CSR – Made in China. By Søren Albertsen, General Manager, CRECEA China

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Danish companies in China often ask us (CRECEA China): “We ought to do something about CSR in our company, could you help us with a gap analysis to begin with?”

What they think of is normally a review of their legal compliance regarding Occupational Health and Safety and in some cases also environment or even human rights.

Is that what CSR, Corporate Social Responsibility, is about?

Well, it is certainly a good beginning, but below here you will find some examples of another approach which is just as common in China.

The Earthquake
On 12 May, 2008, a terrible earthquake shook the Sichuan Province. During the following days companies, organisations and private funds donated money to support the victims.

By 2 June, 2008, 42 billion Yuan had been collected. During this period private messages to support some of the most prominent donors (such as China Mobile, Commercial Bank of China and Suning) circulated via mobile phones, chat rooms, e-mails and blogs. In the eyes of the public these companies had really been living up to their Corporate Social Responsibility.

Others, however, failed to create quite the same positive public opinion: Vanke, a real estate developer – and, ironically, for many years one of China’s “best corporate citizens” – donated 10 Yuan per employee, which was seen by the public as far too little, considering Vanke’s prosperity and the rumours that he would probably benefit from the reconstruction process in Sichuan. The whole story led to a negative attitude towards the company, and in a short time Vanke lost close to RMB 15.4 billion Yuan of his market share.

McDonald’s was similarly exposed to public rage due to some discount coupons published in a Nanjing newspaper. The coupons were red in colour, the colour normally reserved for the celebration of happiness. This was on the first day of mourning the earthquake victims (19 May). Furthermore, the donation from McDonald’s was considered too small by the public.

The public reactions were not necessarily fair, but it did have impact on the respective businesses.

Compliance or Charity?
Basically, CSR is about your company’s impact on your own staff and the world outside. As is easy to imagine, this definition covers a broad palette of topics.

To some people CSR is mainly about legal compliance, such as living up to rules and standards on occupational health and safety, environment and human rights. To others it is voluntary contributions, such as donations to earthquake victims, work place health promotion and support of the local football club.

Milton Friedman claimed that a company’s only responsibility is to make a profit – but this was back in 1970. Today there is more to it than just that.

The original definition of CSR was voluntary contributions to society. But the new trend, starting off in Europe, where many of the social- and health-related needs are covered by law, more and more people see CSR as a matter of both charity and compliance - and it is considered too technical to separate the two parts.

It is both about how you spend your money and how you make it.

Stakeholders
CSR of today can therefore be characterised by the following illustration:

CSR is based on a stakeholder’s interests and needs, and it consists of legal compliance combined with voluntary contributions.

All you need is to know your stakeholders and your own product, which gives you the perfect starting point to plan your CSR.

Let us turn to how they dealt with this challenge in China.

CSR Has Come to Stay in China – One Way or Another
On 4 January, 2008, the state-owned Assets Supervision and Administration Commission of the State Council (SASAC) published a national guideline on “Fulfilling Corporate Social Responsibilities.”
Later – in November 2008 - at the OPEC meeting, President Hu Jintao put forward a proposal that enterprises should establish the concept of global responsibility, social responsibility and consciously incorporate it into their strategic business model.

This has already led to several CSR-activities in China, where the banks were among the first to react. On 12 January, 2009, the China Banking Association (CBA) published “Guidelines on Corporate Social Responsibility for Banking Financial Institutes in China”.

By September 2009, more than 500 enterprises had published a CSR report for 2008, and there are more to come. These are just some of the signs that CSR has come to China to stay.
In fact, many people claim that the concept of being a responsible leader derives from ancient China, and as such CSR is just being updated – it is not something completely new and unknown.

Even though the Chinese government sticks to guidelines rather than legal demands on CSR, the recent years indicate that CSR is something all companies must take into consideration in the future.
In accordance with the Chinese way of doing things CSR is likely to be developed in a pragmatic way, accepting that a small step is better than nothing.

Danish companies, however, cannot wait until CSR really takes off in China. They are under pressure from authorities, governments, organisations and customers already today.

For examples of some elaborate CSR reports please go to www.cosco.com, www.sqcc.com.cn or
www.minsheng-bank.com.

About CRECEA China
CRECEA China is a CSR-consultancy company based on CRECEA Denmark’s 30 year experience. The company is based in Beijing and offers audits, consultancy and training in the field of occupational health and safety, environment and labour practices. This includes HR related topics such as communication, retention, stress and teamwork.
www.creceachina.com