July 11th, 2012 | Shanghai Daily ‘Everyone is doing it’ in ethics void
IT’S common sense that running afoul of the law risks severe punishment and defying accepted ethical behavior risks a tarnished reputation.
So why do so many companies in China throw caution to the wind and ignore corporate social responsibility? The common answer: Everyone is doing it.
An executive in a local bakery chain once told me, on condition of anonymity, that unspoken rules lead companies into potential pitfalls.
“For example, we all know it is not good to use too many additives,” the executive said. “But when all the others in the industry are doing so to make their products better-looking and better-tasting, you will be driven out of the market if you don’t follow suit.”
That may explain why the 2008 scandal in China’s dairy industry trapped so many Chinese milk producers. Starting with the Sanlu Group, the first to be exposed for producing milk powder tainted with the carcinogen melamine, the scandal spread to Yili, Mengniu and Bright Dairy – three dairy giants in China – not to mention a lot of others.
Jian Guangzhou, the reporter with Shanghai-based Oriental Morning Post who brought this scandal to daylight, said he hadn’t originally expected the news to cause such a national stir.
Nor did many reporters in Henan Province, where Sanlu was headquartered. They apparently had known about the practice for some time and just didn’t consider it news. Or maybe they were too afraid to report what they knew.
Melamine-tainted products were blamed for the deaths of six babies and sickness in 300,000 others.
Qin Shuo, editor-in-chief of China Business News, said in a recent seminar that it was a blot on the dairy industry that additives like melamine were considered “trivial things.”
“Many business leaders are interested only in maximizing profits,” he said. “It has grown to such an extreme that now people who raise hens don’t eat their hens and people who feed fish never eat their fish.” The absence of social responsibility is not confined to the food industry, Qin said.
Cases like Foxconn, where workers committed suicide to protest for poor working conditions, and APP, which was illegally felling indigenous trees to plant papermaking trees, are two other examples of a business culture that runs amok.
Wikipedia defines “corporate social responsibility” as a form of corporate self-regulation integrated into a business model that complies with the spirit of the law, ethical standards and international norms. But in China, all too often, corporate social responsibility is regarded as a tool for rich companies to build better images.
If a company joins the Project Hope and constructs schools for poor kids in remote areas, it is said to be a good corporate citizen. If a company donates money for a disaster-struck area, it publicizes its generous corporate conscience.
But nobody seems to care if that benevolent money comes from some malevolent practices.
“Such understanding is too limited,” said Zhou Zucheng, a professor at Shanghai Jiao Tong University’s Antai School of Management. “Charity within the realm of corporate social responsibility isn’t only about charity.”
Zhou said although Chinese businesses have known the phrase “corporate social responsibility” for more than a decade, it doesn’t change the fact that few have grabbed its true meaning.
“It is not about a definition,” he said. “It is about how companies understand it and how they practice it. Companies need to get is clear. To whom are they responsible? For what are they responsible? And to what extent are they responsible?”
In Zhou’s opinion, a company should be responsible not only to its shareholder, but also to consumers, its work force and the society as a whole.
Abiding by laws should not become a minimum standard for companies, Zhou said. The standard ought to be in line with ethical norms.
For example, using additives in the bakery industry is not necessarily illegal, but it is immoral to put consumers’ health at risk if a company is aware that the additives might be dangerous, Zhou said. “Businesses should understand that they will be doing well by doing good,” said Zhou Lin, another professor at Shanghai Jiao Tong University. “Taking responsibility needs to unite with the goal of making profits.”
But what if a company is more interested in short-term success than in long-term business reputation?
That’s where government has a role to play. Last week, the Chinese government declared it would resolve problems related to food safety within three years, a timetable indicating the seriousness of the issue.
What worries skeptics is the government’s close ties to big companies and its reliance on the taxes they generate.
That brings to mind the recent events in the city of Shifang in Sichuan Province. The government there was forced to scrap a 10 billion yuan (US$1.6 billion) molybdenum-copper alloy project after widespread public protests broke out over the health risks from industrial pollutants.
In recent years, the people of China have become more outspoken on the subject of corporate social responsibility. Last year, a chemical factory had to be moved from Dalian in northeastern China after 12,000 people protested about the plant.
Maybe in the end, the public will become the most effective crusader in forcing corporate China to develop a conscience about its actions.
By Wan Yanlin