Doing Business in China - Making the most of the free trade agreement

In this section:

› Understanding reciprocity
› Implementing a code of ethics
› For more information on CSR in China see
› Where to from here?

Corporate social responsibility has not made big inroads into the operations of Chinese businesses; they mostly continue to have a narrow focus on profit maximisation with human and environmental considerations coming second.

The Chinese Communist Party is anxious about growing social unrest throughout the country, wanting a redistribution of wealth from the affluent urban areas to the poorer rural regions to restore 'social harmony'.

In an effort to engage business in this objective a Chinese Association for Corporate Social Responsibility (CACSR) was established in August 2006. It has a mandate to encourage businesses to engage in both business-related activities such as 'employee care 'and the use of environmentally friendly materials and public activities such as “contributions to public welfare.”

CASR has already been joined by a number of trans-national corporations such as Nokia, IBM CISCO and Chinese companies like Pingan Insurance Company, the TCL Corporation and the China Merchants Bank.

New Zealand businesses looking to set up in China, regardless of size, should at least have some type of corporate social responsibility (CSR) programme on their radar for all the same reasons they would have one back home.

Understanding reciprocity

Complicating Western ethical judgments in China is guanxi - the close personal relations between individuals that often underpin business deals and relationships.

Guanxi creates ethical grey areas for Westerners.

For more information on guanxi see Dealing with China's culture and business protocols. To understand gift giving, see Business etiquette in China.

Implementing a code of ethics

A number of international companies have fallen foul of publicity campaigns highlighting labour or environmental abuses in their factories.

If you sub-contract manufacturing in China consider a code of conduct for the factory as part of your agreement. If properly implemented this can protect you against serious financial and public relations fall out. Also consider contracting a third-party inspection and audit agencies.

You need to be careful how you write and present your code of conduct. Don't take a 'holier than thou' attitude and impose a translated version of your existing code. Work as much as possible with your Chinese managers and partners to write a code that Chinese workers will understand and follow.

Where to from here?

See the section on dealing with corruption (if you haven't already).