China’s embrace of CSR could usher in the Wal-Mart effectApril 2009
In itself, the fact that the China Banking Association has issued guidelines on corporate responsibility is significant (see page two), especially since the recommendations are ambitious. But taken as part of a wider picture the move acquires far more importance. China is finally ‘getting’ CSR.
For the past two years the business and state sectors in the country have begun to address corporate responsibility in a much more thorough way, often at the behest of government. Among the number of initiatives that together add up to a substantial body of work in the field has been a thorough revision of labour law to improve workers’ rights, plus a central government dictat to China’s 152 state enterprises advising them to create CSR departments and policies. An arm of the commerce ministry has also drawn up guidelines on CSR for foreign invested enterprises, and the government-backed Chinese National Textile and Apparel Council recently signed an agreement with two European organizations to improve ethical supply chain management in the country.
Various factors have contributed to increased official interest in business responsibility, including the worldwide attention attracted to China by the 2008 Beijing Olympics and the country’s huge economic growth. China has experienced a sixfold increase in manufacturing output since 1990, making it the third largest manufacturer after the US and Germany. Foreign direct investment has increased 20-fold since 1990 and China is expected to overtake the US as the world’s largest exporter in 2010. With this level of involvement in world economic affairs, it is perhaps unsurprising that Chinese businesses, and the government that regulates them, have begun to come into line with business practices that find favour elsewhere.
Again this movement, in itself, is important. But beyond its national significance the development has global implications. There is a parallel here with Wal-Mart. When the world’s largest public corporation announced in 2005 that it would embrace sustainability, it was a massive boost for the mainstreaming of CSR – not just symobolically but practically, given the huge reach of the company.
Though not a corporate entity, similar rules apply to China. Businesses there are increasingly not just suppliers but customers, and their influence is growing by the day. The Chinese state is now a global enterprise with financial tentacles extending into Europe, Africa and the Americas. As with Wal-Mart, we will have to reserve judgement on how far the country’s new outlook is implemented. But any wholehearted adoption of responsible business behaviour in China must have positive reverberations around the world.
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