Foreign companies need to become better citizens of their communities
Print Edition
It’s no longer enough for companies doing business in China to focus on sales, profits and strategies. They must also endeavor to become good citizens.
To promote that goal, the European Union Chamber of Commerce in China holds periodic forums on what is called “corporate social responsibility” and publishes an annual position paper on the issue.
“Corporate social responsibility has become a norm and a matter of growing importance for companies in China,” said Roy Zhang, director of United Technologies Corp’s community affairs/social responsibility in China.
“It involves many more policies and stakeholders nowadays, and it can decide the fate of a company,” he added. “We hope to help companies get a hand on the trend.”
In late November, the chamber hosted an anniversary forum celebrating its 10th year of work promoting social responsibility. The forum’s themes were threefold: innovation, trust and sustainability.
“The topics remain largely unchanged over the years, but they have taken on more depth and different perspectives,” Zhang said.
In recent years, many high-profile foreign companies fell afoul of corporate citizenship standards and had their reputations bruised by scandals in China.
British drugmaker GlaxoSmithKline was fined 3 billion yuan (US$476 million) in 2014 for graft, and three employees of mining giant Rio Tinto were imprisoned in 2010 on charges of accepting bribes and stealing commercial secrets. Other companies have found themselves implicated in food safety, environmental protection and labor rights malpractices.
“Some people say the reputation for social responsibility by foreign companies has been killed by these malpractices,” Zhang said. “But I would rather say that it is being reborn.”
China’s general public has been a driving force in shaping the “new norm” of corporate social responsibility, he said.
“Before 2008, this concept was little known by ordinary Chinese people,” Zhang said. “If it was considered at all, it meant a company making contributions to local charities.”
Today, social responsibility extends to nearly all aspects of business, from research and production to the supply chain, legal compliance and even employee benefits.
“Staff, the community, government and the general public are all involved,” Zhang said.
Many foreign firms have set up independent departments to oversee corporate social responsibility. Gone are the days when being foreign automatically conferred unquestioning public admiration and trust.
“We need to re-evaluate the function of social responsibility, making it part of our broad business strategies,” Zhang said. “In the future, companies may not need separate departments to deal with this issue but should have it integrated into their whole business process.”
Zhang lauded the leadership shown by China’s centrally administered state-owned enterprises in publishing the forum’s 2013 report and addressing its issues.
“They borrowed the framework of Western practices, but it remains at an early stage — an early stage with a high threshold,” he said.
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