Multinationals are enmeshed in China’s complex political economy and entangled in the patronage system that underpins it. Credible, responsible business practices are becoming increasingly important rules of the game, as citizens use tools like social media to challenge their leaders to take action against hazardous products.
This shift is reflected in the proliferation of rankings, indices and high-profile awards. Following international practice, companies are responding with advertising campaigns, strategic philanthropy, public sustainability reporting and even stakeholder dialogues.
However, China’s “corporate responsibility” agenda is shaped more by national interests than by principled notions of the public good. In this environment, adopting business practices that advance China’s interests is essential for companies to secure official support, public trust and, ultimately, continued access to the world’s largest consumer market.
Today, high-profile philanthropy counts for little, while demonstrable environmental compliance, previously less important, is essential. Technology-rich companies are expected to pursue continuous technology transfer and, increasingly, to localize their research and development capacity. At the same time, firms must work diligently to uphold ethical practices in a corruption-riddled system in which state actors are often would-be partners in crime.
A new era of corporate responsibility has begun in China, and not a moment too soon. As with other aspects of China’s transformation, it draws pragmatically on international practice, but is defined by its Chinese characteristics. Global business leaders should take note.
Simon Zadek, currently a visiting scholar at Tsinghua School of Economics and Management, is senior fellow of the Global Green Growth Institute and the International Institute for Sustainable Development.
Copyright: Project Syndicate