Corporate social responsibility is increasingly important to international companies operating in China, but it must be real commitment and not a cynical marketing ploy
As China becomes a buying market, rather than simply a cheap manufacturing base, international companies are recognising that they need to do more than simply rely on the power of their brands to win market share.
Corporate Social Responsibility is an increasingly important part of the marketing armoury to open doors to the government-controlled media, to government officials and even to the hearts and minds of the Chinese consumer. A number of examples have emerged in 2014 of corporations actually putting their money (in addition to their expertise) where their mouths are, and following through with charity funding that supports their commercial expansion.
Foremost among these is Jaguar Land Rover, which used the Beijing Auto Show in April as a platform to announce the establishment of a 50m Yuan (£4.86m) China Children and Youth Dream Foundation. This fund has been established to “support the dreams of under-privileged and disadvantaged children”.
There is also a profit agenda. The foundation, which received equal billing with the opening of a new Chengdu regional office, illustrates JLR’s long-term commitment to developing a partnership with China and the Chinese, which it expects will be reciprocated. It’s a commitment to support the needs of a China that cannot afford its products, in order to encourage the China that can to embrace the brand.
It’s a strategy echoed by other large corporates such as HSBC that claims on its website that CSR “… is critical to HSBC’s long-term success in China. CSR is not only about charitable donations, the environment or society, but also about making decisions that maintain the right balance between the environment, society and the Bank’s business.” Translated from corporate-speak, that means: we can afford to be philanthropic, because it also helps our bottom line.
According to former IBM marketeer and now China consultant, John Pickup, it’s a very sound strategy, even for non-listed companies, “CSR is a sign of the maturing corporate landscape, and an ‘on-message’ way to provide a strong point of difference in an increasingly competitive environment, as it signals that the company is making a long-term commitment to a locality.” But he warns “it needs to be handled very sensitively to avoid giving the impression that is just a cynical marketing ploy.” This requires real commitment on the part of foreign companies as it must convey respect for the community.
In the 2005 National People’s Congress, the government’s Harmonious Society policy changed China’s focus from economic growth to one of societal balance and harmony. Pressure for an intensified focus on CSR was an outcome of this initiative. Article 5 of the 2006 Chinese company law, which requires companies to “undertake social responsibility” in the course of conducting business, is a legislative example of this policy.
The government’s growing appreciation of the role that corporate CSR can play to complement its central operations, and also to help address corruption, was underlined by Premier Wen Jiabao in 2009: “Entrepreneurs should not only focus on business and management, they should have the blood of ethics flowing in their bodies”. It has now been embedded in the twelfth five year plan (2011-2015), which seeks “inclusive growth” rather than growth at any cost.
The massive Sichuan earthquake of 2008 marked a key change in Chinese CSR, generating an unprecedented number of donations and an outpouring of volunteerism. One of the consequences of this earthquake was the establishment of the Chinese Relief and Development Foundation (CRDF) which funds projects including disaster relief initiatives, ‘left behind children’, water projects and social enterprise schemes.
According to the Foundation Center there are now almost 4,000 foundations in China. This figure is set to grow as the government continues to encourage active CSR among Chinese and western businesses. Established foundations can provide a CSR service to businesses, allowing them to avoid the paperwork and the various hoops that need to be jumped through. The central government is keen to manage and control the number and work of NGOs in China, and have therefore made it very complicated to set up an NGO. International banks such as UBS, via their Optimus Foundation, also offer an ‘out of the box’ CSR solution.
China is a complex country and businesses need to have the ability to select NGOs that match their aims and help them to deliver CSR projects which meet a need and help generate goodwill for the business. To quote the IoD’s Responding to Global Risks pamphlet, “Opportunities, as well as resilience, will emerge from building the right corporate culture”
This article was taken from here.