China Begins to Take Corporate Social Responsibility Seriously: CSR and Social Harmony in the PRC©1 Edward F. Ahnert2 Abstract: This essay describes the evolution of Corporate Social Responsibility in the Peoples Republic of China. It links that evolution to the major shifts in Chinese economic policy and in particular to the call for a harmonious society since 2002. It describes how since 2008 the government of China has become the major promoter of CSR not only to achieve a harmonious society but also to advance its global economic interest as Chinese companies seek to penetrate world markets and to buy up strategic resources such as petroleum reserves, iron ore and farm land. It argues that for the promotion of socially responsible business practices to be successful in China in the long run, CSR must move from a reactive, compliance-oriented activity driven by edicts from the central government to a key component of businesses’ strategies based on a continuing dialogue with stakeholders. It cautions against attention to corporate philanthropy and recommends close focus on eliminating externalities of core business practices. It points out CSR issues facing businesses frequently are the result of unmet needs or consumer preferences. Chinese businesses can gain advantage by spotting and supplying these before their competitors thereby creating competitive advantage through socially responsible practices. Political scientists and philosophers sometimes frame their analysis of politics as a contest between liberty and order. The United States and China could be seen as two extremes with the U.S. tilting toward liberty and China toward order. The early history of the U.S. is a story about a struggle for liberty from the rule of a distant power. The foundational myth of the American republic emphasizes the triumph of the individual rights of the people and the restriction of the powers of the central government. On the other hand, the story of the origin of China is about unification and bringing order from chaos through the consolidation of power in a strong central government. To maintain and reinforce this order much early Chinese political philosophy deals not with individual rights but with the obligations of key individuals or groups to each other: emperor Ö people, father Ö son, husband Ö wife. Confucian norms were the foundation of order in imperial China for over two millennia. Formal Confucian institutions and rituals were largely destroyed in the twentieth century: replaced briefly, brutally and incompletely by Maoist socialism/communism. Mao’s recipe for China’s economy dominated until two years after his death. At the Third Plenum in December 1978 a group led by Deng Xiaoping launched economic reforms beginning with the decommunization of agriculture which were the death knell of that Marxist ideology. For the past thirty years China has been struggling to evolve a new identity in which the Communist Party maintains its position and order in the nation by opening the economy to the global market and to capitalism
China Begins to Take Corporate Social Responsibility Seriously (with Chinese characteristics) to promote rapid growth while keeping a tight rein on political activity. To date China’s leaders have been remarkably successful. However, their strategy contains a powerful internal contradiction that they have managed with great skill but that nevertheless continues to represent a real threat. Market economies and capitalism thrive on freedom. They depend on the ability of producers of goods and services to offer them wherever they are needed and at prices set by supply and demand. Availability of information is a precondition for efficient markets. To flourish the free market also needs the certainty provided by the rule of law, sanctity of contract, property rights and fair and transparent processes to resolve disagreements. These conditions have been in short supply in China. As a result social and...
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