The History of CSR in China before CSR Law
Corporate Social Responsibility has attracted the attention of businesses and governments throughout the globe in recent times. Perhaps, it is imperative to note that the concept of CSR was invented in the United States, and it spread to the rest of the world as a result of world. China is among the leading countries in developing policies to deal with this issue. This history of CSR in China is associated with the emergence of multinational corporations (MNCs) in the country as early as from 1970s, following the economic reforms of the country (USA China Law Group, 2013). Prior to the economic reforms of 1978, plus the economic responsibilities, in China corporations were expected to shoulder curtain responsibilities that otherwise were within the scope of the government and the society. Following the implementation of economic reforms, the country put into place the Protection Law as well as the Trade Union Law, which were followed by a series of other laws that came to have a significant effect on CSR in the country ((Lin Li-Wen, 2010).
The Consumer Protection Law, Environmental Protection Law, and Labor Law formed a foundation of CSR for organizations with regard to the environment and labor responsibilities. Arguably, further developments on this concept occurred following the country’s accession to the WTO (Welford and Frost, 2006). Particularly, the awareness of CSR increased not only within the government, but also academic fields. Numerous seminars, forums, and associations concentrating on CSR in China increased significantly as from 1999 to 2005 (Lin Li-Wen, 2010). Besides, by this time, consumers in China were becoming conscious of CSR about the performance of the business as well as other MNCs’ behaviors. In 2006, a group of MNCs introduced the Chinese Corporations CSR Declaration in Beijing. Through this document, these MNCs agreed to be involved in include social and environmental issues in their business development plans. This was followed by the revision of the Corporate Law, which openly required companies to undertake social responsibility (Zhang, 2007).
Chinese government roles in advancing the CSR development
The Chinese government has been one of the key players in development of CSR in the country. It has not only been practicing CSR in its functions, but has also created a conducive environment for CSR of other organizations to thrive with time. In the recent years, there has been a close connection between CSR and public policy. The government of China has incorporated CSR as a tool of addressing environmental and social issues consequential from swift but bumpy economic transition (Lin Li-Wen, 2010).
One of the important roles of the government in development of CSR is creating a regulatory and operational environment, which is conducive to CSR. For instance, the government gives tax incentives. The government introduced a new corporate income tax law in 2007, which saw an increase of tax-deductible donations to 12% from 3% of annual profits (Knowledge@Wharton, 2010). This initiative was meant to spur corporations to upsurge their financial help to NGOs in the country. Furthermore, the government promotes sharing of information among the stakeholders to aid efficient development of CSR activities. A number of government organizations have followed this move, such as the Shenzhen and Shanghai stock exchanges, which have been publishing papers on CSR since 2008 (Knowledge@Wharton, 2010).
The third role is offering expertise development. The government has embarked on endorsing CSR as a social objective. Lately, it is mandatory for state-owned corporations to establish independent CSR departments, which is helping in attracting more individuals to this field. Lastly, the government is also involved in creating public awareness on CSR. This is achieved through launching CSR-related social ventures, and working together with the mass media in promoting CSR activities (Knowledge@Wharton, 2010).
The enablers and key factors that make the law successful in China
The law has been successful so far because of a number of major factors. First is the culture of the Chinese people, which has been in existence even before the emergence of the concept of CSR in the country. The Chinese culture is characterized by collectivism. As such, the Chinese people value most collective goals and groups needs than personal accomplishment and promotion. This has provided an essential foundation for the growth of CSR activities in the country (Yang, 2008). Lately, for companies to do well in their business, they find a way of being accepted by the community in which they are based, and this includes embracing the existing culture of the particular community. Therefore, embracing the spirit of collectivism by corporations has been one of the ways through which these corporations are wooing customers, and this can only be attained through CSR activities. Hence, it is easy for corporations to follow the CSR laws, contributing to its success.
The nature of Chinese politics is another factor that has contributed to the success of this law. The Communist Party has absolute authority, whereas the minor politics are only involved in making decision. The party favors ideas and practices in line with the goals of the government, which forces MNCs to align their CSR with the strategic planning of the government (Lin Li-Wen, 2010). In addition, it is necessary for corporations to create and sustain interaction with bodies of the Chinese government, as the government assumes a crucial role in safeguarding CSR programs’ success. As such, corporations are ready to incorporate any changes in law, to stay on the same page with the government concerns on the issue of CSR (Lin Li-Wen, 2010).
Lastly, the issue of consumer nationalism in China has been a greater influence. The Chinese consumer nationalism is rooted or by concentrating on events that attract and motivate the interest of groups to act. As such, consumer nationalism enforces an impact on MNCs with regard to corporate reputation as well as communication strategies. Hence, consumer nationalism in the country has been a significant impetus for the success of the CSR law in China (Zhang, 2007).
How can the United Arab Emirates adopt the China CSR Law?
The United Arab Emirates should consider creating a framework that could enhance the growth of CSR in the country. Perhaps, this could be done by starting with modification of the Commercial Companies Law. Although this law was initiated in the past ten years, it is yet to be operational (SajadiFar, 2013). With this kind of law, there would be a stronger and more certain foundation for regulating companies in the United Arab Emirates. This would include on the manner in which corporations respond to issues concerned with CSR. For instance, the United Arab Emirates government should emulate their Chinese counterparts by creating policies that ensure corporations contribute to the support of NGOs in the country; perhaps through modification of tax-deductible donations. Environmental aspects are yet another area that corporations should be encouraged to participate. In addition to encouraging corporations to use environmental friendly production strategies, the United Arab Emirates government should also ensure that corporations take responsibility of their pollution activities, just like in China.
In addition, the government of has a big role to play in promoting CSR activities in the United Arab Emirates. This could be important to train the people and corporations of the country to learn to embrace CSR or rather to adopt the CSR culture (Teo, 2011). As mentioned above, the spirit of collectivism and consumer nationalism are two crucial factors that have laid a strong basis for the effectiveness of CSR law in China. Therefore, if these factors could also be encouraged in the United Arab Emirates, significant changes on CSR in the country could be observed within a short period of time. These two factors bring all the stakeholders on board, enhancing the growth of CSR over time.
Knowledge@Wharton. (2010). Corporate Social Responsibility in China: One great leap forward, many more still ahead. Retrieved from http://www.knowledgeatwharton.com.cn/index.cfm?fa=viewArticle&articleID=2218&l nguageid=1
Lin Li-Wen. (2010) Corporate Social Responsibility in China: Window dressing or structural change. Berkeley Journal of International Law, Vol. 28, No. 1.
SajadiFar, V. (2013) Corporate Social Responsibility in the United Arab Emirates. Retrieved from http://bspace.buid.ac.ae/bitstream/handle/1234/359/100114.pdf?sequence=1
Teo, E. (2011) UAE and Chinese Construction Law. Retrieved from http://www.tamimi.com/en/magazine/law-update/section-7/july-2/uae-chinese construction-law.html
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