CHINA
22 March 2014
How Not to Do Business in China
Michael Bloomfield, Founder and Executive Director of the Harmony Foundation of Canada, has shared with us his views on how not to do business with China. It is essential reading!
Michael Bloomfield, Founder and Executive Director of the Harmony Foundation of Canada, has shared with us his views on how not to do business with China. It is essential reading!
It must have been a rare, humbling moment for Apple’s CEO, Tim Cook, writes Michael Bloomfield. In addition to international criticism for poor labour and environmental practices, weeks of intense criticism in China followed over Apple’s warranty and repair policies, which state-run media outlets decried as discriminatory towards Chinese consumers. The powerful CEO finally admitted that his company may have appeared “arrogant” to some, and added, “we have tremendous respect for China.”
His statement posted on its Chinese website last week appears to have ended a crisis for Apple, which was under serious pressure to shape up or ship out. With the majority of economists predicting that the Chinese economy will overtake that of the United States by 2030, Cook had little choice but to apologize and vow to get it right next time.
Others should take note. Expectations of foreign companies are rising and China is taking action. Businesses need to pick up their game if they want to continue to benefit from the booming economy. The Chinese government, facing serious social and environmental issues, is no longer satisfied with job creation alone, and its citizens expect more than token handouts from foreign companies whose fortunes come at the expense of the country’s public health, social development and the environment.
Image-building exercises won’t be sufficient. The key to success in today’s China lies in sustainable and substantive corporate social responsibility policies that help businesses make meaningful contributions to society and local communities.
The Harper government seems to understand. The potential benefits of authentic corporate social responsibility are significant. In Africa and South America, the Canadian government has partnered with mining companies and non-profit organizations to create projects that aim to reduce poverty, enrich local communities and build a stronger skilled workforce. Finance Minister Jim Flaherty went directly to Hong Kong after delivering his 2013 Budget to focus on strengthening economic ties with China. Let’s hope, discussions included social and environmental cooperation.
Canadian businesses have a great opportunity to likewise improve their standing in Chinese society. Rather than simply focusing on return on investment, businesses need to ask themselves how they can help build a healthier, more sustainable China while meeting Canadian and international goals, social, environmental and economic.
True corporate social responsibility means much more than philanthropy. Businesses cannot expect that donations to charitable organizations, even when the funding is significant, will hide product-quality problems, corruption and labour scandals or environmental damage.
Take Johnson Controls, for example, a world leader in the building and automotive industry. In 2011, the company donated more than $15 worldwide to non-profit and charitable organizations, which served as their major effort to address community needs. After it was revealed that Johnson Controls’ new product line was causing severe pollution in Shanghai, China, the company was accused of green-washing and condemned for misleading the public.
Instead of using advertising and charitable donations to mask harmful businesses practices, Johnson Controls would have fared better had they incorporated meaningful social responsibility strategies and practices into their business operations. Stakeholders can tell the difference between pretence and sincere long-term efforts at sustainable development.
For instance, state-owned China Mobile, one of the world’s largest mobile telecommunications companies, which is also traded on the NYSE, enjoyed significant success after partnering with the Department of Health in Guizhou Province. The company created a medical services information network that has assisted over 24 million farmers, 13 million of whom have received help to overcome inadequate and expensive medical services. At the same time, China Mobile upgraded its service networks throughout the province. The company has been praised for its vision and long-term commitment to society, which has significantly strengthened its brand and expanded its market reach.
Companies that help to meet social and environmental needs will improve their reputation and performance, as well as their market access. That’s why the Harmony Foundation has published the comprehensive “CSR Guide for Multinational Corporations in China,” which is essential reading for Canadian firms.
With numerous intractable problems facing the world today, calls for business to contribute to innovative solutions have become widespread and increasingly commonplace. In Chinese, the concept of “harmony” is one that applies both to the essential relationships between individuals and to the relationships within and between nations.
It’s clear that for any Canadian firm doing business in China, achieving “harmony” should be at the centre of its business strategy. Achieving a more sustainable and harmonious society is at top of China’s agenda, and forward-looking foreign companies are contributing to achieving this vision through their corporate social responsibility policies.
Since 1985 Harmony has been building bridges between business, government, and communities on environment and development, pioneering work for which the Foundation has been widely recognized. For the past seven years, he has been leading a program for leadership training for sustainable community development in China.
A copy of “CSR Guide for Multinational Corporations in China“ can be downloaded at www.harmonyfdn.ca.
It must have been a rare, humbling moment for Apple’s CEO, Tim Cook, writes Michael Bloomfield. In addition to international criticism for poor labour and environmental practices, weeks of intense criticism in China followed over Apple’s warranty and repair policies, which state-run media outlets decried as discriminatory towards Chinese consumers. The powerful CEO finally admitted that his company may have appeared “arrogant” to some, and added, “we have tremendous respect for China.”
His statement posted on its Chinese website last week appears to have ended a crisis for Apple, which was under serious pressure to shape up or ship out. With the majority of economists predicting that the Chinese economy will overtake that of the United States by 2030, Cook had little choice but to apologize and vow to get it right next time.
Others should take note. Expectations of foreign companies are rising and China is taking action. Businesses need to pick up their game if they want to continue to benefit from the booming economy. The Chinese government, facing serious social and environmental issues, is no longer satisfied with job creation alone, and its citizens expect more than token handouts from foreign companies whose fortunes come at the expense of the country’s public health, social development and the environment.
Image-building exercises won’t be sufficient. The key to success in today’s China lies in sustainable and substantive corporate social responsibility policies that help businesses make meaningful contributions to society and local communities.
The Harper government seems to understand. The potential benefits of authentic corporate social responsibility are significant. In Africa and South America, the Canadian government has partnered with mining companies and non-profit organizations to create projects that aim to reduce poverty, enrich local communities and build a stronger skilled workforce. Finance Minister Jim Flaherty went directly to Hong Kong after delivering his 2013 Budget to focus on strengthening economic ties with China. Let’s hope, discussions included social and environmental cooperation.
Canadian businesses have a great opportunity to likewise improve their standing in Chinese society. Rather than simply focusing on return on investment, businesses need to ask themselves how they can help build a healthier, more sustainable China while meeting Canadian and international goals, social, environmental and economic.
True corporate social responsibility means much more than philanthropy. Businesses cannot expect that donations to charitable organizations, even when the funding is significant, will hide product-quality problems, corruption and labour scandals or environmental damage.
Take Johnson Controls, for example, a world leader in the building and automotive industry. In 2011, the company donated more than $15 worldwide to non-profit and charitable organizations, which served as their major effort to address community needs. After it was revealed that Johnson Controls’ new product line was causing severe pollution in Shanghai, China, the company was accused of green-washing and condemned for misleading the public.
Instead of using advertising and charitable donations to mask harmful businesses practices, Johnson Controls would have fared better had they incorporated meaningful social responsibility strategies and practices into their business operations. Stakeholders can tell the difference between pretence and sincere long-term efforts at sustainable development.
For instance, state-owned China Mobile, one of the world’s largest mobile telecommunications companies, which is also traded on the NYSE, enjoyed significant success after partnering with the Department of Health in Guizhou Province. The company created a medical services information network that has assisted over 24 million farmers, 13 million of whom have received help to overcome inadequate and expensive medical services. At the same time, China Mobile upgraded its service networks throughout the province. The company has been praised for its vision and long-term commitment to society, which has significantly strengthened its brand and expanded its market reach.
Companies that help to meet social and environmental needs will improve their reputation and performance, as well as their market access. That’s why the Harmony Foundation has published the comprehensive “CSR Guide for Multinational Corporations in China,” which is essential reading for Canadian firms.
With numerous intractable problems facing the world today, calls for business to contribute to innovative solutions have become widespread and increasingly commonplace. In Chinese, the concept of “harmony” is one that applies both to the essential relationships between individuals and to the relationships within and between nations.
It’s clear that for any Canadian firm doing business in China, achieving “harmony” should be at the centre of its business strategy. Achieving a more sustainable and harmonious society is at top of China’s agenda, and forward-looking foreign companies are contributing to achieving this vision through their corporate social responsibility policies.
Acknowledgements
Michael Bloomfield is Founder and Executive Director of the Harmony Foundation of Canada.Since 1985 Harmony has been building bridges between business, government, and communities on environment and development, pioneering work for which the Foundation has been widely recognized. For the past seven years, he has been leading a program for leadership training for sustainable community development in China.
A copy of “CSR Guide for Multinational Corporations in China“ can be downloaded at www.harmonyfdn.ca.