Business Studies Assignment Paper on Corporate Social Responsibility in China

Corporate Social Responsibility in China


1 Chapter 1 – Introduction

1.1 Background information

In the last years, the call for increased corporate social responsibility, by government authorities, traders and organizations, was unique and immediate due to the international downturn that took a central role as observed by the Global Alliance of (2004). Economical market failures, severe financial decreases and food shortages required immediate reactions.  Today, more organizations are using company non-financial reporting, covering the corporate, ecological and financial impact of the business’s functions, not just as a responsibility tool but also to drive technique, opening new sources of income and development. Organizations are not turning to durability for charitable factors (Dai and Artie 2012). Productivity and development are at the heart of their factors for building durability tools into their company technique.

The idea of companies using corporate social responsibility (CSR) has a relatively long history in European countries. While CSR first comprised merely of philanthropy and consequently concern for worker matters, in the middle of the last century this enhanced to interest for organisations’ wider task environment, originally mainly customers, providers, lenders, and later corporate and ecological issues more generally. Although there are different explanations of company corporate social responsibility, it indicates particular interest to the moral, corporate and ecological effects of company (Zu 2009).  Developed generally, companies can be considered as having bad debts (vis-à-vis traders, to perform successful activities) but also legal, moral, ecological and corporate obligations. In the European perspective, the similar idea of ‘sustainability’ or ‘triple main point here has appeared as well to point to the need for supervisors to focus simultaneously on People (social), the planet (environmental) and Profit (economic).

1.2 Definition of terms

Corporate social responsibility (CSR) is business self-regulation by which companies incorporates ecological and economic issues into their principles and features in a clear and responsible way (Tang 2012). CSR allows a company to take responsibility for the effect of its choices and actions on community, the habitat, and its own future productivity. The United Nations have called this triad of issues the multiple base lines people, world, and benefit. CSR features as a device for organizations to observe and ensure effective conformity with the law, moral requirements, and worldwide requirements.

Zu (2009) argued that CSR is determined as a set of generally approved connections, responsibilities and responsibilities between a company and its stakeholders that is predicted to information business actions and to believe its corporate positions improve society’s well-being. It is also generally known as a company citizenship operate in which a company is required to engage in those guidelines, to make those choices, or to follow those lines of action which are suitable with regards to the goals and principles of the society.

1.3 Research objectives

For the purposes of this study, the objectives are:

  • To evaluate whether the uptake and penetration of corporate social responsibility activities in the Chinese market
  • To analyze the differences between companies that practice CSR verse those that have not adapted it yet.
  • To highlight the forms of CSR initiatives in the Chinese industry


2 Chapter 2 – Literature Review

A growing body of research has been dedicated to discovering company corporate social responsibility (CSR) in the area of marketing and promotion (China National Petroleum Corporation 2012). Most of the previous CSR research studies have analyzed the purposes and results of various companies’ CSR actions. For example, the literary works has shown that CSR projects can help address consumers’ corporate concerns, increase customer care and commitment enhance product assessments, and improve company image (Chu and Lin 2012). A promotion with a culturally accountable concept leads to more positive customer behaviour toward the organization than a similar promotion without a culturally accountable concept. As such, CSR has been recognized as a crucial ideal component to promoters in developing and perpetuating beneficial relationships with customers.

Most CSR research to date has focused on the nature and company effects of CSR in European countries. With the globalization of the present marketplace, as well as the financial development of Asia, improving attention has been dedicated to the growth of contemporary CSR in Asia, although CSR methods in Asia cannot be simply recognized as a reaction to European interests. In fact, Oriental forms of CSR are the representation of the competition in international markets for both regional and international businesses; rapid financial, corporate, and ecological changes within Asia; and its relationships with regional customs and corporate principles. In particular, China, and growing industry with rapidly improving promotion expenses and customer spending power, has drawn promoters and promoters around the world. China companies’ conceptualizations, methods, and marketing communications of CSR are determined by the complicated marketing communications among organizations, government authorities, NGOs, other stakeholders in the China society, and the institutional pressure from both the household and the international areas. Specifically in China, CSR features four aspects: group outreach, ecological security, ecological security and education. Community outreach can be noticed by companies’ actions that help enhance living requirements of individuals in areas where organizations operate their company. Environmental security focuses on a business’s responsibility to providing its workers with safe, comfortable, and properly controlled working conditions. Environmental security obligations include initiatives an organization performs to reduce the negative.

In 2010, China was expected to become the fourth-largest international promotion industry after the United States, Asia, and Malaysia. With the China’s competitive promotion environment, leading promoters such as Procter and Bet, Unilever, and L’Oreal endeavour to find new ways to distinguish their manufacturers. Advertising with CSR information may become a tool that assists promoters to stand out in the marketplace, as previous research suggest that ads integrating CSR information lead to increased beneficial brand attitudes.

2.1  The Chinese culture that affects CSR

Despite still being considered as a growing industry and the biggest creating nation in the world, China shows its own viewpoint of CSR, which is a result of its natural lifestyle. Although some students claim that it is challenging to attract an immediate connection between lifestyle and CSR, the social required organizations are considered in a different way across societies and have been combined into all factors of company. Since lifestyle is a important gamer in the company process in growing marketplaces such as China, it is necessary to evaluation the China lifestyle before shifting to further conversation of CSR in this particular market.

2.2 How government activities influence CSR

CSR actions in Chinese include greater govt participation than similar projects in European countries, where mostly personal industry or non-government companies motivate CSR strategies. In Chinese, state-owned organizations usually have the more extensive CSR programs. Chinese CSR projects include rules, government guidelines and recommendations, non-governmental requirements and companies. Since 2004, CSR has become a popular issue in Chinese educational and policy boards. Numerous community and personal CSR projects have appeared in Chinese, and research has shown that Chinese companies are progressively applying CSR methods and reporting (Chu and Lin 2012). Between 2004 and 2008, the number of CSR reviews launched by Chinese companies increased from four to roughly 1302. With the 2008 release of the Work Contract Law and the growth of the Taiga Ecological Catalogue in the Shenzhen Stock Exchange, a variety of institutional frameworks that motivate more “socially responsible” actions amongst Chinese companies are beginning to appear.

The most important growth regarding CSR in Chinese is likely the Condition Council’s recent Condition Possessed Resource Guidance and Management Percentage (SASAC) effort. On Dec. 29, 20073, SASAC, the majority investor and ultimate owner of many of China’s biggest business groups, launched the Notice on Issuance of the Guidelines on Satisfying Corporate social responsibility by Central Businesses, which required SOEs to adhere to SASAC 2008. The Condition Authorities openly confirmed its support for CSR by enacting and distributing the 2008 SASAC law. The notification is a strong sign that CSR is being widely and politically approved and that companies should apply their own such actions (Chu and Lin 2012). Employment and environmental protection rather than completely the amount spent in the country and its profits. Another feature of contributions that is unique to China and is shown by the iron rooster case is the way China and international companies contribute. The Chinese community desires contributions to be clear, which international companies prefer to be more hidden. Chinese objectives on the way contributions should be made have became the main requirements by which Chinese customers measure the social required companies.

2.3 The corporate social responsibility practices in China

Organizations apply community responsibility methods for a variety of reasons by utilizing different methods. CSR actions consist of providing reliable, eco-friendly, secure products; developing work protection actions and well being plans; interesting in business philanthropy and group growth projects; posting business community and environmental performance reports (often through CSR reports); and advertising CSR concepts within group. Philanthropy and non-profit actions are common CSR techniques. These actions often consist of financial contributions and various aids (food, medical, educational, etc.) for regional organizations and inadequate areas in many nations. For example, following the 2008 Sichuan Earth quake in southwest China, corporations in China and international contributed considerable amounts of cash for repair and recovery initiatives. Experts claim that this approach does not develop regional skills; instead, they suggest community-based growth, which is more maintainable (FIAS 2007).

Beyond direct non-profit contributions, many corporations establish CSR guidelines, which they incorporate into their common organization strategies. The China Huadian Organization, for example, has integrated specific CSR goals into its common organization strategy, along with a requirement to supply secure, clean electricity and achieve maintainable growth for the organization, the environment, and group. Another practice becoming popular in CSR sectors involves developing greater joint value in collaboration with areas, which is called Creating Shared Value (CSV). An organization needs a healthy, educated employees, maintainable sources, and skilled govt to contend effectively. For group to flourish, successful and competitive businesses must be designed and reinforced to create earnings, wealth, tax earnings, and opportunities for people.

Levels of CSR among China organizations are low relative to stages among organizations in both western world, such as the United States and Asia, and developing nations, such as Southern South Korea and Taiwan. Yet benefits from improved CSR in China might well surpass benefits from improved CSR in western world. This is linked to the relatively low stages of CSR in China to relatively low income-per-capita and to negative social and institutional dimensions such as relatively low stages of balance and personal image, relatively great stages of crime, and relatively low stages of municipal rights and governmental rights. Stages of CSR in China are likely to improve in the future. China income-per-capita is rising, and greater earnings are associated with greater stages of CSR. Increasing globalization is also likely to improve stages of CSR in China in two ways. First, buyers of China exports will keep avoid items such as toys containing lead and government authorities outside China would keep apply rules against inadequate working circumstances and great crime, advertising CSR. Secondly, there are high chances that the Chinese citizens with international experiences are likely to restore social standards promoting CSR from the nations they visit, such as the concept of power distance and crime, and greater desire for egalitarianism and independence. Compared to foreign organizations whose philanthropic obligations concentrate on advertising, industry development, and maintaining relationships with customers and employees?

Chinese businesses place more focus on relief initiatives, hardship relief and education.

Most CSR actions in China are designed towards significant factors that are considered as a challenge as follows:

The consistent lack of clean water and sanitation facilities – In 2005, around 300 million non-urban people were missing access to secure clean water. The government’s aim is that all non-urban people will have secure normal h2o by 2015.2 as of 2007; Guangdong was treating only 50% of the province’s household sewer, and 45 medium-size places were completely lacking any wastewater treatment facilities.

Industrial contamination and green house gas pollutants – In 2006, 43% of China’s places did not meet category 2 air-quality requirements. A 2009 report said that this had reduced to 17% and recognized that some places suffer serious contamination.

Labor circumstances – Labor circumstances have improved in previous time’s decades, but the issue of extreme extra time has shown particularly intractable. Techniques of double and multiple documentation, model industries, and secret subcontracting have been well recorded and widely known. Recent worker suicides at Foxconn, a contract producer and the globe’s biggest maker of computer components, were linked to work pressure and extreme hours.

Item protection – Item and meals protection scams and remembers have led to fatalities, illness, and injury; broken the reputation of the China organization brand overseas; and led to household anxiety.

Corruption – Extensive crime is one of the areas of most powerful community concern and is increasingly recognized by the Communist Party of China as a critical hurdle to the nation’s community and financial growth. China ratings 3.6 on the Visibility International Corruption Views Index (where 10 indicate maximum trust in government integrity), ranking above Indian and Russian federation, but below South America according to Zu (2009).

Inequality and financial exemption – Although a small proportion of individuals have become extremely wealthy, the earnings of many people has not kept pace with financial growth over previous times several years. The divergence in total well being between China’s urban and non-urban people is especially large

This concentrate is typical of CSR in growing markets. In fact, Visser explains, “the social-economic needs in developing nations are so great that philanthropy is an expected standard – it is considered the right thing to do by organization. Like in other developing nations, CSR in China is still at an early age of adulthood and sometimes CSR is associated with philanthropy. In previous times, philanthropic actions in China, particularly the non-reflex giving of cash and materials to inadequate areas especially after significant mishaps, were used to measure community responsibility of an organization.

Consequently, contributing has been considered as a key part of philanthropic required corporations in China in that they balance the financial difference between the rich and the inadequate, improve the use of community sources and develop an organized industry, and relieve community disputes as well as promote equity in a group. This is one of the reasons why China consumers in the iron rooster case showed up to use the amount of contributions in the post-earthquake period as requirements to evaluate the potency of CSR by international corporations. Today, people pay more attention to corporations’ participation to the group, such as product quality.

3Chapter 3 – Research Methods

The research methods that will be relied on during this study will be secondary literature review that will include a review of Chinese company’s practice of CSR. While organizations can connect their CSR details using advertising, yearly reviews, advertising and their sites, for this research it was decided to analyze the sites and the CSR reviews, as regularly released papers to adhere to willingly requirements.

The research will apply both qualitative and quantitative designs to evaluate some of the top highlighted companies at international levels.  A sample population of ten major organizations will be selected through probability sampling for case study analysis. This will enable the researcher to establish the separate factors affecting CSR implementation.  Using details given on their websites, the researcher will complete the data analysis process by focusing on variables that affect a company’s CSR like the resources, earnings, percentage change on earnings related to previous years, annual profit, and stockholders’ equity. These details will be gathered for each company, added to the data source and produced in thematic tables.

4 Chapter 4 – Data Collection

In order to develop some evaluation of  the CSR practises in the selected companies, the researcher will perform a thorough material analysis of the business corporate social responsibility (CSR) reports released by the companies for the year 2013, which is the most recent. Content analysis is determined as a technique of codifying text into different groups based on selected variable requirements in this study. This analysis technique has been used substantially to examine CSR initiatives in most of the previous studies as established during the literature review. In content analysis, several alternatives have been suggested to be able to evaluate the effectiveness of CSR implementation.

The annual reports review will provide sufficient data. They will also indicate the level of disclosure given by companies, on their CSR involvement and implementation. This will be considered as an indicator of the significance of a CSR subject to the company. It seems now widely accepted that the variety of web pages is the preferred means for processing the quantity of disclosure. Because it shows the total space given to business issues, the significance connected to that theme can be contingent.

5 Chapter 5 – Data Analysis

Along with overall analysis of social and environmental disclosure through CSR reports, this research study will investigate whether the differences in the CSR reporting extent among companies has a direct correlation with the size of the Chinese companies selected or profitability. To make this effective, the Pearson correlation technique will be applied due to its strength of measuring the relationship between two variables and testing their significance. Previous scientific studies have applied it as a measure of the strength of linear dependence between two variables.

6           Chapter 6 – Conclusions and Recommendations

6.1         Conclusion

However, CSR projects are new in China the idea of building up Chinese companies, boundaries, and national pride has been essential throughout China’s history. CSR can be seen as mixing essential requirements with conformity tests to secure a business’s value, and to maintain its (and its stakeholders’) growth. On the other hand, unable to look at appropriate CSR requirements perform conformity tests, or remediate instances of noncompliance can, eventually, amount to ongoing and sometimes permanent failures. Simply having good CSR requirements is inadequate to accomplish the reasons for which they were implemented. Organizations must take the persistence to apply requirements and policies and manage relevant data to achieve their CSR goals. China’s fast financial rise has led to community and ecological difficulties that must be resolved to avoid decline the country’s ability to maintain financial growth and growth progress in decades to come.

These difficulties, such as water lack, contamination, work circumstances, and item safety, along with the need for improved government and responsibility, are widely recognized and figure noticeably as objectives for action in China’s Twelfth Five-Year Plan (12 FYP). The role of company in dealing with these difficulties is progressively recognized and is shown in the call for, and practice of, business community responsibility (CSR). In Chinese, the term CSR covers a wide opportunity of problems that can also be described as citizenship and durability. It explains actions taken by companies to provide advantages that either markets or government authorities have did not provide and to balance out negative community and ecological effects.

CSR in Chinese has progressed quickly beyond its origins in philanthropy and conformity. For large companies, CSR is progressively an ideal concern, dealing with problems such as worker management, item quality, government, and human rights. Handling such problems, which affect the primary company, can provide ideal advantages for provide sequence performance and security, advancement, service, fascination and preservation of skills, and trader confidence.  Motorists of CSR in Chinese are also moving toward becoming included in China’s own international brand and way of doing company. Initially, demands on multinationals for CSR maintained to come from community interest groups and customers in the Western. The Chinese are progressively finding ways to show combined discomfort over recognized poor business methods. Simultaneously, Chinese companies are increasing the bar for competition as they work to meet international requirements of responsibility as part of their strategy for moving up the value sequence.

The most essential car owner recently has been the progressively close relationship between CSR and community policy. The Chinese government has accepted CSR as a tool to help deal with community and ecological problems because of fast but irregular financial conversion. In an economy so affected by the condition, formal approval of CSR requirements, scores, and indices makes indicating performance against them a material factor in identifying competitive advantage. CSR will continue to develop quickly, with stress from the condition and, progressively, from people. A significant powerful to watch will be the connections between demands from the condition and from people mobilizing, for example, through new community networking.

Ultimately, in light of the various new rules and financial concerns detailed above, the question for companies in Chinese is not whether CSR problems need to be resolved, but how to deal with them in the most beneficial way. CSR applications need to be professionally constructed with respect to real life circumstances and relevant legal and reputational risks, carefully applied, and frequently modified to account for growing styles and changing circumstances. CSR reports must also be taken into consideration and checked out. Efficient CSR applications enable companies to secure their manufacturers, to efficiently contend against their international opponents, and to deal with essential concerns of their workers, customers, traders, and other stakeholders.


·  Identify the ideal material and concentrate of CSR, while not neglecting the more conventional group involvement factors.

· Develop sensitive stakeholder interaction, while keeping an obvious positioning to China’s growth main concerns.

· Interact with definitely and sensitively in China’s growth of CSR frameworks.

· Localize the art of CSR and stakeholder involvement in the company.


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