Making A Business Success Of Keeping China Happy

24-Aug-2011

Looking to crack the Chinese market? You have probably thought more about what the country's cheap labour force and billion-strong customer base can do for you, rather than what your business can do for China. However, many companies in the UK are now beginning to realise careful management of their social responsibilities in China can translate into a flow of new business opportunities.

All this is on the back of the recent Chinese interest in enhancing social governance, a policy that has first and foremost seen Chinese businesses big and small being asked to “do their bit” for the country. This could be anything from broadening access to computers to cleaning up the environment or helping poor children get to university - and the social message is coming across loud and clear; businesses are no longer going to be allowed to get away with a selfish approach to success.

Connections matter in China, and many successful foreign companies operating there have long established CSR programmes, but they have never been so vital to success as they are now. China's ruling Communist Party is faced with a growing wealth gap, disgruntled farmers and an education and healthcare system falling short of rising public expectations. Even Chinese officials at a local level are being judged not only on their ability to deliver better GDP growth, but now also on their efforts to deliver “happiness” to the people they are serving, and on maintaining social harmony.

And it stands to reason, therefore, that those businesses that can help these officials succeed personally will be those businesses most likely to make a success in China. As Clare Pearson, lawyer and editor of The Charitarian, says: "Social responsibility isn't part of your business strategy for China, it is your business strategy,"

Mere charity work alone is no longer going to cut the mustard in modern China however. In order to receive that all-important stamp of officialdom, to open doors, get licenses, permits and regulatory approvals, more is expected. "Doing CSR is not new, but the Chinese government's renewed emphasis on stability and good governance is clearly going to have a major impact on foreign businesses," says Dirk Moens, the head of the EU Chamber of Commerce in China. "We are now seeing that the workforce is now more outspoken and more demanding, and China's government is clearly looking for help in managing that potential instability, and EU businesses with their experience in managing labour relations are well placed for this."

However, foreign companies are not as good at CSR as their Chinese counterparts. In a 2011 survey of which companies Chinese consumers felt did most to help society, only two global brands – Coca-Cola and Nokia - made the top 10, taking 8th an 9th places respectively in a recent survey by R3, a marketing consultancy based in Beijing. "The Chinese government has made some important commitments within each of their Five-Year Plans with regards to community outreach, closing the digital divide, and building greater racial harmony," the R3 report on CSR in China concluded. "Companies who develop plans that reflect and enhance these initiatives … will all produce better results."

And what does all this boil down to for UK businesses looking to make inroads into the lucrative Chinese market? With Chinese officials being graded for promotion on their achievements in enhancing social welfare, forging successful relationships in China is no longer just about paying bribes or finding the right joint-venture partner. It looks as if helping a government official meet his social targets is what brings him promotion, and so anything that will help the official make the grade is going in turn to help the determined businessman achieve his own ends.

 

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