Chinese corporations ’becoming better citizens’ finds new report

Leading Chinese companies are actively developing
corporate citizenship efforts as they expand their global footprint but
should do more to communicate transparently, a
report by the World Economic Forum has found.

Prepared in partnership with The Boston Consulting Group (BCG) “Emerging Best Practices of Chinese Globalizers: The Corporate Global Citizenship Challenge” examines how Chinese globalizers are aligning their profits with real and lasting contributions to the local communities in which they operate.

Over the past 10 months, the report’s research team reviewed the corporate-citizenship-related reports of 95 Chinese companies with large overseas operations and talked to 130 senior executives, researchers, and corporate citizenship experts.

All companies face challenges as they become international, but instead of focusing on shortcomings, this study focused on emerging best practices. Ten outstanding case studies were selected and feature in the final report.

“This is the first time a comprehensive analysis of the corporate citizenship activities of China’s globalizers has been undertaken,” said Robert Greenhill, managing director and chief business officer at the World Economic Forum. “Our hope is these best practices become standard in the future.”

Under the “Go Global” policy, China has become the world’s fifth-biggest outbound-foreign-direct investor. “As Chinese globalizers play a greater role in shaping global business, it is encouraging to find examples of innovative and effective approaches to corporate global citizenship,” said Christoph Nettesheim, a Beijing-based senior partner at BCG.

Recognising the cultural and societal differences in the process of internationalisation, the report also points out key challenges and provides practical recommendations for this push.

The report concludes that Chinese companies that are still midway to fulfilling their corporate global citizenship.

Greater understanding needed

It suggests that some Chinese companies lack a sufficiently broad and thorough understanding of what corporate citizenship means.

“They assume it must be purely altruistic, but this implies a zero-sum tradeoff in which communities benefit at the expense of shareholders. Instead, corporate-global-citizenship ventures should align their business goals with social problems, adds the study.

The report also warns that some Chinese companies are notably reluctant to communicate, such as in disclosing balanced citizenship information to the public, discussing corporate plans with external stakeholders, and demonstrating trust to local partners.

Instead the report calls for a more open discussion and fuller partnership which “would help companies strengthen critical relationships that result in better outcomes for them and their communities”.

Additionally, the report argues that Chinese companies need to become better innovators of corporate citizenship practices. In the 30 years since economic reform, many of them have succeeded by following the well-established practices of Western companies. However, to become true corporate global citizens, Chinese companies “must develop their own creative solutions as well as learn from the experiences of others”.

“We hope this report helps the global community better understand Chinese companies’ progress on corporate global citizenship, as well as domestic changes in China that have led to greater focus on this effort,” said Nettesheim.

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