Ethical Performance
inside intelligence for responsible business
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Here be dragons?

August 2013

An unexplored territory to many, Keith Crane looks at how foreign companies are approaching CSR programmes in China and discovering that businesses need to ‘reverse the support circle’ to make things work.

China’s new president, Xi Jinping, didn’t waste any time in creating a phrase to sum up a view for his next 10 years in office – achieving the China, or Chinese dream. It has inevitably been discussed as to what it actually means; can you can compare it to the American Dream, and how do Chinese people themselves see it.

Vast improvements in lifestyles, poverty reduction and education have been made in China in the three decades since Deng Xiao Ping opened up the country to reform, and western investment. So where is the country heading under its 12th five year plan, and its new leadership?

There’s also one thing to make clear, while China may have a new leadership, its policies have also been agreed collectively well in advance… China plans its future 10 years at a time. And while President Xi and Premier Li may be taking over, they inherit plans already agreed for 2011 to 2015.|

Many commentators in the west are fraught at the fact China’s growth has slipped to single, but still impressive figures. But they miss the point – that’s what the Government has decided, for a more sustainable future. It wants a more balanced, customer-led economy.

So where does CSR fit in with all of this? Key experts from the British Chamber of Commerce and British China Council addressed the issue in a forum earlier this summer.

They were led by Clare Pearson, a China veteran of eight years who leads DLA Piper’s corporate responsibility, and Daniel Wang, publisher of Charitarian Magazine. To say they work closely together is an understatement. They’re more like a double act, second-guessing each other’s next sentence as they describe where the country is now, and where it’s going.

So if the economy is slowing, does CSR have a future, when budgets are tight and margins are slipping? The message is clear. Companies that want to succeed in China need to think about CSR – but differently from the way they do in The West. NGOs and government have to work together. First the government oversees about 90% of the economy, and has a built-in resentment of overseas intervention.

Reversing the support circle
Pearson has reversed the circle how companies offer support. Rather than a bank say, writing a cheque and asking their Beijing office to spend it, say on a school, that may be built in the wrong area and ultimately closes, you need to ask the government where they need help, and fill in the gaps they can’t meet. That means identifying the areas the government can’t reach, which these days mean bringing the western inland regions up to the standard of the highly developed east coast. Wealth redistribution, narrowing the income gap, is this government’s key priority, and if you work with it, you will shine out Pearson says.

“Start with the ‘Five year plan’, and select a social issue that is of current concern such as unemployment, climate change, education or health care. If you tackle one of their priority issues, they will ensure your profile, as the government is the media.”
Daniel Wang says companies need to be aware of what is happening in the country, with regards to the increase in income, and reduction of poverty across the China.

One of his first slides showed the Gini-co-efficiency scale, comparing the GDP per capita across the country. While Shanghai and the Yangtze Delta may still be leading, the inland cities of Chengdu and Chongqing are increasingly important to overseas employers as labour costs in The East rise. They’re building factories there and increasingly building sub-headquarters, or even moving lock, stock and barrel.

He also addressed who benefitted after the last five year plan, and is confident, that while yes, the rich have got richer, farmers, still from a very low base, have benefitted from recent government policies, including the removal of taxes, new subsidies and pension rights.

I checked this with a Chinese friend, whose father farms in north-western Shanxi province, and himself is one of the rural migrant workers now in the capital, Beijing, if he agrees? He does. Does his father have any complaint with the government? No.
So, where you may ask, does CSR come in?

One of Pearson’s pet projects, now in its sixth round, is E3, equal education for everyone, in conjunction with Nord Anglia and working with the British School of Beijing , which trains 100 teachers a year from rural areas of China about modern study methods.

“This project helps the rural teachers to broaden their horizons, receive new and advanced education ideas and gain exposure to different teaching methods. It also helps to balance the education standards between the city and the countryside. One teacher can influence the future of 10,000 rural children,“ Pearson says.

But it’s the approach that matters, she stresses.

“It’s all about training people without them realizing they’re being trained. We want them to feel comfortable. It’s not the British school telling them what to do – it has to be seamless.”

That means participatory events of getting to know each other, and just getting down to basics, where the UK head teachers sit down and paint, play ping-pong, alongside their Chinese colleagues. Creating former President Hu Jintao’s “harmonious society”, without ever mentioning the word ‘harmonious’. But it’s not always so, as Pearson demonstrated at the forum which showed a situation probably unique to China.

Taking the teachers around Tian’anmen Square proved less than harmonious as their photographer, a former paparazzi, noticed they were being followed and videoed.

They were stopped and asked to produce their papers by the ever-vigilant Chinese plain clothes security personnel – another reason Daniel Wang’s presence was essential.

“You need a local face. I didn’t believe it when he told me, but then we got stopped. And we needed Mr Wang to show them we had the right papers and were not doing anything wrong.”

Mr Wang is Pearson’s local face. They work hand-in-hand, as Pearson says, they need to.

“You can’t just come into China and tell people what to do. It’s the complete reverse of The West.”

So her CSR cycle begins with asking the government what needs to be done and filling the gaps it can’t do.

And while people in The West sit at computers and wait for meetings, the Chinese are far more active.

Need for action
The forum was held just weeks after western Sichuan suffered its second major earthquake in five years (but thankfully without the severe loss of life in 2008). Disaster response is one of the areas the government has identified for CSR, but western firms need to react quickly, there’s no time to wait for a board decision.

“Look at the earthquake response… the Chinese were on their mobiles straight away, they weren’t sat at a desk on a computer, waiting for a decision miles away, they were getting things done standing up. These are people who have been through hardship and complete change in their lifetimes, they don’t need to go through a change management programme, they’ve already been there, done it.”

She highlights the philanthropy now of China’s millionaires and billionaires, who, like Bill Gates now see their roles as giving something back.

“They’ve seen hunger and hardship, and we wonder why they want to make a fortune? They’re less interested in raising flags now, more in raising awareness.”

And this is where companies need to focus, she says, not in major banner-waving of projects, but ones that get to the grassroots, ones that make the most difference to the most people.

“Foreign firms count less than immediate social priorities to the Chinese government. They must literally give away some intellectual property to help the rural regions. Look at Microsoft. Millions of poor students copy their software but it doesn’t go after them, but it will certainly sue corporate offenders. Instead it focuses on computer training for unemployed migrant workers.”
So, back to where we started, where does all this fit in with the Chinese Dream?

Pearson frets a little about the future. “I think the world is at a tipping point, it’s going to be a complicated century, as everywhere becomes more urbanized, with climate change and potential water shortages, how can you deny people access across borders if they have no water?

“But China is trying to do things that have never been done before, but in a very pragmatic way. As it becomes a superpower it will have a huge influence on individualism and collective responsibility. Just by the sheer number of Chinese, how they grow up with each other means they have a second sense of knowing what’s going on around them, which means they’re not so combative on the international stage.

“They can work out in minutes somebody’s character, and what needs to be done, and that gregarious environment breeds political and economic empowerment.” But does that empowerment mean more freedoms?

“They’ve grown up through floods, famine, baking hot winters and freezing winters and they’re too busy working to build a successful future to worry, or have time to worry about the things we do in the west, like human rights. They haven’t got to the point of having leisure time yet to think.”

It’s a salutary statement that means no-one should come into China, corporately or personally, thinking they’re on a mission to change. As Daniel Wang reminds us, China is a country which has lifted 600m people out of poverty in 30 years, and now educates 99.8% of primary-age schoolchildren.

So what’s the message? Please do come, but we’ll tell you how we’d like you to help us, thank you, it seems.  

Asia | CSR


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