Practice And Perception Of CSR In Asia

November 2, 2006 | Print | Email Email | Comments | Category: Viewpoints

By Chandran Nair
A great deal is being written and published describing business practices in China, a country seen as enforcing near-slave conditions on their workers, churning out products of shoddy quality, hiding questionable figures in secret sets of accounting books, and paying scant regard for the distress manufacturers inflict on the environment.

The simplistic, black-and-white view of these accounts does more harm than help by missing the point that even in business, the rules of the game are often unfair and unclear and that people simply have different views of what is acceptable. While some values and standards are intrinsically universal, is it naïve or even arrogant to believe corporate social responsibility (CSR) as understood in the West is equally applicable everywhere?

The heart of the matter is to ask whether CSR is really a view borne of a certain luxury of how companies ought to behave in mature capitalist societies. If it is, how relevant – if at all – is this understanding of CSR to Asia and its business leaders?

There are other considerations, too. Does calling what is essentially a concept of corporate governance and ethics "corporate social responsibility" actually narrow its focus and, worse, risk losing a key main audience — Asia's business leaders? If this is the case, then what system or code is there in Asia that deals with and addresses the issues that Asian CEOs see as priorities?

The "Asian Way"
It may surprise the critics, but Asian business leaders have different priorities. Since smaller companies possess less of the advantages available to Western CEOs, Asian business leaders face David-and-Goliath realities. They must compete on cost just to survive, thus placing pressure on social safety nets and drawing fire on environmental and other issues. They must grow aggressively against an influx of multinational corporations (MNCs), whose growing dominance has unfortunately led Asian CEOs to associate CSR as Western values being imposed to impede their growth. Asian companies must also work to build core competencies to meet international expectations that will allow them to compete as they juggle all this with the need to maintain political favor at home. This is the "Asian Way" of things.

In their own way, the bigger, more international Asian companies believe they are practicing their own version of CSR, focusing on treating staff members as part of an extended family. The challenge is that global competition can suppress workers' pay. The result is often that firms continue a tradition of giving to charities, and pay only token heed to environmental issues as a means to offset the pressures that markets place upon them.

Dispelling Myths, Understanding Contradictions
Asian business leaders do, however, harbor some misconceptions. They see CSR as a luxury they can ill afford. Many feel it is essentially a code of Western standards being imposed on them, which dulls their competitive edge and puts livelihoods under threat.

They also question the need for it, since workers are not asking for it, governments are not pushing it, and consumers are not demanding it. They feel that the West is preaching to them, and as a result they are either tired or just confused by it. There is a simmering, unspoken resentment in the region, and plenty believe the CSR debate is little more than pandering to an audience in the West.

These attitudes and Asian practices of today have historical roots. Many U.S. and European corporations have had almost two centuries to establish themselves. Often the beneficiaries of circumstances such as colonialism, they have grown virtually unchallenged. Now they are focusing their attention and production networks on Asia.

Attracted by cheap, abundant labor, malleable regulatory and enforcement regimes, and new markets, Western corporations have found El Dorado in the East. To be fair, they have brought much needed capital. But this has brought many business practices under the scrutiny of Western civil society. Its muscle and influence has been honed by years of campaigning to get Western corporations to do the right thing at home. These efforts have simply followed the production networks logically to Asia.

What's galling to Asians is that these foreign companies ignored the same issues of ethics and "responsibility" in their own march to becoming the largest of multinational corporations of today – the same issues Asian companies are being accused of committing now. They reason that since Western companies had a free hand in growing to dominate the world economy, they ought to leave Asian companies to develop or catch up. This is a complex weave of issues in a region where few things are cut and dry.

Two Faces of Responsibility
Many believe (rightly or wrongly) that Westerners are naïve and do not understand the issues: enforcing the Western concept of child labor laws will often mean the difference between a family eating and going hungry. Similarly, enforcing a minimum wage may force a business to close. For people who need work, any money is good.

Most of this work is done in China to produce goods for Western markets. There are unhelpful accusations of hypocrisy being leveled at the West. After all, giant corporations – Wal-Mart and others – are taking full advantage of the low-wage regime in the Pearl River Delta. By doing so, they simultaneously help suppress wages to stock stores at home for consumers who – despite apparent concerns about the developing world – are ultimately looking for the best value for their money.

The attitudes described here could do with a shake-up. The core values embodied in CSR are intrinsically good, and as Asian corporations grow and begin to make their marks internationally, their leaders will practice their own form of CSR, distinct from the West simply because Asian capitalism is different.

China's Premier, Wen Jiabao, hinted as much in May 2005 at the Fortune 500 Global Forum when he introduced a distinct socialist flavor to the predominant capitalist creed of wealth: "Wealth is not just about economics," he said, "but also about culture. We should not only look at the Fortune 500, but also [at] poor people who make up half the world's population," adding, "if wealth is not distributed fairly and if it is concentrated in the hands of few, the society will also not be stable."

There's a chance that with its emergence, China's values may help to reshape global capitalism. As countries such as India and China begin to grow and flex their economic muscles, they may start to ask fundamental questions focusing on the geo-politics of business – issues that go to the core of free trade, patent laws and accounting rules (such as transfer pricing). As a result, the influence of large Western MNCs may be shaped and even balanced in a way that creates more level global playing fields.

However, there is a possibility that as the Asian "giant" rises it may come to be seen as exploitative. To prevent this there needs to more enlightened leadership, which would go far toward instilling an appreciation of the intrinsic goodness of many CSR values. To do so, governments will need to ensure that strong, appropriate regulations are fiercely enforced.

More importantly, Asia must step up by itself and shape its global business future. First, it must take responsibility for its corporate values and ethics. Recognizing that not all current attitudes and practices will continue to carry currency, Asians need to push themselves and their business leaders to move on intellectually and to discard excuses from the past or embodied in so-called "Asian" values. As this occurs, we will see the headlines turn from targeting the negative to singing the praises of the positive.

About the author:
Chandran Nair is founder and CEO of the Global Institute For Tomorrow, a pan-Asian non-profit think tank.

Reprinted with permission from Business for Social Responsibility, © 2006 Business for Social Responsibility

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