By Sam Lee
Everyone will most likely agree that China has grown economically to a level where it really is the center of the world. Past two and a half decades, with the leaderships of Deng Xiaoping to Jiang Zemin, and again, to Hu Jintao, China, economically, was flying when other developing countries were walking and running.

At the present moment, most multinational companies are busy making and revising their long term strategies with the rise of the Chinese domestic consumption power. Most MNCs are no longer looking at China as their manufacturing base but rather as their biggest foreign market with a huge potential. However, notice that the growth is only mentioned at the economic side, which, without a doubt, is the key foremost factor when a single country wants to grow. But as China was growing economically, some opinion leaders, concerned about the socio-economic gap, were constantly questioning; "Is China growing the right way?"

As we can carefully interpret from Mr. Hu Jintao's emphasis on creating the "Harmonious Society", China still has to deal with many societal and environmental problems. It achieved high satisfying economic growth but there are still many side affects to this great achievement. These problems include energy/pollution problems, fair labor problems, fair trade issues, transparency issues, IP regulations, and a lot more to be realized.

This is the reason why China could become the front field research site for Corporate Social Responsibility practices for companies. US and European companies are very used to giving back to the society with what they already have. However, as modern CSR theory stresses, it's about how a company makes money rather than how it spends money. There is a clear difference between giving back to the society with what the company already has and engaging the society as the company grows. China, in this sense, provides a perfect chance for companies to grow as it involves the society.

As MNCs are coming to China and growing with the country, companies will include their CSR plans in to their long term strategies. Sometimes, it's even considered as a best localization strategy.

In a long term, government, NGOs, consumers, shareholders, media and other stakeholders will naturally enforce companies to be engaged in practicing CSR. ISO 26000 (Corporate Responsibilities) and Corporate Responsibilities guidelines from different governments are being prepared at the moment. Looking at the trend, it seems to be smart to start before one is enforced.

Chinese society bears the potential to return high with a minimum investment, just like their economy 10-20 years ago. Thus when a company realizes a societal cause and invests in them, the return is absolutely greater than others. Its return could be defined in many different advantages such as government relations, consumer behaviors, employee satisfaction, and media spotlights.

However, the investment should be carefully analyzed and dealt with high level strategies, since it will be highly effective when it is committed in a long term, aligned with the company's mission, vision, and even its products and services. Furthermore, the strategies should be developed from the China headquarter, not from the international HQ. Lots of MNCs make this mistake but it is same as doing the business. CSR strategies developed outside of China, without knowing its inside situation, is likely not to be effective as to the ones developed inside the country.

China, without a doubt, is the world's market leader and it will grow more for sure. However, there are still lots of risks for business as the success rate for foreign entities is shown not to be so high. Taking an ethical approach and including Chinese society as your company's stakeholder will help minimize the risks and, in a long term, could provide a very good case for sustainable development of your business in Asia.

About the author:
Sam Lee is a recent MBA graduate of CEIBS (China Europe International Business School). His focus lies on Corporate Social Responsibility (CSR) strategies as well as Private/Public sector partnerships.

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