By Danny Levinson
After a few years of promoting the "China Miracle" and avoiding talk of moving jobs to China to instead focus on the wondrous assortment of cheap, quality goods coming out of the Middle Kingdom, foreign companies are now faced with a tarnished image of China and its manufacturing capabilities.

Toxic toothpaste, deadly dog food, and trade troubles have in a few months stripped China and the companies that use this nation of any pre-Olympic glory. The standards that global consumers relied on for their multinational producers to follow have failed. And we're just getting started.

In industries where margins are meager, cutting corners seems like a good thing to do. No multinational textile corporation would publicly sanction this type of behavior, but with middle managers eyeing promotions and second-tier suppliers looking to surpass competitors, circumventing laws and standards in China seems too easy. With big retailers from America hungry for cheap doodads, expediters and consultants exist to ensure those suppliers are compliant prior to "surprise" inspections.

And who is going to find out? Foreign press agencies are handcuffed by costs and formalities with placing a large contingent of investigative journalists on the ground in China. This gives investors a blank picture of where and how their funds are being used. And the Chinese press operate in a twilight zone of mixed messages and unspoken boundaries.

This is not to say that good investigators do not exist and have not uncovered cases of corporate malfeasance.

With information zipping around the world faster than corporate public relations departments can react, companies are forced to either embrace better oversight or die from neglect. Corporate social responsibility is not an arms-length jumble of programs pawned off onto a public relations manager to give money to Chinese charities. CSR is instead, and should be, part of every company's supply chain, human resource, and accounting agenda. If a company does a straw poll of managers and some do not understand CSR, fire them.

So it all goes back to credibility and the extent to which investors and customers can trust the goods and deeds of companies operating in China. For many overseas consumers, recent discoveries of tainted Chinese toothpaste and Melamine-laced pet food only confirm embarrassing stereotypes of poor manufacturing conditions in China. And for others, it provides more anti-China fodder. Everybody ends up losing.

About the author:
Danny Levinson is publisher of ChinaCSR.com and has been working in China for 11 years.

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3 Responses to “Tarnished Corporate Image In China”

1. By Jason W – June 4th, 2007 at 11:29 am

   Who said Chinese products were good in the first place??! Everything happening of late tells me my suspicions about big corporations in China were always correct! Companies go to China because there are no laws. If there are laws existing, they are not enforced. So when Nike, Starbucks, Microsoft, and Ford go to China to make their products, they don't have to follow the same standards. I read an article also about a Chinese car company that had a very unsafe car selling in Europe. I will never trust anything made overseas anymore and I will make sure my family does not use toothpaste, vitamins or anything else that is made in China or anyplace where laws don't exist to protect my health!!

2. By Michael – June 7th, 2007 at 5:39 pm

   I would hardly think a multinationals would deliberately break rules and tarnish it's name. where ever it set up a company maybe the people in the company will but also they will take a great risk to do so.

3. By Univ Chicago – June 9th, 2007 at 7:24 am

   Companies in China surely have no agenda to break local laws, but Levinson is correct that staff at companies can become engaged in illegal activity. Last year BusinessWeek magazine had an article on these issues.

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