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Hard Lessons Learned as Chinese Companies Embrace Social Responsibility


A new business trend is gaining momentum in China as companies attempt to balance making money and embracing social accountability.

The sign of the growing trend is the increasing inclusion in Environmental, Social, and Governance (ESG) reports in an annual report on financials submitted by publicly traded Chinese enterprises. According to the tracker for corporate social responsibility Rankins CSR Ratings, 852 listed companies have filed ESG reports this year, an increase from 371 in the past ten years.

Peter F. Drunker, an author and management expert who laid the foundations for modern corporations, once stated that every business is a fundamental member of society. In the last 20 years, companies have begun to accept this fact and understand that every community they operate is a key stakeholder. The lesson is one certain Chinese enterprises have yet to be able to grasp in recent incidents.

China’s largest car-hailing company Didi discovered itself in the middle of a social responsibility saga in the past few months following a spate of murders and rapes related to Didi drivers. These incidents revealed issues with the company’s social media product, an unclear area of driver certifications, a tangled customer support system, and an ineffective security and risk management system.

Finally, Didi CEO Chen Wei and President Liu Qing apologized and promised to review the company’s plan to build lasting value. They stated that the growth of profits and business won’t be the top priority, and neither would the measurement of corporate development solely rely on growth and scale. Instead, they suggested that security would become a crucial performance indicator and that resources would be allocated to customers’ safety and providing excellent customer service.

Management at Pinduoduo (Nasdaq: PDD), the social e-commerce platform provider, has realized the necessity of considering people as stakeholders. One week after the company’s IPO, the stock price fell amid the backdrop of lawsuits against class action companies and a public relations crisis.

Pinduoduo has underestimated the strength to protect intellectual property rights. He also underestimated the growing consumer awareness and the Chinese Government’s resolve to slash down on counterfeit items.

Each of these instances demonstrates the strategic significance of corporate social responsibility. As with other companies worldwide, Chinese enterprises have gradually become aware that social missions must be included in strategic plans. Social responsibility should be considered as part of any business plan.

Today, amidst complex civil society and social issues and usual business model disruptions caused by the internet, Chinese enterprises are closer than ever to the people they serve and the community.

Chinese entrepreneurs and executives eager to implement socially responsible methods for their business activities are advised to adhere to the 3 “usefulness” steps spelled out in the Analects of Confucius. A gentleman must first be “Xiu Ji Yi Jing ,” after which he should be “Xiu Ji Yi An Ren ,” and finally “Xiu Ji Yi An Bai Xing ,” according to Confucius. This means that a gentleman must first contribute to the success of an organization and then contribute himself to the community and society at large. These three principles of Confucius can also be applied to managing an enterprise.

At the Salzburg Conference, Trudy will explain how her business, Zhifei Consultancy, always incorporates social impacts into their strategies for communication with their clients. The company also outlines a plan for social impact that aligns with the corporate strategy.

Last but not least, social responsibility should be effectively managed, and social goals, just like business goals, should be pursued in conjunction with a solid strategy and a plan of implementation, along with key performance indicators.

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Jane S. King

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