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Corporate Social Responsibility in China: Window Dressing or Structural Change

Corporate Social Responsibility in China: Window Dressing or Structural Change

 

Li-Wen Lin*

ABSTRACT

In recent years, many indigenous corporate social responsibility (CSR) initiatives have emerged in China. The Chinese CSR initiatives include laws and regulations, governmental instructions and guidelines, non-governmental standards and organizations. The recent growth of the Chinese CSR initiatives deserves an analysis of the CSR development in China, especially given that China’s international image is usually associated with human rights abuses, substandard products, sweatshops, and serious environmental pollution. How sincere and serious are the Chinese CSR measures? Are they simply window dressing or is there any real structural change? This Article overviews major Chinese CSR initiatives and analyzes the Chinese CSR development from the perspectives of the historical and ideological foundations, instrumental motivations, and institutional environments in China.

 

I.

INTRODUCTION

Corporate social responsibility (CSR) essentially requires companies to conduct business beyond compliance with the law and beyond shareholder wealth maximization. It suggests that companies should do more than they are obligated under applicable laws governing product safety, environmental protection, labor rights, human rights, community development, corruption, and so on; it also suggests that companies should consider not only the interests of shareholders but also those of other stakeholders (e.g., employees, consumers, suppliers, and local communities). CSR requires companies to provide not only the quantity of goods, services, and employment, but also the quality of life for those whose interests are affected by corporate activities. The abstract concept of CSR has been transformed into a long list of corporate practices including, but not limited to, environmental management systems, eco-friendly and safe products, labor protection measures and welfare plans, corporate philanthropy and community development projects, and corporate social and environmental performance disclosure.’

China seems an awkward case in terms of CSR development. China is infamous for sweatshops and environmental pollution problems. The recent series of scandals of Chinese substandard products has again confirmed the shocking fact that many Chinese companies are unscrupulous about making money at the expense of human lives.2 Made-in-China products are popularly associated not only with low prices but also low product quality and irresponsible production processes. Ironically, the widespread image of Chinese corporate irresponsibility may be a main driver for CSR development in China.

Since 2004 CSR has become a prominent issue in Chinese academic and policy forums. 3 As this Article shows, in recent years many public and private CSR initiatives have emerged in China. The Chinese government in particular plays an important role in guiding the CSR discourse. The leading example is Article 5 of the 2006 Chinese Company Law, which requires companies to “undertake social responsibility” in the course of business. 4 Another important state-led measure is the promulgation of the CSR principles for the Chinese central-government-controlled companies to follow. Some private initiatives are growing as well, such as the Responsible Supply Chain Association’s CSC9000T and the Chinese industrial associations’ joint declaration of the Chinese CSR Industrial Principles.

On the one hand, CSR advocates may be glad to see the growth of CSR initiatives in China. On the other hand, they may also cast doubt on the real purposes and effectiveness of these Chinese CSR initiatives. Are these Chinese CSR measures simply window dressing, through which China just intends to improve its tarnished international image? This question particularly arises from the notorious fact/allegation that the Chinese government pushes or uses companies as vehicles of human rights abuses. For example, the Chinese government requires search engine companies to conduct censorship based on the instructions provided by the Chinese government officials.5 The Chinese government also has aggressively employed the state-owned enterprises to acquire its political and economic interests in many conflict zones in Africa. For instance, international human rights organizations have seriously condemned China National Petroleum Corporation (CNPC), a state-owned enterprise directly controlled by the Chinese central government, for its indirect involvement in the Darfur genocide. 6 These cases are contrary to the generally understood idea of CSR and raise doubt about the Chinese government’s motive of promoting CSR.

This Article analyzes the question from the ideological, instrumental, and institutional dimensions. The ideological dimension finds that the charitable practices by traditional Chinese family enterprises, the socioeconomic function of state-owned enterprises under Chinese traditional communism, and the newly-minted Chinese socialist percept provide footholds for CSR in China. The instrumental dimension considers the economic pressure in the global market and the social, economic and political interests within China. However, the political, legal and economic institutions in China still pose great challenges for the true furtherance of CSR. With respect to the public initiatives, this Article suggests that it is fair to say the Chinese government may be sincere in promoting CSR to the exclusion of human rights issues. China has relatively consistent political and economic interests in promoting the labor and environmental aspects of CSR. The Chinese government’s implicit exclusion of human rights from its official CSR measures signals a CSR discourse with Chinese characteristics. With respect to the private initiatives, private actors are becoming acquainted with the CSR standards in the global market, but the implementation is still subject to Chinese companies’ technological capacity and bargaining power in relation to their international buyers.

The study on CSR development in China offers important implications for the CSR development in global and comparative senses. CSR initiatives are part of the global governance scheme. Globalization not only creates huge business space for corporations but also more out-of-reach areas for national regulators. Many innovative transnational governance mechanisms outside the traditional regulatory territory have emerged to capture the emptiness. Still, global regulatory order is inevitably shaped and constrained by the existing institutions at the country level; any design of global regulatory order cannot be practicable if it fails to consider the effects of implementing such global regulatory law in a given country. The CSR development in China is a good example for evaluating the effects of global governance on the local level. In particular, the contemporary CSR movement is primarily pushed by the civil society in developed countries, but the movement has great impact on developing countries in the age of globalization. The impact can interact with the local environments of developing countries, producing some intended and unintended effects. Moreover, the Chinese case study also suggests that different countries have different indigenous CSR courses. The understanding and implementation of CSR is subject to cultural and institutional settings. It indicates the importance of comparative research for the study of CSR.

This Article is arranged as follows. Part II overviews the recent development of major Chinese CSR initiatives. It shows that CSR has gained an institutionalized position in the Chinese legal and political system. Additionally, some private actors have mobilized resources to develop CSR standards with Chinese characteristics. This overview sets the stage for the discussion in the following parts. Part III traces the related ideological roots of CSR in China. The indigenous ideologies echo many aspects of modem CSR generally understood in western societies. Part IV analyzes the instrumental motivations behind the Chinese CSR measures. There are external and internal forces that push China to embrace CSR, though with some qualifications. Part V elaborates upon the political, legal and economic institutional constraints on the CSR development in China.

Read more… II. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES IN CHINA

 

 

Source: Corporate Social Responsibility in China: Window Dressing or Structural Change

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