Eyes wide shut

By Chandran Nair

This column appears in the Ethical Corporation May 2006 issue.

COLUMN: Ethical Corporation: Corporate Citizenship in Asia
As Asian companies seek their place in the global economy, they are having to grapple with a western agenda for Corporate Social Responsibility; This is misguided

Many Asian business leaders are embracing the bottom-line benefits of globalisation, but far too often they are thrusting themselves into the fray with their eyes wide shut.

In integrating themselves into the global economy they have had to open their factory floors, production lines and business practices to international clients. This has brought them face to face with essentially Western sensibilities of corporate social responsibility that have left them and their working methods exposed to heavy criticism from a vanguard of international media and civil society agencies.

But for all the ink being bled on grim business practices in Asia, and especially China – on workers suffering near-slave conditions churning out products of shoddy quality, of managers double-bookkeeping to hide rubbery figures, and of manufacturers’ disregard for environmental distress – this black-and-white view is both simplistic and arguably off the mark. It does more damage than good to goal of fairness for all and can, if left unabated, make an already simmering resentment boil over.

Historical hangover

Where does this resentment spring from? It is deep-set, and often unspoken. But any fair debate about present Asian business practices must acknowledge certain realities: that colonialism and the post-Second World War economic order allowed western companies to grow rapidly and virtually unopposed to secure their grip on the world economy; that the West’s not-so-saintly past does not give it the right to preach now; that non-Western business practices are not necessarily deviant; and that there is clearly a mislaid acknowledgement that Asia and the west are culturally different.

Public spats over attempts by India’s steel-making giant Mittal and China’s oil producer CNOOC to expand in the west have done nothing but confirm in Asians’ minds that the traffic in free trade is all one way. It reinforces the sceptics’ view that much of corporate social responsibility and related debates about governance in corporate Asia are attempts by Western governments and corporations to continue their dominance of the global economy.

At the heart of the matter is this: what really is corporate social responsibility in Asia? How relevant is it to Asia and its business leaders, seeing as it is a recent development from a Western ideal of how companies ought to behave in mature capitalist societies?

Many in the West are of the opinion that Asian business leaders operate in an ethics void. But it may surprise these critics that many Asian business leaders believe they do practise corporate ethics, and have their own priorities, different from those of their counterparts in the West.

The first priority is survival. For example, in the cut-throat competition to win international contracts, Asian companies, often far smaller than the foreign giants that come to take advantage of cheap and abundant labour, have to pare back their operations to compete on the only thing they can – cost. After all, consumers world-wide want the “Made in China” label because it is cheap. And that inevitably leads to shortcuts and cost-cuttings that often leaves social safety nets dangling, ecological concerns on the backburner – and draws fire in the international media and from non-governmental organisations. The inherent hypocrisy is obvious. But their radar is set to a very different debate, one that has been building over decades.

Survival is also the primary concern of the workers. Theirs may not be a working wage in the Western sense, but it means the difference between being stuck in poverty, idleness, and starving and a chance at least of eating, and at best of a better standard of living.

Expansion counts

The second most pressing concern is expansion. Asian corporations are beginning to come into their own. They are lagging the better-run Western companies, multinationals in particular, but they see that in the opening up of trade there is money to be made. And they believe that they should be left to catch up – especially when the giants of the west had free rein.

Asia’s larger home-grown companies have built the “tiger” economies but believe they are responsible for much more. They believe they have performed a national service by dragging their economies out of post-colonial gloom and second-class status – and that because of this they are above the fray. Their governments have encouraged this attitude, building close relationships that the West considers collusion.

Yet, where multinationals are now being driven by a strong civil society to be more responsible in exploiting raw materials and labour, in Asia civil society is only just cutting its teeth. The dogged campaigners who drew people into the debate and brought Western corporations to heel, over decades, have been absent from Asia up until just a few years ago.

Pot calling kettle black

Logically, the efforts in the West followed production networks to Asia. But what appears to gall many Asian business leaders privately is that these global companies paid no heed to the issues of ethics and responsibility in their rush to becoming today’s MNCs. They recall slavery, collusion with the Nazis, support for despots, and gross environmental violations.

Ironically, it was the distrust of left-leaning organisations after the Second World War that throttled the growth of civil society in the region. These fears were in many ways fuelled by the deeply engrained Cold War view that communism would engulf the region from China through Indonesia to Vietnam.

None of these arguments and the attitude predicated on them holds currency now. The intrinsic values of the broad objectives of corporate social responsiblity are in essence good. The priorities of Asian business leaders are on the whole reasonable – given where they are in the evolving global economy and how that shapes business behaviour – and not that different from those of their Western counterparts.

But the “Asian victim” is a weak defence for poor leadership in corporate social responsibility. And it misses at least one vital point: the rise of Asia and its corporate sector is causing disquiet outside the region. It is sparking debate about outsourcing stealing jobs in the West. The spotlight is one thing that Asian business leaders will have to get used to if they want to take their rightful share of the global wealth. They may as well approach it intelligently and with enlightened self-interest.

Asia's third priority

Tied to this is the question of taking responsibility. This is Asia’s third priority, which – frustratingly – is not even on the agenda of many. Asia needs to see this spotlight as an opportunity to chart out its own future, rather than be dictated to by the West.

Asia needs to see the big picture, much as MNCs are realising that corporate social responsibility is not a PR exercise. It is about intrinsic values and weaving them into the very fabric of businesses' decisions operations. It is about relationships. It is a long-term contract for the good of all – a perfectly business-like sentiment to embrace. Beijing is beginning to see this in questioning its obsession with economic growth at all costs, and paying heed to social and environmental well-being – perhaps Asians’ first steps into global business with their eyes wide open.