Community Service

When State Grid Corp. wanted to do good in Chinese communities, the Beijing-based utility turned to what it knows best: electricity. In rural villages nationwide last year, State Grid’s “Power for All” project ran electric lines to 545,000 previously unserved households, offering the occupants free power indefinitely. Families bought their first refrigerators, televisions, even computers. Farmers stopped hauling buckets of water and installed automated irrigation systems. “We transformed people’s lives,” says Liu Fuyi, the project’s chief. “We brought them into modernity.” Over the next two years, the utility plans to spend $3 billion to do the same for 4.5 million of China’s poorest people in 18 provinces — and that’s just one of 30 promises the state-owned firm has made to its customers and business partners to improve society, including investment in eco-friendly energy projects. “There was both internal and global pressure to do this,” says Li Weiyang, who oversees State Grid’s social initiatives. “But this work has made us both more innovative and more profitable.”

A Chinese company with a conscience? That runs counter to the world’s current impression of the corner-cutting Chinese manufacturer that saves a buck by using lead-based paint on children’s toys or that bars employees from bathroom breaks. Yet as bad press surrounding China Inc. grows, so does the number of mainland companies trying to improve their image through good works. While the corporate social responsibility movement in China is still small, it has some big names behind it. PC manufacturer Lenovo began a computer-recycling service last year. White-goods maker Haier has donated nearly $400 million to school tuition for poor Chinese students. All in all, about 25 Chinese firms had issued reports to shareholders and the public detailing their CSR projects by June this year, up from fewer than 10 last year, according to Syntao.com, a website that tracks good corporate practices in China. “Most of the largest corporations have committed to some action,” says Syntao’s manager Guo Peiyuan.

This is progress, however modest. In the past, the vast majority of Chinese companies single-mindedly focused on growth and profit, heedless of the impact their activities had on the environment and communities. Things began to change a few years ago, when “social responsibility went from being a topic pushed on China by others to one it took on as its own,” says Zhou Weidong, who runs the China branch of the U.K.-based NGO Business for Social Responsibility. Zhou and others largely credit the government for pressuring companies to contribute to a “harmonious society,” Beijing’s catchphrase for promoting social development along with economic expansion. “Party officials are in all earnestness trying to deal with labor abuses, environmental degradation and political corruption,” says Dennis Driscoll, head of the CSR Research Center at Peking Law School. “Business is expected to do its part.” Says Jia Feng, a vice director at the State Environmental Protection Administration: “This is not just a Western concern anymore. It’s about China’s future.”

Companies are also paying more attention to their reputations because they hope to expand globally. Mainland firms know they face fierce competition for deals not only from well-established Western counterparts but also from acquisitive Indian companies. According to a report issued in May by the law firm Norton Rose, buyouts by Chinese companies in Europe and North America rose to $6 billion last year. But corporate China’s anything-goes reputation can be repellent to potential partners. “There will be times that Indian companies, based in a high-functioning democracy, will win a bid or get an investor, a customer, because they’re just seen as more stable,” says Melissa Brown, director of the Association for Sustainable and Responsible Investment in Asia.

Still, many Chinese business leaders, especially in smaller enterprises, do not yet grasp the need to be socially responsible. “The public is not informed enough to hold companies accountable,” says Guo, the Syntao website manager. But that, too, is starting to change. In June, for example, thousands of residents in the southern port city of Xiamen took to the streets to protest against a planned chemical plant. Authorities put construction on hold. “Such fury wouldn’t have even been notable in the West, but it’s new for China,” says Stephen Frost, director of the nonprofit CSR Asia. “People now have their pick of what to buy, what to eat and where to work. They’re increasingly choosing the products and employers that advocate a better quality of life.” Even in China, CSR is changing from a business option to a necessity.