Besides the establishment of headquarters in China,
what other strategies might be useful for
foreign firms to become strategic insiders in China?
Next, I would introduce another commonly used strategy,
Corporate Social Responsibility in China.
According to a study conducted by a joint initiative
between the CSR center of the Embassy of Sweden in Beijing,
and a CSR center in 2014,
the effectiveness of CSR performance in China is actually relatively high.
On the one hand, according to the online survey results,
78 percent of respondents believed CSR had been
effective in addressing social and environmental issues in China,
indicating a comparably high ratio of perceived effectiveness in China.
On the other hand, nearly 82 percent of the respondents were either
neutral or disappointed about the current state of CSR development in that country.
The majority of Chinese companies still see CSR as cost into
profitability and not as something that can create
a value and have to improve business performance.
For different ownership types,
the cases are fairly different regarding CSR.
First, foreign MNEs, you already have clear sustainability strategies and are good
at integrating CSR into their daily operations with well-rounded management systems.
Second, for Chinese SOEs,
a fast-growing improvement in CSR has been reported among SOEs recently.
Third, for private companies,
it has been shown that POEs are perceived to have a lower level of
CSR awareness and knowledge than those of both MNEs and SOEs.
For companies in different industries,
CSR performances are also distinct.
Companies in the industries that are dependent on the use of
fossil fuels are considered to be the most advanced in terms of CSR development.
Export-oriented firms are also prominent in the performance of CSR.
The banking and financial sector is also
ranked highly with regard to CSR knowledge and the performance.
Overall, CSR in China,
with increasingly quantity and quality,
has been performed by companies in various industries.
In spite of the current state of CSR performance,
there are still many challenges for foreign MNEs to perform CSR in China.
The first one is set of internal challenges.
Firstly, there might be conflicts between
the head office and the local branches in China.
Second, the available pool of talent and experience is small.
The third internal challenge is the lack of senior executive involvement in CSR.
Finally, the lack of employee engagement
may be another internal problem being faced by foreign MNEs.
Besides the internal challenges,
companies may encounter the following challenges when revitalizing their CSR programs.
First, there are challenges in developing strategic CSR rather than precautionary.
Second, challenges in recognizing the need to localize CSR strategies can't
be ignored as local stakeholder groups may have different expectations for CSR.
Third, NGO is very important for the CSR activities,
but MNEs sometimes face challenges in finding and cooperating with local NGOs in China.
The third kind of challenges that foreign MNEs might meet in
China to conduct CSR may be the challenges along the supply chain.
First, many Chinese SMEs, as MNEs suppliers,
do not provide adequate training in ensuring compliance with CSR programs.
Second, there are increasingly strict environmental regulations along the supply chain.
Third, when there are multiple suppliers,
it is even more challenging to maintain
effective social and environmental standards throughout the supply chain.
The last challenge might come from growing public expectations.
First, with a great and growing influence of MNEs,
the general public tends to place
higher expectations on these companies than on domestic ones.
Second, CSR issues related to MNEs are magnified by intense media coverage.
For example, immediately after the earthquake in Sichuan in 2008,
many firms including both foreign MNEs and
Chinese domestic firms made donations to
the Chinese government to help the recovery there.
The MOFCOM publicly released the exact amount of money on its website.
It is the first time for MOFCOM to publicly release such CSR information.
Obviously, as some very famous foreign MNEs were not so generous as expected.
A number of Chinese netizens called for actions to boycott their goods.
Prof. Xufei MaAssociate Professor, Director, Center for Entrepreneurship
Dr. Frank NgLecturer
