Corporate social responsibility in Asia - Essay Example

?Running head: CORPORATE SOCIAL RESPONSIBILITY IN ASIA 28th July Introduction In the contemporary business atmosphere, local and international companies have emulated various strategies as a way of facing off their competitors in the market. One of the major concepts that firms have not overlooked is corporate social responsibilities (CSR). Being one the major concepts in a business model, CSR entails a self regulating mechanism that ensures that companies are compliant with the ethical standards, global norms and law. Based on the fact that the success of any company depends on the contribution of all stakeholders including the employees, managers, suppliers, shareholders, consumers, society and the government, there is need for firms to adopt a CSR program that will have a positive impact on all the stakeholders. This paper is aimed at accessing the corporate social responsibilities in ASIA. Some of the major aspects that the paper will discuss include the human rights, environmental conservation issues child labour among others. Based on the expanded entrepreneurship and diversity of the region, Asia plays a vital role in driving the global economy (Chang, 2006). In order to clearly discuss the concept of CSR in Asia, this paper will cover CSR in four main countries that include China, India, Japan and Korea. Corporate social responsibilities in China Despite its efforts to initiate infrastructural programs in the developing countries, China has embarked on creating conducive environment that has attracted multinational firms in the country. The country has stepped its corporate social responsibility in order to curb the environmental challenges that are caused by the expansive manufacturing sector. As part of its efforts to curb the environmental challenges, the Chinese government has established a number of organizations for example Wokai that is focused at ensuring the supply chains are green. In this way, the cost of doing business in the country has greatly reduced (Park et al, 2006). As compared to other countries such as US where CSR is driven by consumers, China corporate social responsibilities are spearheaded by government owned enterprises. Through the support of the government, the success of the environmental programs has been guaranteed. By initiating education, environment and health care programs, the government has established an avenue that firms are now adopting. For example, in 2009 the Chinese government launched an expansive tree planting program and in response Chinese based firms established tree planting as part of their CSR initiatives. Another notable aspect that makes China maintain a strong business to business relationship is the support among various organizations that operate in China. For example, based on its effort to support small enterprises and conserve the environment, Wokai benefits from the support of Cathay Pacific Airways and Morrison & Foerster that provides financial and legal support respectively (Chen and Dean, 2007). One of the major challenges that faced China is the earlier cases of violation of human rights that created a negative image of the country business atmosphere. Major cases that created a negative image for the government was the use of prison labor in order to produce profitable products in the international market. In the area culture, Alan (2003) argues that the government has been noted to violate human rights by persecution of individuals who engaged in activities that threatened the control of the government. However, in its effort to create investors confidence, the Chinese government has engaged in dialogue with foreign countries on the matters of human rights. For example, in the past 5 years, the government has invited delegations from Britain, France, Australia and France to access the human right situation. The major country that has led in the ending of human rights violation in China is US. In their studies on the impact of human rights on business investors in china, Diane and Timothy (1993) indicates that key strategies the US adopted to end prison labor included banning of importing products made by Chinese prisoners, imposing economic sanctions and continuous renewal of human rights in China. Corporate social responsibilities in India As compared to other Asian countries, India has the richest corporate social responsibilities. This has been through training country entrepreneurs on the benefits of CSR programs. Additionally the CSR in the country has undergone 4 major stages of development in the past as indicated on the table below. Phases of India CSR development Phase CSR events First phase This phase was driven by philanthropy and charity Wealthy merchant were advised to share their wealth with society Businesses were encouraged to provide food and money to the merchants Second phase Indian investors were strongly encouraged by Mahatma Gandhi to support the society Businesses in India established trust for schools as well as setting scientific institutions. There were women empowerment, socio-economic development Third phase Emergence of environmental standards and labor laws Setting up of public sector undertakings that were aimed at equitable distribution of wealth to the society Setting up of national workshop on CSR by politicians, academicians and business community Fourth phase Economic liberalization led to expansion of India companies thus improving their ability to contribute to the society Compliance with the international environment regulations In their studies, Buckley and Ghauri (2004) depict that based on the need to conserve the environment, Indian Companies have embarked on activities such as tree planting and treatment of factory waste thus improving the health of the public. Notable firms that are engaged on such CSR are Aditya Group, Indian Oil Corporation and Tata Company. One of the vital points to note is that based on their products, Indian companies have embarked on providing CSR that are in line with the needs of the society. For example, GlaxoSmithKline Pharmaceuticals is focused at improving the health of the community. This is undertaken by launching health camps, medical check-up in the rural areas as well as health awareness programs. SAP India and Hope Foundations, two of the major non-governmental organizations are engaged in improving the lives of the needy by training them on entrepreneurial skills. A good example of a training centre is the SAP Labs Center of HOPE that is situated in Bangalore. Other notable companies that have contributed in establishing vocational training, improving sanitation facilities as well as building schools are Hindustan Unilever Limited, Bharat Petroleum Company and Maruti Suzuki India. Indian government is aimed at encouraging local and international firms to be socially responsible. This is indicated by the establishment of the Companies Bill 2012 that requires companies to indicate their annual spending on the CSR. Having being passed by Lok Sabha, the Parliament of India lower house in 2012, the bill requires companies to allocate 2% of their net profits on CSR programs. The culture of impunity has led India to lose large amount of funds to corrupt government official as well as lack of justice. For instance, the security forces that caused abuses in Kashmir and Jammu were not taken responsible despite the negative implication of their behaviors on the public (Budhwar, 2001). Another example that indicates the high level of impunity in the country was the resistance by the Indian defense to revise the Armed Forces Special Powers Act that allows soldiers to violate human rights. Just like the increasing cases of human right violation in India, the country is noted to have large number of child laborers globally. According to M.V Foundation, the number of child laborers in 2001 was 12.59 million while in 1991 the number stood at 11.28 million. Embroidery industry is the key employer of children. The use of child labor is due to the high level of poverty and inadequate social security. Despite the international regulations on child labor, the Indian government has not adequately implemented labor laws. It is thus essential for the government to initiate regulations that will ensure that children are not employed as domestic workers in towns and industries. Corporate social responsibilities in Japan One of the major aspects that make Japan a country with business opportunities is the extensive use of CSR in the Japanese corporate management. As compared to Europe and the US where firms aims at attaining short-term returns for their shareholders, Japanese companies place high value to all the stakeholders including the customers, employees, shareholders and members of the community (Waldenberger, 2007). In this regard, majority of companies in Japan have established departments that deal with corporate social responsibilities. Yamaha Company, a Japanese based firm is one of the key companies that have initiated a strong CSR department. Through this department, the company initiated Yamaha Forest reforestation program in 2010. During the first phase of the program that took place in Sukabumi Regency, Yamaha Motor Company in collaboration with Yamaha Corporation planted approximately 115,110 trees. Other organizations that are engaged in the environmental conservation in Japan include Japan International Cooperation Agency (JICA) and University of Kuningan among others. In its part, Toyota Company is focused at enriching the lives of its customers as well as members of the communities. For example, through the establishment of eco-friendly vehicles the company has effectively reduced the level of carbon in the atmosphere. Two of the major environmental conservation initiatives that Toyota has initiated include Toyota Shirakawa-Go Eco organization and Toyota Environmental Activities Grant initiative. With the establishment of environmental policies, Japan will continue to benefit from large number of investors locally and globally since the cost of production is low. As compared to India and China, Japan highly value human rights. Through the establishment of civil liberties volunteers, legal affairs bureau and ministry of justice, the country dealt with approximately 359,970 human rights violation cases in 2009. In this way, the government has provided a positive image to foreign investors. According to the 2010 Human Rights Report, Japanese government did not engage in unlawful killings or disappearance of local and foreign individuals an aspect that depicted high level of security in the country. However, the report indicated some cases of inhuman activities and torture. For example, in 2010 a Ghanaian man died aboard after being tortured by the security agencies. Similarly, in 2009 four instructors employed by the Hiroshima Juvenile Training School were implicated for abusing 50 students. It is worth to note that the Japan government through its independent judicial system effectively dealt with the two cases. In contrast to the child labour that characterizes India economy, Hodgson 2000 argues that Japan has strong policies that aim at protecting the right of children. Despite its effort to increase domestic products, the country does allow children to engage in employment. In this regard, the government is signatory to various international conventions that protect children rights. Some of the notable conventions that Japan has ratified include U.N. 1989 Convention on the Rights of the Child, International Covenant on Civil and Political Rights, Convention concerning Minimum Age for Admission to Employment and Optional Protocol to the CRC on Involvement of Children in Armed Conflict among others. According to Child Abuse Prevention law, any medical personnel, teachers, and child welfare officers should report any kind of child abuse in a timely manner. Protection of child rights thus is one of the key aspects that make Japan a suitable Asian country where investors from developed and developing can enter. Corporate social responsibilities in Korea Chen (2004) studies indicate that Just like Japan, India and China, Korea companies have strong policies towards environmental conservation. However, according to 2010 Unlocking Investment Potential report, majority of companies poorly report on the matters of human rights. This indicates that local firms do not highly recognize the significance of other stakeholders in the business sector. Even though since 2006, there has been an improvement in the manner companies reported on environmental and human right issues, CSR experts in the country argue that there lacks materiality in the reports produced by corporate. Another notable finding by the report is that the information disclosed on the human rights by majority of companies cover issues that are non-existent or immaterial. Wright and Kwon (2006) argue that one of the key issues that are affecting the relationship between business fraternity and the employees in Korea is the existence of mistreatment of companies’ employees in the foreign countries. While local employees experience lower cases of mistreatment, as indicated by the 2010 Unlocking Investment Potential report, workers in other countries undergoes mistreatment an indication that most of the local firms have a negative relationship with their stakeholders. Based on the importance of all the stakeholders in the day to day running of any company there is need for Korean based firms to protect human rights. This should be done by putting in place adequate legislation and ratification of international conventions similar to those adopted by Japan. Political donations are one of the notable forms of corruption that Korean companies poorly report according to 2010 Unlocking Investment Potential report. This is a form of bribery where senior managers pay facilitations payments to other firms in order to acquire goods or services (2010. Unlocking Investment Potential). As a result of lack or reporting of such corruption, the perpetrators do not face justice an aspect that worsens the business environment. Kim and Lee (2007) studies on the challenges of Korea’s foreign direct investment indicates that major CSR aspects in Korea is child labor especially in the secondary schools. According to article 31 of Korean Constitution, child labor is illegal and the minimum age to work for children is 16 years (Constitution of the Republic of Korea). However, children in secondary schools are exposed to activities such as repairing roads and construction swimming pools among other duties. According to Citizen’s Alliance for Korean Human Rights, secondary schools administration and teachers forced their students to undertake variety of duties for example collecting raw material to be used in government factories, cutting down trees, collecting foodstuff from mountainous regions among other duties. In the contemporary world, governments are focused at eliminating child labor. In this regard, there is need for Korea to put in place effective measures to end child labor thus presenting the country as conducive place for investors. Conclusion The profitability of companies largely depends on their relationship with all the stakeholders including employees, consumers, suppliers, shareholders, government and the society. One of the notable tools of ensuring that all the stakeholders are put in board is by undertaking CSR programs that covers environmental conservation for example planting of trees and waste disposal, protection of human rights, elimination of child labor among others. As indicated above, Asia is one of the major regions that environmental conservation has been strongly emphasized on by companies. However, violation of human rights in Korea, India and China is a major problem that is affecting the relationship between companies and stakeholders. There is need for Asian government to ratify all the ILO Conventions as a way of ensuring that issues of labor discrimination are reduced. Similarly, there is need for more research on the implications of child labor on the Korean economy. The reports from such research should be provided to the government in order to make necessary amendment on the constitution of the country especially in the education acts and employment. References Alan, I .2003. Chinese culture, organizational behaviour and international business management. London: Praeger. Buckley, P and Ghauri, N .2004. Globalisation, economic geography and the strategy of multinational enterprises, Journal of International Business Studies, vol. 35, pp. 81-98. Budhwar, S. 2001. Doing business in India. Thunderbird International Business Review, vol. 43, no. 4, pp. 549-568. Chang, J.2006. Business groups in East Asia: Post-crisis restructuring and new growth. Asia Pacific Journal of Management, vol. 23, no. 4, pp. 407-417. 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