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August 12, 2015

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Despite importance of CSR, cut-throat environment makes morality a low priority

LAST Saturday I attended a forum on wealth equality and corporate social responsibility (CSR) at Fudan University.Like so many other forums I’ve attended before, entrepreneurs were center stage. They held forth on their definitions of “fair wealth” and their theories of how to accumulate wealth in a supposedly equitable way.

But the impassioned speeches belied hushed grievances. At the lunch buffet where attendees queued up for food, I found myself standing behind two entrepreneurs and overhearing their whispered conversation.

One remarked ruefully that while affluence often inspires admiration in the United States, in China rich people have to literally “hide their tails between their legs.” The other entrepreneur nodded vigorously in agreement.

I was hardly surprised at their complaints. Such sentiments can be heard echoing throughout the business community. There is a somewhat paranoid belief among Chinese entrepreneurs that their wealth is perceived as tainted with “original sin” — a reference to the shady nature of their rise to prominence.

Popular enmity towards entrepreneurs is largely unjustified, and is a result of either jealousy or the cynical view that businessmen lack scruples.

The social atmosphere was not always this way. Since time immemorial, Chinese businessmen have been indoctrinated with the lesson that “a gentleman loves wealth, but is fastidious about the means of acquiring it.”

Today, being fastidious is not enough, as a yawning wealth gap increasingly calls for the affluent to engage in charity, partly to dissipate public misgivings about the legitimacy of their wealth.

According to Ding Min, a professor at Fudan’s School of Management who spoke at Saturday’s forum, involvement in charitable endeavors does help to improve the image of entrepreneurs, but not so much as commitment to CSR.

Over the past decade, the concept of CSR has percolated through the ranks of Chinese entrepreneurs. The idea that treating suppliers, customers, employees, society and the environment fairly and respectfully — the very essence of CSR — makes economic (and moral) sense has picked up considerable traction.

Ding recalled a meeting he attended years ago in Holland, where Paul Polman, CEO of the consumer goods giant Unilever, said it was his philosophy that a company capable of earning one dollar should settle for fifty cents if the other fifty is spent on meaningful social causes.

Nevertheless, there is often a contrast between professed belief and actual practice, said Lu Jiangning, chairman of Wanxiu International, a domestic trading company. A veteran dealer in textiles, Lu’s clients have included Walmart and Gap. Companies of their caliber often require their suppliers to meet certain ethical business standards — like paying employees on time, providing a safe workplace and instituting paid leaves — before placing orders.

Down to the last penny

But in practice, these well-meaning attempts to achieve “fair wealth” are often obscured by the fact that big businesses like Walmart are ruthless when it comes to bargaining with suppliers, bitterly arguing over prices down to the last penny.

Many established companies fail to practice CSR consistently, let alone smaller companies which are struggling in a cruelly competitive market.

In the opinion of Li Lan, a senior researcher with the State Council’s Development Research Center, many Chinese businesses are focused on unbridled expansion, or simply fighting for survival. As a result, they put CSR on the backburner.

Yet a survey of business leaders conducted by Li and colleagues also found that most respondents named morality as the most important thing to a company’s credibility.

However, these leaders indicate that they feel compelled to follow suit in an environment where everyone else is cutting corners and choosing to be honest doesn’t necessarily pay off.

As such, it ought to be made clear to business leaders that bottom lines and profits are an important — but not the sole measure — of success, said Li. As she sees, more and more businesses are also starting to rethink their profit-at-all-costs strategies thanks to the example set by persuasive CSR advocates.

At any rate, businesses are comparable to trees, said Li.

How tall a tree can grow depends on the depth of its roots, just as a sound moral foundation is vital to a business’ future.




 

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