Keys to survival in China
Many economic analysts predict that the growth of the Chinese economy would slow down in the new year. Korean companies largely dependent on the Chinese market would be faced with fierce competition. They might not survive if they don’t win the trust of Chinese consumers. Multinational corporations are already making efforts to communicate and make social contributions to gain the trust of Chinese customers.
As Pepsi is working on a pasture project in Inner Mongolia with the Chinese Red Cross, Coca-Cola has launched a project to clean the Yangtze river along with the World Wildlife Fund. French petrochemical company Total Group started a course on humanity, environment and energy conservation for college students. Thai agro-industrial company Charoen Pokphand Group, known as Zhenda in China, focuses on agricultural and seed improvement education and training in China’s Northwest. Starbucks has also initiated an environmental preservation campaign for college students while DuPont is leading the new agricultural system in accordance with government policy. These are just some of the corporate social responsibility activities that are being undertaken by foreign companies in China.
Intel has gone further than mere social contribution and is pursuing creating shared value by running a support program for 1.7 million teachers around China, to help reform China’s educational environment.
As the Chinese government wages a war against economic corruption, Beijing has demanded that foreign companies promote lawful management based on international norms, protect the rights and interests of workers and consumers, and show responsibility to local communities. The issues neglected during the nation’s rapid development, such as wasted resources, environmental pollution, food safety, labor rights and safety concerns, are also highlighted, and the government has asked the private sector to contribute to a harmonious society as the economic gap grows. China’s key state-run companies are required to publish a social responsibility report. Jack Ma, founder and CEO of Alibaba, China’s biggest private e-commerce company, said, “The competition between me and Bill Gates is: Who can spend money more effectively?”
Lately, the Chinese media are reporting more on subpar products made by foreign companies. It is a reminder that foreign companies need to communicate with Chinese society in order to take root in the market. As labor disputes and government regulations of low-quality products grow, and the territorial dispute between China and Japan has led to a boycott of Japanese products, multinationals operating in China now consider corporate social responsibility as a key management strategy. Foreign companies in China make contributions to the local communities as a survival tactic and because it is a requirement to expand in the Chinese market.
Due to the Korea-China free trade agreement, market expansion will accelerate, and corporate contributions to local communities will become even more important. As the Chinese government focuses on qualitative growth of its economy, demands for environmental preservation, energy conservation and saving resources will grow. In order to open new markets, companies need to engage in social responsibility and investments that meet China’s values. For example, LG Electronics’ “LG Loves China” campaign matches the ideology of the Chinese government by investing in education in underprivileged regions. Samsung China runs “Dream Classes” for elementary school students in collaboration with the China Youth Development Foundation.
Cultural heritage preservation and facility management can also be a desirable form of communication for Chinese culture. BMW promotes a volunteer program for historic sites and food container company Lock&Lock built a statue of Wu Xizu, a politician of the Wu kingdom, in Suzhou.
Foreign companies in China are promoting corporate social responsibility to resolve issues and get closer to local communities, focusing on corporate values, supporting values promoted by the government and promoting Chinese culture.
Through partnerships with the government or nonprofit organizations, they are also helping to close the gap between the rich and poor, as well as the educational gap. They are also encouraging environmental preservation, cultural innovation and entrepreneurship. Now, major Korean companies need to pursue the direction of overall social innovation in accordance with the values and policies of the Chinese government. Small and midsize businesses should work with local communities.
The social responsibility campaigns related to a sustainable society model promoted by the Chinese government will not only translate into more revenues but also boost brand image and allow easier entry into the market. In China, demands for environmentally friendly technology, such as low carbon emissions, renewable energy and safe food are growing. Korean companies need to develop and implement environmentally friendly programs customized for those communities. Strategic activities for corporate growth, social development and sustainability should be the focus of Korean companies operating in China. The shortcut to long-term survival in the Chinese market is sharing and spreading social values, fulfilling social responsibilities and reflecting the interests of the environment, workers, consumers and local communities.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, Jan. 1, Page 29
*The author is a professor of Chinese studies at Hanyang University and a visiting professor at Beijing University.
by Yoo Hee-moon