3.4.1
Past-day facts
Before the economic reforms in 1978 and the introduction of a socialist market economy, state-owned enterprises (SOEs) were the dominant enterprise structure under the control of the centralised governmental command (Jin, 2008; Ramasamy & Yeung, 2009). This fact directly lead to a lack of motivation in managing and
marketing products, as there was no “free market” at the time. Hence, both SOEs and
the workforce lacked creativity in CSR conduct, and only considered the operational side of business – there was no consideration of corporate social responsibility (Zhu, 1999). Simply put, due to the fact there was no actual corporate governance, corporations lacked innovation and lost their connections with their shareholders, stakeholders, and the market (The British Council, 2008). Therefore, CSR was not practiced until after the 1978 economic reform, which was followed by the emergence of a market economy and privately owned enterprises in China (Chen, 2002).
3.4.2
CSR practice: Present
Compared to the West, the practice of CSR is still relatively new in China, as a free market economic policy was only introduced in 1978 (Zhu, 1999). Regardless, Chinese firms have adopted and practiced Western business approaches as globalisation has progressed. Increased international trade has revealed a number of social and environmental issues alongside economic development. As a result, the
31 Chinese government undertook an initiative to manage the business sector, and society, with a sophisticated policy to bring back the ancient code of conduct.
According to China’s previous president, Hu Jintao, at the 15th Central Committee of the Communist Party of China in 2006, a new strategy of a “harmonious society” (HS) was introduced, which clearly defined the direction and perspective of the nation’s development strategy in the context of a global economy (Communist Party of China, 2006). This new concept distinguishes itself from the strategies of the second and third generation leaders, Hu’s predecessors. Explicitly, Hu stated that rather than strictly engaging in economic development, the focus would also be on social issues, in order to facilitate the long term, sustainable development of China (Communist Party of China, 2006).
Another key influence on firms conducting CSR is social perception and awareness among stakeholders. While China’s central government implements their HS strategy, it is crucial that general society perceives the same value, to further progress the achieving of HS. In fact, research has shown that Chinese consumers are supportive of CSR from economic, legal, ethical, and philanthropic perspectives (Ramasamy & Yeung, 2009). The Chinese population has begun to look beyond products and services offered by businesses, and are taking greater consideration of factors, such as business ethics and the social/environmental impact of their business conduct, into their decision making process. In fact, such a shift among consumers from products/services towards responsible business conduct has been argued to be the result of economic growth and increased consumer power (Yang, 2005). Thus, this illustrates the presence of incentives for Chinese firms to conduct CSR.
In the Chinese government’s five year plan, 2006-2011, the urgency and importance of departing from a “market-economic growth oriented” strategy, in order to pursue more sustainable long-term development strategies, was emphasised (Zhao, 2008). The change in the country’s development path has certainly altered the focus in different sectors in society. The focus of the Government’s national and social economic development five year plan was urgently rectifying the institutional weakness of the state environmental agency.
32 The above five year plan clearly represents the Chinese state authority’s encouragement of civil society developments and participation. This follows the example of the Western world, which had already agreed upon and started practicing the utilisation of aid from civil society, in areas such as environmental protection (Anheier, 2000). The Chinese government has recognised the importance of promoting sustainable development with help from civil society, particularly non- governmental groups/organisations (Jin, 2008). In particular, the existing system, operated by government officials, actually causes misalignment and misconduct of duties for their own benefit. Biased assessment and poor decisions have been made due to the drawbacks of this system.
In recent years, there has been a dramatic change in terms of the nation’s development strategy. The term HS has been introduced and heavily emphasised since 2006 (See, 2009; C. P. China, 2006). This change, at a national level, has certainly created a stir in society. It has also forced businesses to adapt their operational strategies accordingly. Such a relationship between HS and CSR in a Chinese context has been widely discussed by researchers (See, 2009; Zhao, 2008).
3.4.3
Social partnership in mainland China
Notably, a large number of giant international firms have formed partnerships with Chinese NPOs, and have offered their support to local NPOs (Meng, 2000). Social partnerships are at the developmental stage, and vague direction and vastly different cultural backgrounds have created barriers for practitioners trying to borrow well developed, third sector experience from Western countries.
From a regulatory perspective, the government significantly reduced their interventions and simplified related legislation in order to encourage third sector development in the current social environment (Alagappa, 2004). This has provided an enhanced developmental groundwork for newly formed NPOs and has helped them to gain experience and develop skills to increase effective, efficient organisational operations (Meng, 2000). Also, a vastly increased number of foreign firms have
brought a foreign collaborative culture into China and influenced the country’s social partnerships from a co-operational cultural perspective.
33 Most importantly, several researchers have pointed out that raising the bar of governance skill is a path to achieving a sustainable NPO (Meng, 2000; Jin, 2008; Zhao, 2008). Certainly, with more efficient management strategies, issues such as financial stress, scarcity in human resources, efficiency, and credibility could be solved more easily (Liu, 1999). Therefore, sustainable development can only become a tangible objective after these issues are addressed in an appropriate manner.
However, the most difficult aspect of SP is that the majority of practitioners fail to recognise that there are far many more opportunities for partnership than there are for financial donations (Chen, 2000). This is especially seen in collaborative efforts and teamwork strategies among NPOs and businesses.