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IJLMA

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International Journal of Law and
Management
Vol. 51 No. 3, 2009
pp. 134-138
#Emerald Group Publishing Limited
1754-243X
DOI 10.1108/17542430910959218
Economic globalization and the
construction of Chinas corporate
social responsibility
Shen Sibao
Shanghai University, Shanghai, China and
University of International Business and Economics, Beijing, China, and
Cheng Huaer
University of International Business and Economics, Beijing, China
Abstract
Purpose The purpose of this paper is to trace the history of the emergence of corporate social
responsibility (CSR) among enterprises in China.
Design/methodology/approach The study draws upon the comparative and international
influences on the development of reform and expectations in China.
Findings The raising of a sense of CSR among enterprises who are supposed to assume such
responsibility is subject to the material foundation of a society and the stage of social development. In
other words, the extent of social responsibility assumed by enterprises is decided by what
development stage the society is on and how much the society can provide. China is no exception.
Nowadays, more social responsibility is supposed to be undertaken by enterprises in China this
brings to the country a special and complicated social task, which to complete requires common effort
by enterprises, government and the society.
Originality/value This paper provides a contemporary view of the emerging picture of CSR in
China.
Keywords China, Corporate social responsibility, Globalization
Paper type Research paper
1. Economic globalization has given raise to convergence of countries
corporate social responsibility institutions
Economic globalization is defined as an evolutionary process of the integration of world
markets, characterized by liberalizing economic activities, investment and trade, free
flow of production and management factors. It demands unification of countries
markets, removing trade barriers. However, unification of markets can be attained
only by uniform rules adopted by different countries, which gives rise to a legal
globalization issue. Thus, the result of economic globalization is the convergence of the
different countries market rules which includes policies regulating the major market
participants enterprises, both domestic ones and multinational ones. The convergence is
embodied by the similar trade modes by multinational companies. The similarity
encourages a resemble inclination of commerce modes of different countries. Convergence
is also found in the enforcement of bilateral agreements or conventions between two
countries.
From the perspective of corporate social responsibility (CSR), convergence is a
product of social development. To be exact, CSR, synchronizing with globalization,
is a result of social productivity growth, as well as a sign of social progress and
civilization.
In short, driven by the development of economic globalization, there is a growing
acceptance to CSR by international communities. Some countries have been enacting
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laws regarding CSR, even enacted specific clauses regarding CSR in corporation acts.
With the trend of globalization, the understanding of the scope of CSR is seen to be more
and more convergent. By today, most countries have highlighted CSR in corporate with
social issues such as environment, labor and food safety, etc.
2. Necessity to maintain countries diversity on CSR in the trend
of economic globalization
The process of economic globalization is evolutionary. A nation follows this trend
gradually by integrating different economic sectors into the world market on different
phases. Under economic globalization, not a single legal institution could perfectly
keep in consistency with other country. Therefore, convergence of CSR tends to
resemble, rather than be identical.
Dimension of CSR shall be subject to different developing stages of a nation. It
cannot be unified in different countries acts due to its intricacies under different
levels of productivity growth and social developing stages, and with different cultural
traditions, countries face different historical tasks.
Though international communities share common understanding of CSR, divergence
exists on how to establish a nations CSR system and then be compatible to an
international CSR system. A nations CSR system, as part of countries legal institution,
has risen from social development. And different CSR systems are characterized by
diversities in countries economy, politics, laws and culture.
With the advanced economic development and a high level of legal regime,
developed countries in North America and Europe have established CSR systems
ahead of other countries, and enterprises in these developed countries have a relatively
strong sense of CSR. A relatively perfect legal regime enables developed countries to
perfect laws on CSR, such as labor protection, environment responsibilities, etc. These
laws are fully executed, e.g. enterprises pay high annual taxes, operate in accordance
with law such actions themselves are the implementation of CSR. While in
developing countries, a relatively low level of economic development and imperfect
legal regimes led to laggard development of CSR systems. Even more worse, social
issues such as environmental pollution, resources exhaustion, epidemic diseases can be
exacerbated by less tax income of countries whose governments carry out a great
amount of preferential tax policies to attract foreign policies, with the single aim of
developing the economy. Besides, multinational companies tend to impair interests of
hosting countries to an extent by taking advantages of tax avoidance measurements to
transfer profits out of hosting countries. In some developing countries, many of
enterprises focus on pursuing profits in the stage of primitive accumulation of capital,
regardless of CSR.
In developed countries, it has been under heatedly argued whether unified
minimum restriction on CSR shall be established. For instance, NGO endeavors to
establish a binding CSR system in EU, while mainstream emphasizes a voluntary
approach by enterprises European Committee defined CSR in CSR Green Paper as a
concept whereby companies integrate social and environmental concerns in their
business operations and in their interaction with their stakeholders on a voluntary
basis. Obviously, there is a deep gap on the key point as to whether CSR is legally
binding.
The conclusion could be drawn that, responding to the different social development
stages and economic level of countries, national differences and variety are of
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nature of CSR and will exist for a long period, regardless of the economic globalization
background and the convergence of countries legal systems.
3. Legal speculation on constructing Chinas CSR institution
3.1 Multi-versions to CSR
.
Advocates the opinion of foreign neo-liberalism scholars the goal of enterprises
is to pursue profit. The CSR is supposed to be assumed by governments who
collect taxes. This separates profit pursuing fromsocial responsibilities.
.
Equates CSR with old conception on planned economy Enterprise-Run Society
in the process of accelerating construction of market economy system with
Chinese characteristics, enterprises no longer assume the social obligation which
shall be burdened by the government.
.
Misreads international development tendency of CSR as rigid dimension,
advocating establishment of high-dimension CSR beyond the actual level of
Chinas economy and society.
.
Equates CSR with charity. This opinion tends to simplify CSR without the
awareness that charity merely is a portion of CSR.
I amof the opinion that the understanding of CSR should be an integration of connotation
and denotation. CSR includes responsibilities in four aspects: economic responsibility,
legal responsibility, ethical and moral responsibility, and philanthropic responsibility.
According to the Carroll CSR pyramid, CSR includes economic responsibility, i.e. making
profit to make more tax payment, as well as legal responsibility, i.e. making profit legally,
and assumption of ethical and philanthropic responsibility as much as possible on the
basis of economic and legal responsibility.
3.2 Envisage disparity between Chinas CSR and international dimension
In China, CSR is under laws and regulations. Besides the general provision of article
five in new Company Act, Chinas CSR provisions scatter and in Constitution, Company
Act, Contract Law, Consumer Protection Act, Product Quality Law, Natural Resources
Law, Environment Protection Law, Labor Law, Social Security Law and Welfare
Donations Law, etc. CSR is specified at all levels by these laws and regulations. Chinas
CSR system is constituted by these laws and international conventions regarding
human rights and labor standard signed by Chinese government. However, legislation
regarding labor and security lags behind, and disparity is found between domestic and
international standards.
3.3 Enactment of related laws and rules and improvement of legislation
Scrutinizing current legislation regarding CSR, current laws lack related implementing
rules to fully execute. For instance, Article 14 in Company Act which normalizes basic
rights of employees could not be implemented effectively. According Article five of
Company Act, enterprises shall assume CSR. Article 17 provides Company shall
protect lawful rights and interests of employees, conclude employment contract with
employee, cover social insurances, and strengthen labor protection so as to realize safe
production. The company shall, in various forms, reinforce the vocational education
and in-service training of its employees so as to improve their personal quality. The
above articles provide enterprises obligation only in a declarative manner. Protection
scope of Labor Law is very limited, lawful rights and interests of peasant workers
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could not be protected effectively. Thus legislation regarding social securities should be
upgraded. Environment Protection Act cannot restrict enterprises from gaining short-
term interests by damaging the environment. Therefore, we should provide
implementing rules of related laws and regulations to enhance operability of laws to
consolidate legislation achievement.
3.4 Construction of CSR certification system applicable to China
Products of many Chinese enterprises were rejected by international markets for
lacking of international certification. It is necessary to study international CSR
standards in order to establish Chinas own CSR certification system equal to the
International one.
3.5 Promotion of business separation management and utilizing the power of NGO
as industry guild and interests group
Guilds and other NGO play positive roles on promoting CSR. Responding to the
request by enterprises, China Textile Industry Association drew up CSC9000Twhich is
a step forward on Chinas textile industry.
On September 25th, 2006, Shenzhen Stock Exchange released Social Responsibility
Guidelines for listed Companies which adapts CSR into listed companies. Following
Company Laws, Labor Laws, Listed Companies Regulations and SA8000 Standards,
this regulation highlights the protection of rights and interests of employees, stock
holders, creditors, providers, clients and consumers on full consideration of the
domestic circumstances. It also stresses the environmental protection, community
relation, public interest and information disclosure.
It is difficult to establish a complete set of standards of CSR applicable to all
enterprises and all industries due to the various development states of Chinese
enterprises and disparities among industries. However, it is feasible to frame some
standards in listed companies which meet international ones, or to frame industry CSR
standards in accordance with particularity of the industry. Therefore, in order to
accumulate experiences on setting up CSR dimension and constructing CSR rules,
industry guilds should be supported to frame CSR management system, set up
specialized departments to supervise enterprise in accordance with laws and
regulations. It is also important to investigate experiences of enterprises, learn form
foreign fellows, take experts and research institutes suggestions.
3.6 We should strengthen publicity of CSR, stress moral and ethical cultivation, set up
good social environment for well performing CSR
The core of CSR is morality which counts on consciousness of enterprises since it is
hard to promote rigid laws and rules. The absence of culture environment would be the
result of lacking cultural atmosphere, going beyond the bound of morality without the
reprimand and the pressure by the society. Worse is that, comparing with the economic
profit, such reprimand and pressure could be easily ignored. When China undergoes
social transformation, moral conception is changing radically. If the moral construction
is inapplicable to this change, it would be difficult to encourage enterprises to cultivate
consciousness of CSR. As long as the public recognizes this, CSR could be well
performed by enterprises.
Enterprises should abide by laws and rules regarding CSR in China, follow CSR
instruction, set up scientific development concept, take a positive view on relationship
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between society and enterprises, and work on CSR in the perspective of corporate
governance.
In other words, Chinese CSR dimension is determined by current social
development and socialist system with Chinese characteristics. The construction and
development of CSR system demands joint efforts of enterprises, government and
society, by which could CSR lead to win-win and harmony. Lacking of any party, the
CSR issue would not be ever solved. Only if the above principles are definite, we can
grasp new opportunities and conquer challenges brought by economic globalization in
Chinas CSR course.
Corresponding author
Shen Sibao can be contacted at: shensibao@shu.edu.cn
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