How Different Stakeholders Influence CSR: Experiences From China

Authors

• Adam Lane

  Former Manager, BSR

After five years of asking how corporate social responsibility (CSR) in China is different than CSR in the developed world, I've now come to a fairly simple answer: Stakeholders in China differ greatly from the developed world, where external stakeholders—including NGOs, customers, government, media, and trade unions—drive CSR.

In China, on the other hand, the government and consumers (in that order) are the only two external stakeholders seriously influencing corporate responsibility efforts. NGOs, the media, and trade unions have little influence inside the country.

The Chinese government drives the CSR agenda by setting regulations and either enforcing them or not, while consumers affect CSR by setting expectations for business behavior and action. Other external stakeholders are less important (but by no means of no importance).

In China, both the government and consumers are not homogenous groups. The central government and local governments often have different motives, which lead to a massive disconnect between the two entities. They also enforce certain regulations over others.

On the consumer side, there are the consumers and the businesses. Foreign buyers are increasing supplier expectations, but Chinese buyers are not. Additionally, Chinese consumers’ expectations of companies are increasing, with many cases of consumers boycotting companies such as the Chinese property giant Vanke, KFC, McDonalds, and P&G for not donating enough after the devastating earthquake last year. Additionally, the general public’s use of the internet and mobile phones to express themselves is having a greater impact on mainstream media and businesses' reputations.

The other stakeholder groups—which greatly influence the CSR agenda in the West—have had limited influence on CSR in China:

Depending on which country you are in, stakeholder groups influence the development of CSR in different ways. Business needs to understand the different roles stakeholders play in the different countries where they operate, and engage with the stakeholders in a way that is most impactful for that specific context.

• The Chinese media is generally less critical of companies and rarely undertakes real investigative journalism. The government also controls its content.
• NGOs, which are generally young and often face an uncertain regulatory environment, rarely criticize businesses (and the government). However, some—notably the international NGOs—are learning how to apply pressure in a Chinese way.
• The Chinese government heavily influences the one official trade union in China, so it is generally not as an important stakeholder as it could be.