Corporate Governance in Contemporary China in Corporate Social Responsibility perspective

SOURCE: Wikimedia Commons

It is difficult to clearly define a term of Corporate Social Responsibility (CSR), although there are some fundamental features that can be drawn from the various definitions. To start with, the main characteristic for CSR is a behaviour of corporations that aims to achieve not only corporate goals, but also it’s work for the general good of society (Zhao, 2014). Going further, CSR concentrates mainly on different aspects of social life, like environmental concerns that are an addition to the traditional objectives of corporations. Additionally, the majority of scholars agree with themselves that CSR works for the purpose of improved living standards and community harmonisation. In general, CSR involves many different issues like occupational health and safety, consumer protection rights, corporate governance development, corporate objectives, and employment rights (Zhao, 2014). From governmental perspective, CSR may contribute to the fulfillment of welfare state goals of political character or responsibilities based in law (Buhmann, 2006). The case of CSR enforcement in China seems to be awkward regarding development.

The concept of Corporate Social Responsibility (CSR) in China was firstly adopted after 1978 when Deng Xiaoping decided to open the country for foreign investors. The process of restructuring the China’s economy had a huge impact on the development of CSR (Zhao, 2014). According to Zhou, there were three stages of CSR evolution in China. The CSR practices were firstly introduced to China in 1996, and the first stage lasted until 2000. At this stage, CSR wasn’t considered as an essential concept, and neither government nor media or general public were involved in CSR (Zhou, 2006). Another period of evolution came with the new twenty-first century, and it lasted until 2004. During that time international organisations, progressive academics and NGOs have contributed to the introduction of CSR in China. Finally, the third phase that started in 2004 and last at present brought a shift from passive into more active and participatory approach towards CSR (Zhao,2014). It is worth to mention that the whole idea of CSR in China was influenced by external and internal factors, such like economic interests externally, and social and environmental problems internally (Lin, 2010). Even if nowadays CSR is taken more seriously, the infamous environmental pollution problems, human rights, corruption or sweatshops are the challenges that this country must tackle with (Tian, Slocum, 2010).

In the socialist country like China, the government plays the main role in the development of CSR. Chinese policy makers are responsible for work to promote social cohesion, the establishment of competitive business environments and support the collective responsibility for the amelioration of society by way of business practices (Lam, 2014). CSR itself has a lot of in common with the notion of ‘harmonious society’ in China. Firstly mentioned by the previous President Mr. Hu as a society “that is democratic and ruled by law, fair and just, trustworthy and fraternal, full of vitality, stable and orderly, and maintains harmony between man and nature” (Lam, 2014). The Chinese government encourages corporations to increase its activities regarding CSR by offering many incentives like for instance better institutional environment or providing many labor and environmental regulations along with the guidelines (Lam, 2014). In the recent years, Chinese government even started granting many corporate citizen awards to the corporations with the encouragement to take care of “green growth, livelihood improvement, outward development into the West, and a general integration of Chinese businesses into global markets” (Zadek, 2011). In spite of many problems caused by pervasive corruption, product safety scandals or environmental issues that are slowing down a process of enforcement, CSR became an essential characteristic of business management strategy in China.

Harmonious society defined as a set of policies implemented by Chinese government consists of many objectives of corporations mentioned in the guidelines ISO 26000. ISO 26000 has several core subjects that should be implemented by socially responsible businesses. First of all, organizational governance promotes transparency and accountability, than ISO identifies human rights, where all individuals are treated with respect, and labor practices where all employees work in safe and healthy conditions (Kritkausky, Schmidt, 2011). Going further, another core subjects consist of environment, and consumer issues, where businesses ought to identify and improve environmental impacts of its operations, and fair operating practices that encourage to respecting the law (Kritkausky, Schmidt, 2011). During the Sixth Plenum of the Sixteenth Central Committee of the Communist Party, the government has set up several targets which refer to the improved Harmonious Society with compliance and similarity to ISO 26000 and CSR in general. The government should achieve it by 2020. That clearly shows a broadly defined relationship between companies, civil society and the government (Zhao, 2014). Going further, it can be assumed that the role of business in the implementation of CSR programs may contribute to the harmonious societal policy in China. In fact, according to the research conducted by Lam, only 4 out of 20 interviewed foreign MNEs have responded to the China’s national objectives and pursued a CSR programs that met the governmental priorities (Lam, 2012). The rest of interviewed companies meet the Chinese regulatory, institutional and plausible CSR requirements imposed by the government, although they do it at minimal cost. The result of this research, give us a clear picture how the MNEs are implementing Chinese government’s harmonious policy. Most of them do it superficially, and we can assume that most of the MNEs are rather focused on short-term awards. However, the examples of the firms that have the highest quality of CSR programs may inspire other companies and local government to follow them through adapting CSR programs that would foster a harmonious society (Lam, 2014).

Since the CSR practice was brought to China with the restructuring of its economy, we could observe many CSR initiatives that were taken mainly by the government (Lin, 2010). New laws, governmental instructions, and regulations, along with non-governmental standards have clearly shown that government has economic, social and political motivations to encourage the development of CSR in China. Although, examples derived from developed countries, shows that CSR development is a time-consuming process and it takes many years to adopt it fully (Lin, 2010).

References:

Zhao, Jingchen. (2014). Introduction. In: Corporate Social Responsibility in Contemporary China. Cheltenham : Edward Elgar. 1-20.

Buhmann, Karin. (2005). Corporate Social Responsibility in China: Current Issues and Their Relevance for Implementation of Law. The Copenhagen Journal of Asian Studies 22. 1 (1), 69-75.

Zhou, W. (2006). Will CSR work in China? Business for Social Responsibility Working Paper . Leading Perspectives BSR. n/a, 5-7.

Lam, Maria Lai Ling. (2014). Toward a ‘harmonious society’ through corporate social responsibility. Journal of Public Affairs. 1, 105-115.

Lin, Li-Wen. (2010). Corporate Social Responsibility in China: Window Dressing or Structural Change?. Berkeley Journal of International Law (BJIL) . Vol. 28 (1), 65-91.

Zadek, Simon. (2011). Corporate Responsibility and Sustainable Economic Development in China: Implications for Business. U.S. Chamber of Commerce. n/a (1), 7-18.

Zhao, Jingchen (2014). Corporate social responsibility in contemporary China: A growing awareness. Cheltenham: Edward Elgar. 65-84

Tian Xiaowen, Slocum John. (2016). Managing corporate social responsibility in China. Organisational Dynamics Journal. 45 (1), 39-46.

Randy Kritkausky and Carolyn Schmidt. (2011). Handbook for Implementers of ISO 26000, Global Guidance Standard on Social Responsibility. Available: http://www.ecologia.org/isosr/ISO26000Handbook.pdf. Last accessed 2.11.

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