Social Responsibility of Multinational Corporations and Chinese Society

Author: / Country: Mainland China
Publisher:
Publish Date: 2003-01-01
Features:
3. The Operation of Production Codes in China
In the past, foreign merchants rarely inspected factories when purchasing goods or selecting suppliers. They typically placed orders by viewing samples at trade fairs. Buyers only needed information on delivery dates, quality, and prices, without requiring details on working conditions, environmental protection, or labor practices in the factories. However, since the mid-1990s, major global retailers and trading companies that had established production codes have gradually conducted social responsibility inspections on their Chinese manufacturers and suppliers in compliance with the terms of these codes. Some large buyers also regularly evaluate factories to ensure continuous improvement from suppliers. According to our rough estimates, since 1995, at least 8,000 factories in coastal China have undergone social responsibility inspections by multinational companies. Some companies have received more and better orders due to their good performance, while others have been disqualified as suppliers due to a lack of commitment to improvement. These factories are primarily export-oriented production enterprises in Guangdong, the Yangtze River Delta, Fujian, Shandong, the Liaodong Peninsula, and Tianjin. Some members of this project have had the opportunity to participate in these inspection activities and have conducted empirical research on social responsibility inspections by multinational companies. From our inspection experience and field surveys, we have found that as multinational companies strengthen and extend their supply chains in China, multinational corporations, particularly those from Europe and the U.S., are increasingly concerned about the social responsibility of their Chinese partners. Among the factories we inspected were suppliers for major telecommunications companies, traditional labor-intensive factories producing clothing, sports and leisure goods, toys, and footwear, as well as Chinese business partners of investment companies. According to the information we obtained, inspection and evaluation reports on factory social responsibility by multinational companies and their commissioned monitoring agencies have become a fundamental reference for multinational companies when selecting partners. When customers decide to place orders or make purchases, factors such as safety and health, factory production environments, and whether workers' labor conditions comply with Chinese labor laws are considered as important as production quality, price, and delivery schedules. In 1998, the Hong Kong Chamber of Commerce, with funding from the Hong Kong Special Administrative Region's Industrial Bureau, commissioned a survey on the requirements of buyers in major Hong Kong export markets. The research found that when selecting suppliers, overseas buyers prioritize "quality first, followed by compliance with regulations, and price considerations come last." The "regulations" refer to requirements in areas such as labor rights, environmental protection, product safety, and government trade rules. Moreover, from the limited scope of known information, Wal-Mart, Nike, adidas-Salomon, Reebok, Live-Strauss, Pentland, Disney, Mattel, Pentland, Ll