Emergence of Corporate Social Responsibility in China - Case Study Example

Cross-Cultural Management Name Instructor Institution Date Article’s Link http://www.theguardian.com/sustainable-business/2014/aug/21/china-csr-corporate-social-responsibility-jaguar-land-rover-hsbc SUMMARY The concept of “corporate social responsibility” as becomes very popular among many businesses in the world. Many businesses, especially in China, are using the concept to build their brand and increase the brand loyalty. CSR has become increasingly important to international companies as the competition becomes stiff because of increased consumer choices due to the presence of many varieties of products in the market. Recently, the Hong Kong and Shanghai Banking Corporation, which is a subsidiary of HSBC, started using CSR to increase the chances of success of their brands in China (Rice 2014). Jaguar Land Rover has also embraced CSR in the country. Businesses have ignored CSR in the past but with the current dynamic business environment, they have realized that they can no longer do without it. This paper analyzes the emergence of CSR in China, why CSR is vital to brand success and points out the challenges that organizations face in developing CSR. Corporate Social Responsibility Corporate Social Responsibility is a significant issue in today’s business environment. The concept has many different definitions. Small Business Commissioner (2014) defines CSR as a term that describes the manner in which businesses takes into account the environmental, financial, and social impacts of actions and decisions of its activities. CSR is a way, which organizations integrate environmental and social concerns in their operations and their dealings with the organizations’ stakeholders on a voluntary basis. According to Ruhnkorf (2015), the Confederation of British Industry (CBI) describes CSR as companies’ acknowledgement that they should be accountable for both of their activities impact on the environment and or the society and financial performance. The definition of CBI adds that CSR is business drive, voluntary, and often goes beyond the legislation requirements. There are two forms of corporate social responsibility, which corporations can consider. In the first type, a corporation can provide resources and funding for worthwhile social causes. These social causes include donating employees’ time to charities or to activities that raise money for charities and donating money to charities. The second type of CSR involves laying down a plan that produces services or products that serves the best interests of the society in which the corporation is located. These include activities like using raw materials that do not pollute the environment when manufacturing products. More also it includes corporate environmental initiatives and activities such as economic development and job creation. Emergence of Corporate Social Responsibility in China China is becoming more integrated globally, and CSR is steadily taking a central role in business. Zhao (2014) explains that CSR is a vital issue for a business that aims to achieve long-term sustainability and success. According to Zhao CSR is believed to be a westernized invention that arose in concurrently with modern industrialization. He adds that there is evidence that CSR in developing countries China included draws strongly on indigenous philanthropic cultural traditions, community interactions, and business ethics. China is known for its high population hence providing cheap labor for manufacturing companies. More also it offers a big market for assorted products and services. Encouraged by the 1978 economic reforming China and accession to WTO in 2001, multinational companies flocked the country bringing with them innovative technologies. More also they brought with them new business traditions and practices. The CSR was among these new business traditions but was not well noticed until the 2008 disastrous earthquake. Many corporations are implementing CSR and integrating CSR facets into their business operations. As businesses begin, operate globally, they are increasingly being held accountable to ensure that they conduct their businesses in a responsible manner. Jaguar Land Rover has established children and Youth Dream Foundation worth 4.86 million pounds. The foundation is meant to support the dreams of children who are disadvantaged and underprivileged in China. HSBC is using CSR as a critical element of long-term sustainability and success in China. CSR is about charitable donations, society, and the environment, making decisions that sustain the right balance between our societies, the environment, and the bank’s business (China CSR map 2015). HSBC Bank China is committed to emphasis to education, support for local communities and environmental protection. Moreover, the CSR activities of HSBC China Bank focus on ethical banking, social development, consumer education, and staff volunteering. Importance of Corporate Social Responsibility to Success of the Brand CSR is essential because it promotes development in the society, brand competitiveness and enhance long-term business value. The importance of corporate social responsibility to brand’s success can be explained using four factors as discussed below. True Commitment to the Public As discussed earlier there are two forms of CSR. Most CSR programs combine the two types to have a true commitment cause. The combination of the two types of CSR not only brings success to the society but also bring success to the organization by building a positive brand image. For instance, an organization that donates financial resources to activities geared towards conserving the environment and uses sustainable resources in production their products shows a true commitment to the public. More also an organization that gives the workers paid time off to volunteer in environmental charities shows a true commitment to the public. A true commitment goes beyond a single CSR initiative. Improve Brand Image CSR is vital in building the brand image as well as increasing the brand loyalty among customers. Companies should increase their popularity by conducting campaigns that aim at promoting worthwhile charity causes. The more the company becomes popular in promoting activities geared towards helping the society and conserving the environment the more people are attracted to its products. CSR is the best way to market a business because it promotes positive branding environment where an organization can engage the audiences in deep levels that go beyond their products and services. Government and Public Relations Engaging in CSR improves the relationship of the company to the government and the public. Corporations that show a true commitment to CSR activities attracts the attention of the government and are likely to win its trust. Additionally, CSR commitments reduce the chances of rattling the activist groups that is known to tarnish the images of irresponsible companies by launching campaigns and demanding for inquires of the organization’s activities. Building a Positive Environment in the Workplace The greatest way that an organization can promote social responsibility in the place of work is to have a positive workplace environment. Keller & Richey (2006) explains that many international companies based in China are striving to build a positive working environment because it is known to boost employees’ morale. Challenges of Developing CSR in China Despite the increased development of corporate social responsibility in China, there are still numerous challenges that face the course in China. Moon & Shen (2010) argue that challenges are fueled by misunderstandings about CSR, the high cost of CSR implementation, insufficient support from nongovernmental or governmental organizations and ignorance by companies to fulfill social responsibilities. Misunderstanding about CSR Many business leaders do not understand the concept of CSR. They have negative attitudes towards the concept and feel that they are doing the public a favor by involving themselves in CSR activities. The challenge of misunderstanding the CSR concept is worsened by little awareness and ignorance to learn about it. Business leaders should understand that they need the environment as much as the public need it. Additionally they need the people around them not only to consume their products but also to provide them with skilled and unskilled labor. Companies need to ensure that their managers attend training to gain sufficient knowledge on CSR to increase CSR development in the country. Companies Ignorance to fulfill social responsibilities Most companies do not recognize the importance of CSR thus fail to fulfill their responsibilities. Problems that are caused by companies’ ignorance to fulfill social responsibilities include infringement of consumer and employees rights as well as environmental pollutions (Fang 2010). Insufficient Support from nongovernmental or governmental organizations Developing CSR in China is a challenging task because there is little support from nongovernmental and governmental organizations. China lacks regulations to guide corporations on CSR hence some international companies’ takes advantage of the situation and applies low standards regarding the application of environmental and social requirements (Olukoya 2010). High Cost of CSR Implementation CSR implementation requires managers and other business leaders to have sufficient knowledge of the concept. More also the companies lacked enough financial, technology, and human resource support. The high cost of implementation has been a major impediment to the development of CSR in China. Conclusion Serious businesses should implement CSR in their areas of operations not only to improve their brand image but also to fulfill their responsibility as a business. After a long period of ignorance, businesses in China have realized that CSR cannot be ignored in today’s business environment. We have explored the emergence of CSR in China and analyzed the importance of CSR to brand success. More also we have discussed the challenges faced by businesses in developing corporate social responsibility in China. We have been able to understand that CSR as a critical issue for any business targeting to succeed and become sustainable in the long-term. REFERENCES CHINA CSR MAP.(2015). Hongkong and Shanghai Banking Corporation Ltd (HSBC). Retrieved from http://www.chinacsrmap.org/Org_Show_EN.asp?ID=823. FANG, Y. (2010). Corporate Social Responsibility in China.School of Communication American University. Retrieved from http://www.american.edu/soc/communication/upload/Fang2010.pdf KELLER, K. L., & RICHEY, K. (2006). The importance of corporate brand personality traits to a successful 21st century business. Journal of Brand Management, 14(1), 74-81. MOON, J., & SHEN, X. (2010).CSR in China research: Salience, focus and nature. Journal of Business Ethics, 94(4), 613-629. OLUKOYA, A. (2010). Corporate social responsibility in China: a comparison of the top 20 Hong-Kong Hang Seng index and FTSE100 Listed companies' CSR reporting practices.Saarbrücken, Lap Lambert Academic Pub. RICE, A. (2014). “Jaguar Land Rover and HSBC using CSR to Ensure Brand Success in Chins”, Guardian News and Media Limited. Retrieved from http://www.theguardian.com/sustainable-business/2014/aug/21/china-csr-corporate-social-responsibility-jaguar-land-rover-hsbc RÜHMKORF, A. (2015). Corporate social responsibility, private law and global supply chains. Cheltenham, Edward Elgar Pub. Ltd. ZHAO, J. (2014). Corporate social responsibility in contemporary China. http://public.eblib.com/choice/publicfullrecord.aspx?p=1600283. Read More