The current textile dispute with China - the so-called "bra wars" - has thrown the political spotlight onto the working practices of China's manufacturing sector. Aside from manipulating an undervalued currency, harrumph the protectionists in Brussels and on Capitol Hill, China also gains an unfair trade advantage by exporting boatloads of socks and pants stitched together by poorly paid workers in unregulated Dickensian sweatshops.
The Chinese government, eager to allay international criticism that China's roaring economy is built entirely on the back of sweatshop labour, wants to show the world that it takes labour regulation and corporate social responsibility seriously. Government officials say International Labour Organisation standards are gradually being adopted around the country. And next year the government will promote CSR in medium- and large-sized state-owned enterprises (SOEs) in accordance with the United Nation's Global Compact programme, first advocated by Kofi Annan in 2000.
As a part of this public relations exercise, the Chinese journal China WTO Tribune, which is supervised by the Ministry of Commerce and aims to increase awareness of WTO regulations and global economics in China, co-held a conference in Beijing on September 7-8 with CSR Europe. Set up by former European Commission president Jacques Delors, CSR Europe promotes corporate social responsibility in Europe and around the world.
Participants in the inaugural CSR China Forum included politicians, academics and businessmen from China and Europe, and featured a keynote speech from Dr Vladimir Spidla, the European Commissioner on Employment, Social Affairs and Equal Opportunities.
The forum was very much a showcase of CSR with Chinese characteristics. CSR in the developed world is a matter of independent, corporate policy - but in China the hand of government is rarely far away.
In his opening speech, Yi Xiaozhuan, Assistant Minister of Commerce, proclaimed the advancement of CSR in China as "a concrete action taken by Chinese companies to implement the political aspiration of the new Communist Party collective leadership - 'putting people first to create a harmonious society'".
The harmony-growth balance
The creation of a "harmonious society" is the new mantra of a government that is increasingly worried about the risk that social instability poses to its authority. President Hu Jintao has set out to differentiate his brand of leadership from that of his predecessor by showing the Chinese people that the new regime cares about the people left behind by the country's rapid growth.
Government support for CSR should be seen in this light. Throughout the two-day conference, Chinese officials and academics couched their arguments for greater social responsibility in the workplace in the language of social stability. "Compassionate capitalism", as CSR has become known in the West, may be good for corporate profits at home, but in China it is also a useful way of selling political leadership to the unruly masses.
A number of speakers used the forum to stress how the government is concerned by the poor state of social responsibility in Chinese enterprises. Dr Zheng Gongcheng, a professor at the People's University and a member of China's national parliament, lambasted the lack of legal protection for workers and the poor enforcement of labour regulations. "The lack of CSR in China is an abnormal state of affairs," he fumed. "In the past, when China had a centrally planned economy, each company had excessive social responsibilities. But since the period of reform and opening, some enterprises have thrown out all of those responsibilities. It's very irresponsible."
Zheng said that these enterprises refuse to sign their workers up to social insurance projects, fail to protect workers from injury and exploit employees by not signing proper labour contracts. People are forced to work overtime, the companies delay wage payments and use fraudulent accounting. "All these abnormal phenomena reflect a chronic lack of CSR in China today."
The solution to the problem, he argued, is greater government supervision. "In China we need to regulate social responsibility strictly. China has a surplus of labour, and it is currently too easy for companies to tread roughshod over their employees. We need to bring CSR into the legislative arena. We need new laws and better enforcement."
Responsibility and regulation
Zheng's speech was one example of how the Chinese and European participants at the forum talked at cross-purposes. In economically developed countries, CSR describes how corporations choose to behave above and beyond what is required of them by law. In China - where trade unions are controlled by the Communist Party, labour laws are patchy at best and the media remains tightly controlled - CSR is just another name for greater government regulation of labour practices.
The point that social responsibility has a different meaning in China was forcefully made by Chen Ying, the deputy chair of the Federation of Chinese Enterprises. "China is still a developing country, with many regions still mired in poverty. But many foreigners do not seem to be aware of this when they talk about social responsibility. SOEs believe China's national interests are as important as their social responsibilities. CSR in China and Europe has totally different connotations."
The point that meaningful talk about CSR can only come when countries have reached a certain level of legal sophistication and economic prosperity was implicit in comments made by Vladimir Spidla. "Social responsibility is not a substitute for social dialogue or legislation," he told the forum. "Health and safety at work are not a matter for voluntary initiatives of companies. The same applies to environmental protection, equal opportunities between men and women, the fight against discrimination, and trade union rights."
CSR in China means protecting the health and safety of coal miners, ensuring that employers pay social insurance premiums and enforcing basic labour regulations in sweatshops. Corporate philanthropy, such as white-goods maker Haier's recent investment of US$370 million in "schools of hope" for poor Chinese children who cannot afford to go to class, demonstrates welcome progress in corporate thinking in China. But this remains beyond the capability of all but a handful of elite Chinese enterprises.
CSR, in the conventional sense, will not become a significant force in Chinese society until China's legal system matures, companies become more profitable and brand aware, and the media are allowed to report on the dealings of state-run enterprises. Until then, basic corporate responsibility must be instilled through effective government regulation.