Corporate social Investment responsibility in the People s Republic of China

Abstract
China has a unique background in terms of culture, accompanied with a fast-economic growth trajectory. The country has received a lot of attention on the international front in as far as their adoption of corporate social responsibility is concerned. The implementation of the same will greatly influence global sustainability. Thus, this paper seeks to explore ways in which CSR has paved way for growth economically in China from the onset of economic transition, its political, cultural, and historical background, and how such dynamics have affected or been affected by the performance of business firms. Therefore, the pressure on China to adopt CSR in the recent past came close on the hills of a period when the country arguably practiced one of the strongest CSR globally. The transition is viewed against a background of the state owned-enterprise of the Chinese, also referred to as SOE, and a host of private organizations in the same industrial segment in the city of Zhengzhou in the province of Henan in a period of 8 years. While the SOE CSR has been on the decline alongside the structure of ownership, its economic performance did not show any signs of improvement. In contrast, while experiencing a steady improvement in their performance, economically, the private firms in the lower cadre are not showing interest in CSR (Zhanget al, 2014).
Introduction
The nature of CSR compliance is such that it compels organizations to go beyond the statutory requirements and look beyond maximizing profits. It means that such firms should spend their resources at a rate and level beyond what the law requires them to do. CSR demands that companies also take the interest of the stakeholders into consideration, and not just the shareholders’. The stakeholders are the communities that live and operate around where the company is located and sells its products. Such groups as the suppliers, employees and the consumers form part of the stakeholder group (Lin, 2010).
CSR focuses on, apart from goods provided, the employees, the services provided; the quality of life for all affected by the operations of the company. China is well known for its notorious sweatshops and environmental indifference. There has been a series of claims regarding the common occurrence of substandard goods from the Chinese producers. The scandals signal to the fact that many Chinese companies are on a senseless trajectory to make money at all cost, including human life. The products made in China are generally associated with both lower pricing and poor quality. It is interesting to note that, it is probably the declining public image of the Chinese production industry that is propelling the country to, now, vigorously pursue the CSR strategies. Issues surrounding the CSR subject are a common subject of discussion in China across a range of forums (Whelan& Muthuri, 2017).
The government of China plays a significant role in steering the CSR agenda. Article number 5 of 2006 Chinese Company Law is a typical example of the efforts by the authorities. The law requires that every company undertakes CSR. The launching of the principles of CSR for the companies controlled by the central government in China is yet another good example of efforts to promote CSR. Several initiatives to push the CSR agenda are emerging including CSC900T, of the Supply Chain Association and the joint declaration by the Chinese Industrial Association of the Principles of Industry in CSR (Baniket al, 2016).
It is worth pointing out that the advocates of CSR will be happy to witness CSR growing in China. However, the same advocates may cast aspersion on the true objectives of the CSR campaign by the Chinese firms and authorities. They wonder whether the Chinese CSR initiatives are only meant to hoodwink the public and work as a cover-up for the purposes of washing their tarnished image. The apprehension arises from the allegations the Chinese authorities commonly uses such companies as their tools for abusing human rights. The practice by the Chinese authorities, requiring search engine firms to censor individuals and groups based on the instructions that they issue is a good example (Baniket al, 2016)
In furtherance of the government’s quest to control its population in a wide spectrum of respects, China deploys companies owned by the state in conflict zones to protect its own interests. One of the Chinese firms under heavy condemnation on the international front is the Chinese owned National Petroleum Corporation. Human rights organizations have blamed the petroleum firms for human rights abuses, particularly, for direct involvement in the genocide in Darfur region. Such developments fly in the face of the goals of CSR. They are the ones that make critics raise concerns about the seriousness of China in pursuing CSR. This article examines the matter from various perspectives, including ideological, instrumental and institutional angles (Whelan& Muthuri, 2017).
Ideologically, it can be argued that the practices of charity by the traditional Chinese enterprises, the function of the state-owned firms; socio-economically based on traditional communism, including the socialist percept gives a basis for CSR as practised in China. Nevertheless, it should not be lost on the reader that economic, political and legal institutions are still a stumbling block to the realization of CSR as the world understands it. It is the view of this article, in as far as the efforts by the Chinese government go in promoting CSR that it is fair to conclude that the authorities may be truly sincere, excluding issues to do with human rights (Whelan& Muthuri, 2017).
China has demonstrated consistency in its economic and political interests for the promotion of the environmental issues and labour. The exclusion of human rights, implicitly, by the Chinese authorities from the formal CSR practices point to a CSR approach with uniquely tailored Chinese traits. Regarding private actions, the actors in the private sector are getting used to the standards of CSR from a world view. However, the carrying out of the standard practices is left to the technological capacity of Chinese organizations and their bargaining power with regard to their customers at the international level. The CSR development in China is a good case study and offers important inferences for CSR discourse at the global level. CSR is part of the scheme of governance, worldwide. Apart from the creation for a large space for business, globalization also presents a scenario where regulators have to deal with firms that are out of reach. The innovative governance approaches at international level have developed ways of curbing the shortcoming of the traditional national regulators. The order of regulation, is still, nonetheless constricted by the institutions at national level. Any efforts to develop global regulation systems must consider the practicability of such practices at the local level (Bergman et al, 2015).
The growth of CSR in China is an ideal scenario for checking the influence of global governance locally. The CSR movement as we know it in the present day is propelled by the civil activists in the developed world. The movement affects developing countries because of the globalization trends. The effect can interlace with the environments in the developing nations and generate both desired and undesirable outcomes. Furthermore, the case study on the Chinese implies that various countries come with different CSR approaches. The implication of CSR is given to both institutional and cultural settings. It shows the significance of comparative studies for CSR (Bergman et al, 2015).
Background of CSR for Investment in China
The process of rural reform came with came with the policy of opening up. The development has led to an increase in exports from USD 18.1 billion in 1978 to in excess of 1.19 billion in the year 2009. Since the 70s, China has seen exponential economic growth which has stood at over 9% for the past 20 years. The economic growth was powered by the denationalization of the economic entities and privatization. It was also occasioned by domestic entrepreneurs and local investors (China Daily, 2009).
CSR was witnessed in China for the first time in the 90s. It was occasioned by factors from the external world. CSR was advocated for the first time by western organisations which brought in western CSR norms. It came at a time when the anti-sweatshop campaign was at its peak. Since the Chinese suppliers were at the centre of focus, and yet they were the main global suppliers of a wide of products and services, were made to accept the norms of CSR as it was and is from the western perspectives. Nevertheless, it was observed that there was resistance to CSR because it was widely tailored along the western views and that it was confusing in the context of the Chinese realities. Other CSR forces pushed the CSR agenda in china, even though it may not have been readily received and accepted. The acceptance was widely passive. For instance, a number of multinationals have written codes of conduct which are tailored, particularly for Chinese business outfits. The codes also incorporate the International Labour Rights Fund and Global Exchange in the China Business Principles. It is, therefore, apparent that the CSR in China as informed by external forces, as opposed to an internal desire for a change in the way of conducting business (Tan-Mullins & Hofman, 2014).
The rise in the economic developments in China came with practices that were unethical and were largely unsupervised. The outcome was an increase in environmental and social violations. Such issues as lack of sufficient clean water, poor labour conditions, corruption and industrial pollution are concerns that must be dealt with by the Chinese government. While there as recognition by the government to address these issues, there is no judiciary sector that is independent, poor laws and the incapability to enforce the few laws that could help have made it impossible for China to achieve its targets for reform. It is clear that the biggest problem facing China is the enforcement of laws and regulating how the various stakeholders behave (Tan-Mullins& Hofman, 2014).
Foreign direct investment, the WTO accession in 2001 and a high level of public investment have been highly instrumental in China’s economic growth and the general restructuring of their economy. The available data shows that since 1985, the amount of foreign direct investment in China rose from USD 2 billion to 105.7 billion USD in 2010. China has also invested in foreign countries at a significant level in the last five years. There was a corresponding increase in financing running parallel to accumulation of foreign reserve and an expansion of the domestic economy in China at a significant level. The local economy grew by 9.6% and 8.6 in 2008 and 2009 respectively; irrespective of the economic slump that was being experienced during the period. The FDI of China in 2010 hit 57.9 billion USD. The figures show that that by 2008, the number of businesses with Chinese capital in foreign lands stood at 12 000. These were spread across 174 countries globally (Ministry of Commerce, 2009).
Based on emerging research, CSR could mean different things to different people and in different times and places. There are institutional factors contribute to the social behaviour of corporate. The factors incorporate both public and private regulation practices. Others include the presence of private and independent organizations that keep track of organizational behaviour and arrange for dialogue between the various stakeholders in organizations (Caiet al, 2013).
The Chinese company law of 2006 calls for all companies to practice CSR. Disclosure of environmental issues has attracted special attention from the Chinese authorities. He state through the State Environmental Protection Program has developed a raft of regulations to protect the environment. China is on the record for having started the Ministry of Environmental protection. The main stock exchanges in China have also given CSR guidelines for the companies that are listed. The changes filtered down to the provinces (Caiet al, 2013).
The quest for regulation is connected to the corporate changes in the US and Europe. Therefore, there is a high likelihood that CSR will improve in China. Regulation does not mean reducing the competitive advantage. According to Campbell, Denmark, Sweden and Finland are regarded as some of the most competitive countries globally, but they still subscribe to a strong regulation by the state, bargaining at corporate level and self-regulation (Caiet al, 2013). The changes that came later have triggered a range of actions by the authorities. The government is seeking help from businesses to address the shortcomings in policy formulation. The private sector role has also evolved to include social issues; apart from just securing profits. A lot of firms have decided to go beyond the legal requirements so as to incorporate issues relating to human rights (Lim & Tsutsui, 2012).
CSR has emerged, therefore, as a tool to mitigate the effects of a neoliberal economy. CSR was used in the formulation of policies for institutions in which it informed the inclusion of issues to do with the environment and the impact of labour and social aspects. The implementation of ISO (ISO 14001 and ISO 26000) THE Equator Principles and the UN Global Compact with regard to social responsibility was informed by CSR. The realization of the global standards was realizes through CSR activities such as acts of philanthropy and environmental impact assessment (Lim& Tsutsui, 2012).
Methodology
The Model Developed
Evidence is provided in the literature review to the effect that the Chinese government is actively involved in the formulation of CSR policies by providing direction via legislation and regulation standards. All these actions help to encourage Chinese businesses to shift from their traditional approaches to a more stakeholder sensitive standpoint. At the same time, there is a push from the international front to pursue the CSR agenda. The impact of such influence is limited to Multinational Companies, though. Owing to unique CSR environment in China, and guided by the literature review, a model was crafted and applied in the analysis of the SKF matter. The internal synergy among Chinese businesses is a strong force in the evolution of CSR locally, compared to the external forces that tend to be limited to MNCs.
Case Study Description
SKF is a brainchild of Sven Winquist. He pioneered it in 1907 in Gothenburg. The company grew fast and became a global outfit. SKF has so far launched its branches of operation in Europe, Latin America Asia, Africa and North America. It has built over 140 companies from 1920 to date. SKF has a representation in over 130 countries with 44, 742 employees who are registered. The company handles over 15 000 distributors across the globe, and has over 100 sites of manufacturing and operations. The company deals in five technology aspects: mechatronics, seals, bearings and units, lubrication systems and services. The net sale, in fiscal language was 61, 029 million Kronor in the year 2010(Tong, 2011)
SKF had maintained and expanded its presence in China from 1912 to the 1950s. SKF as absent for about 30 years but returned thereafter after China embraced economic reform. In 1986, the company established SKF China Limited in Hong Kong. The company has seen a rapid expansion since 1994. It started putting up factories on the Chinese landscape. SKF built 11 plants for manufacturing, several units for service and attracted over 150 distributors and marketing teams across the globe. The company has over 4000 employees based in China (Tong, 2011).
Selection of Methodology
This study uses the qualitative approach since the aim is to find out the role of the government in the promotion of CSR through studying SKF and its CSR pursuits in the remolding of the Chinese society. Owing to the fact that the results of this research may be of uncertain nature, along with the fact that the information is derived from personal sources, perceptions and documents from the corporate sector, a hypothesis is not there. There are no restrictions or treatments on the results. Therefore the qualitative study is chosen as an approach applied in the research, and depends on inductive insights.
Case Study Approach
Since the objective of his study is to find a solution of the how part of the equation as far as the relationship between CSR and investment goes in China, the case study method is chosen as the best method under the circumstances to find an answer to the core issues raised.
The study approach with a detailed examination of SKF is chosen because it is ideal for a holistic description, intensive and that it is great for a single entity analysis (Yin 2003). However, since a single case method may present conclusions that are less convincing and offer more vulnerability compared to a multiple case study (Yin 2003), in the SKF case study, three separate and representative smaller cases based on the CSR projects by SKF in various phases of socio-economic development nature in China will be provided and examined to establish how SKF has reacted the instruments of government. The mini cases are explored for the purposes of filling in the evidence deficit of a single case study.
The case study method allows researchers to collect information that is empirical, and can be analyzed deeply. The method will help to understand how SKF has engaged in CSR in China, and whether such a mission has been achieved. The case study approach may be limited in as far as the outcomes can be applied on other companies. There is subjectivity in data collection; which in turn showcases the perception of the interviewee. The case study has been done via interviews that are half structured done in the month of May 2011. Each of the interviews takes 30 to 60 minutes and takes a tele-minutes form via Skype, and taking into consideration the geographical issues. The deep semi structured interviews seek to encourage those interviewed to provide detailed information in responding to the open ended questions. The pragmatic illustrations are sought to be given via narratives. The study instructions and the memorandum of the central question has been dispatched to the people to be interviewed a week before the actual interview. The strategy is to make sure that the interviews are carried pout smoothly when they come. The whole interview process has been recorded. Apart from the interview, information has also been collected through the review of the documents from SKF such as the sustainability report, Environmental Report, the official website and the code of conduct so as to improve data objectivity.
Semi Structure Interview
The choosing of the participants in the interview is guided by the organizational structure of SKF sustainability management at the corporate level. SKF has set up a department that deals with monitoring and supporting CSR and other sustainability programs. In the case of SKF operating in countries where they have already established manufacturing and logistics units, they appoint a country coordinator to supervise the implementation of CSR sustainability programs at the site. Thus, effort has been made to contact the departments of sustainability in both China and Sweden.
The SKF Project Managers in charge of the departments of corporate sustainability are the ones interviewed in Gothenburg and China respectively. Since they are widely read people, and the practical experience they have, they are viewed as the experts in the field of CSR. While it is subjective, their view is highly valued in the research. For reasons of personal privacy, their names have been withheld in this thesis.
Limitations
This study elicits weaknesses in a number of areas. To begin with, it follows a single company CSR development within China. Thus, it is not easy to arrive at a conclusion that applies to all companies in China. Nevertheless, there has been an analysis of three mini cases, and can make up for the deficiency of a single case. Secondly, the research outcome is guided by the perception of the interviewee and the experience of the company as the basic source of data. SKF has been noted to exhibit high CSR ambition and standards which may affect their response to the changing CSR in China. Nevertheless, the result of the research can be applied in other company scenarios, particularly for MNCs relating to the approaches they need in adapting their CSR to the Chinese society. Governmental influence is significantly strong. Thirdly, the research model cannot generalize both external and internal factors that could influence the CSR levels in China. Since the study seeks to establish the level of government influence in the practice of CSR, the institutional factors, domestically, are overemphasized. Lastly, since there is limited time in the conducting of this research there will be a level of insufficiency with regard to collection of information.
Empirical Findings
SKF’s CSR in General
For a century now, SKF has paid attention to the social responsibility aspects of the company to society. It has sought to embark on sustainable development since it was established, thus it is part of the company culture (www.skf.com). According to the information provided by the interviewees, SKF has applied its CSR strategy across all of its outlets all over the world. The project manager of the company indicated that the mail power behind its growth is the fact that the company plays a major player in the wider environment and the interdependence of other stakeholders is always in existence. He says that the company goes behind the legal requirements to ensure that all stakeholders are satisfied (SKF Group, 2010).
Basing on the documents from SKF, its CSR began with caring for its employees. The rights of the employees were included in the company’s code of conduct in the 2000s. Some of the aspects that were incorporated are getting rid of labor abuse, child labor, age standards, collective bargains, work safety, among others. The company applies tools such as the resolve to zero accidents and the standards OHSAS 18001 meant to get rid of the accidents at the place of work (SKF Group, 2010).
SKF takes responsibility to protect the environment; both internal and the external surroundings including the safety and health of the employees. The issuance of the environmental policy was first done in 1989. The first ever environmental report by SKF was done in 1994. The company attained certification by ISO in 1997 with ISO 14001. In 1998, all the SKF companies were certified. The certificate for the whole group was covered 29 countries with 98 sites spread between them. Since the 90s, SKF has dramatically improved its environmental performance. It has also reduced environmental impact (SKF Group, 2010).
SKF seeks to be responsible in the communities within which it operates. The social policy launched by the company in 1998 as aimed at encouraging the management of the company’s outlets and the employees to find ways of making a positive and lasting impact in the communities within which they were operating. The initiatives launched by the company include helping the less privileged access the basic needs, supporting the poor in acquiring education and vocational training, supporting local sporting initiatives, and encouraging a range of volunteer work in the community (SKF Code of Conduct, 2010).
In the same breath, SKF also focuses on its obligation to the stakeholders. The group defined by the company incorporates the customers, shareholders, analysts, local and national authorities, employees, investors and the local communities. SKF places the task of creating a strong return for the stakeholders the most important on the list of obligations. In 2002, the business ethics of the group were incorporated in its code of conduct. The move was aimed at maintaining a positive relationship with such stakeholders as distributors, suppliers, partners and agents (SKF Code of Conduct, 2010).
SKF’s CSR Engagement in China
The project manager states that the CSR initiative of SKF should be accomplished step-wise. He states that there are huge differences between the CSR initiatives in China and those in Sweden. The responds also pointed out that there are some projects and initiatives that are global in nature. The host of projects should be implemented locally. They are planned and executed by the Country Corporate Sustainability Department (Tong, 2011).
In general, there are four CSR development phases in China. The company launched its business in China over a century ago. The SKF CSR engagement began formally with issues to do with the environment following the establishment of the production factory in 1994. The Environment Management Systems was set up in accordance with the standards ISO 14001. The next phase of CSR engagement by SKF was to take care of the employee issues and other important stakeholders through the zero accidents initiative, OHSAS 18001 of 2000, 2005 and 2005. In 2005, the company embarked on its third round of CSR pursuits. This is the stage when SKF started participating in community activities. In 2007, the company started highlighting emphasis on a business market that is CSR sensitive in China. More plans related to the environmental issues and products that are eco-friendly have been given to the Chinese market and molded for the markets in China. Just like the Project manager pointed out, SKF intends to incorporate CSR in every aspect of its business. Figure 1 shows CSR development in China on a General scale. It is based on the interview with the CSM (Tong, 2011). The phases correspond with the different Chinese economic and social development phases (Figure 1)
Figure 1: Four Phases of SKF’s CSR Development in China
Local CSR linked projects done by SKF in China are abundant. Table generalizes CSR practices by SKF in China since the 90s. It is based on the instruction of the CSM. A couple of representative projects are shown in the latter section.
Both the Project manager and the CSM emphasized that CSR in China must incorporate several factors from the local settings if it is to succeed. The CSM pointed out that macro policy is an essential ingredient in CSR in China. The CSM adds that the society will follow suit if the authorities provide direction. He says that government policy will influence how the company implements its CSR initiatives. One of the classic examples is that in it illegal to conduct public fundraisers in China. The company is only allowed to make donations through specified channels such as the Hope Project and the International Red Cross (Tong, 2011).
Another example cited by the CSM is the legislation in China. For instance, restricted substances and chemicals for automotives require that they be registered. The CSM highlighted the important contribution by the government in enhancing the CSR agenda. The CSM further says that there is a series of calls from the government asking the company to take part in a range of CSR activities that are initiated by such authorities. He says that the company gives trainings and speeches in various parts of China to demonstrate how CSR is done at SKF. The CSM says that the company has shared its experiences with other companies in China on many occasions (Tong, 2011).
SKF has cultivated a positive relationship with the government by way of engaging in CSR. The company, he says, for instance, been involved in forestation projects aimed preventing desertification and improving the quality of soil. These initiatives are beneficial to the locals and to the environment, regionally. The projects, according to the CSM help to cement relationships between the Swedish and Chinese authorities. The advanced forest management skills will be shared with the National Forestry Administration to help them improve forest management in the country (Tong, 2011).
Discussion
This part evaluates the outcomes to figure out the role of the government in promoting the CSR agenda in China. There will be reference to the theoretical framework provided earlier.
Economic Globalization and CSR in China
SKF recognized the major potential in business in China and incorporated the Chinese market into its global business agenda. The company established its base in the 1980s. The persistent activity by foreign players in the Chinese investment market has helped to break the monopoly by the SOEs. It has also helped to increase activity in the market. At the time of Economic Reform in China, there are multiple economic bodies in China now. Joint venture entities and private companies have also jumped into the ring (Crane & Matten, 2016).
Western CSR came to China with the coming of the MNCS. It is not a secret that foreign investment has created opportunities for the Chinese corporate sector to experience the world of CSR. For example, Multinationals import production materials from China and required the suppliers from the Chinese sources to comply with the codes of conduct of the companies. The more the international transactions take place, the more CSR takes root in the Chinese society and business community. The co-existence of multiple economic outfits, from within and without, has shaped the growth of, and trends in CSR in China. Nevertheless, the company ownership still determines the form of CSR to be adopted (Crane & Matten, 2016).
The basis for a company to pursue CSR is how well it is doing economically. However, it should not be construed that only the economy powers the CSR agenda among companies in China. Traditionally, and from history, government influence is an important ingredient in the driving of the CSR agenda. In other words the government always has a role to play in the shaping of a countries national economic policy, norms and practices. While it not debatable that economic globalization has led to an increase in wealth in China, the society in China could not have formed an ideal environment for CSR if the government did not play its role (Liu, 2005).
Changing Business Environment and CSR in China
The business environment in China is influenced and regulated widely by the authorities through instruments such as legislation and macro policy. Government policy is the most influential in shaping the economic practices in a country including development. Now, society has started focusing on the social performance of firms and not just the economic excellence. Macropolicy by the government has provided the operational framework to companies to practice CSR in China. It has also offered an opportunity for business sustainability; the large low carbon market, according SKF, is a good example. The scenario is significantly different from what the case was in the 2000s. Chinese organizations only passively accepted to adopt CSR requirements demanded by foreign corporate buyers. The intention of the action by the government achieves several objectives. Nevertheless, the central goal is to establish legitimacy, stability and to deal with the environmental challenges that face society and even the businesses. These, it is recognized, are challenges that affect the development of the Chinese society in the long term (Xinhua Agency, 2011).
In China, establishing good rapport with the authorities is important in acquiring freedom from the close and restrictive scrutiny of doing otherwise. It is also a way of circumventing more regulations. China is also more openly embracing CSR policies. Changing social values may also be contributing to the trends. The speedy economic growth, traditional Confucianism and an increase in Chinese enterprises may also be informing the transformations (Lin, 2010).
The 3 Mini-cases in the Changing Chinese Society
EHS Project Economic Reform Times
The case demonstrates that in the 90s, the CSR campaign by SKF focused mainly on the employees and the environment. According to SKF, CSR engagement at the time was at its minimum. The situation has, thus, led to the reduced CSR engagement by SKF in China; collaborating with other stakeholders is considered highly important by SKF. It is therefore, difficult for any company that is willing to fulfill its CSR responsibility to join hands with the wider Chinese society (Liu, 2005). There were several factors that led to the low level of participation in CSR by Chinese companies at the time. For starters, the main goal in the dealings by companies as economic performance. Consequently ethics and moral considerations were pushed to the back banner. It is reasonable to assume that during the 1990s, a decade after the Economic Reform, the social aspects of business were largely put in the SOE dimension and political aims. Moreover, there was no government intervention via institutional approaches. The socio-economic and political grounds were still shaky at the time for a significant CSR take off across the nation (Liu, 2005).
SKF Hope School Project in the Harmonious Society
The project took off shortly after the 2005 rising of the Harmonious School plan. The combined standards of the ethical benchmark and the factors in the institutions made donating to be the best approach for the companies in China to make their contribution to the society. In the context, firms find an opportunity to enhance their CSR and spread it to the community. It is reasonable to assume that the Hope Project partnership is a secure and rational way for firms such as SKF to make a move to increase their CSR activities (Geis& Holt, 2009).
In several aspects, CSR shares common ideas with the Harmonious Society Plan macro policy. CSR has consequently drawn interest from the government, the wider society and companies. At the onset, in China, CSR was more of philanthropy than anything else. The return of Confucianism to the Chinese society and the restrictive institutional factors are linked to the latter development. Confucianism advocates for benevolence as a core element of its ideologies. The local institution is not sophisticated enough to provide a legal framework and an administrative basis organizations to pursue CSR (Geis& Holt, 2009).
Strategic Partnership with Baosteel Corporation in the Low Carbon Economy
SKF officials say that the company has since 2007 been engaged in producing goods that are energy efficient and other products that are eco-friendly. Recently, after focus shifted strongly to the low carbon policies for the purpose of building a stronger Chinese society, there are multiple channels for organizations to pursue CSR. There is a great emphasis on technological innovation as an important ingredient in the CSR agenda in the industries. The technological aspect is emphasized especially to deal with environmental issues related to CSR and constraints in energy production (Bai& Xu, 2005).
From the information the information provided by SKF, it is evident that more SOE companies are embracing long term CSR partnerships. The partnership between SKF and Baosteel is a good example of such developments. SOE seem to be changing in their political and social function. They are being strengthened (Bai& Xu,2005).
Conclusions
CSR is gaining momentum in the Chinese society, even as the government policy is changing. Judging from the development of CSR in SKF on the Chinese landscape, it can be concluded that the government is at the centre of the positive CSR evolution in China. The role of the government is clear since it is the one that controls and oversees the market and directs the social values. Considering the literature review and the case study in this paper, there is a range of ways through which the government intervenes to promote CSR activities in China. One of the interventions is the macro policy that is CSR-friendly. It has also instituted harsh legislation that supports CSR, and general support of institutions. The shifting social values are also affected positively by the authorities that aid in the establishing the ethical standards for business outfits. The Low Carbon Economy macro policy, a recent development, means that the authorities in China are employing eco-friendly technology to reduce the pressure of energy demand and to protect the environment (Wang& Juslin, 2009).
It is also logical to conclude that when the government promotes CSR, the effect is an intensive partnership in the same by the players in the market. The partnerships lead to sustainable solutions between the companies; and the between them and the government. The partnership between SKF and SOEs is proof that China has arrived at a point when its companies do not only focus on the economic wellbeing at the expense of CSR; as was the case during the Economic Reform. The resultant outcome of the decision to take care of all interests besides economic ones is that there will be sustainable growth now and in the future. Thus, adopting a positive response to the promotion of CSR by the government assures business entities of significant incentives and profits in both the short and long term. Success is, therefore, realised on both fronts; financially and society-wise (Wang & Juslin, 2009). Apart from what has been concluded in this thesis, future research can also gain from the findings. Multiple case studies could be conducted to further confirm the outcomes or add a new dimension thereof. It would also be interesting to find out to what extent government influence goes in the companies; in as far as CSR is concerned in China. Lastly, there are two sides to every coin; the strong intervention by the government may also be causing problems in the efforts to encourage CSR. Further studies could help to enrich the study regarding the influence of the government in the implementation of CSR among Chinese companies and society in general (McWilliams et al, 2006).
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