises are in need of a platform provided by NGO and NPO to carry out CSR. For the consumers, they should cultivate the concept of green consumption. By way of the purchase rights, consumers supervise the enterprises to see how they perform CSR.

Thirdly, enterprises must set up the concept of corporate citizenship and be concerned about stakeholders through improving productive condition and guaranteeing production quality. What's more, they should increase disclosure of corporate information, letting the society taking part in the supervision. And enterprises should develop public spiritedness and cultivate the habit of charity.

what are examples of CSR best practice and worst practice by companies?

In 2008, melamine was detected in the products of 22 Chinese milk companies those account for 20% milk supplies in the country. The incident shocked the public and involves the international reaction about food safety standards in China. More than 20 people were convicted of their role in the toxic milk. Melamine is a compound used to make plastics, fertilizer and concrete. As the food, it will increase the amount of protein, but cause kidney stones and kidney failure. The melamine in Chinese milk was found at 500 times higher than the maximum allowed. In 2008, as the public announcement, the milamine milk killed six children and about cause 300,000 children infected.

CONCLUSION

In conclusion, from the establishment of legal entity to the concept of CSR, the theory of stakeholders, CSR in China had several steps on a long journey. The basic reason of lack of CSR in the Chinese enterprises is the imbalance of social responsibility cost and short-term profit. Therefore, a set of reasonable system to evaluate CSR is necessary. If the system is to work well, the enterprises, the government and the society should make concerted efforts. A good CSR in China is an effective way to optimize wealth distribution, an effective lever to adjust social fairness and economic benefit, a regulator to stabilize the society, and a protective screen of public and natural environment.

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