2012.11-Working Paper-Corporate Social Responsibility of the Chinese Multinational Enterprises

Corporate Social Responsibility of the Chinese Multinational Enterprises
Huaichuan RUI

INTRODUCTION
　　During the past two decades Chinese firms were rapidly internationalising by exporting goods and services, contracting international projects and investing around the world. While China has replaced the USA to become the top trading partner of many countries, its outward foreign direct investment (OFDI) has also developed at an extremely fast pace during the last decade. The OFDI rose from $1 billion in 2000to $12.3 billion in 2005, then $21.1 billion in 2006, $55.9 billion in 2008 and $56.5 billion in 2009, with the minor increase as the result of the global financial crisis. The OFDI then rebounded to $68.8 billion in 2010 before falling to $60 billion in 2011. China’s OFDI stock by 2002 was $29.9 billion, but rose to $57.2 billion by 2005, $73.3 billion by 2006, $117.9 billion by 2007, $183 billion by 2008, $246 billion by 2009 and $322 billion by 2011. In 2011, the OFDI flow by the Chinese firms was ranked fifth in the world and the first among developing countries, while the OFDI stock was ranked 15th in the world and the 3in developing economies. By the end of 2011, 13,000 Chinese investment entities had established nearly 16,000 overseas directly invested enterprises in 178 countries, across a wide range of industries from natural resources to manufacturing to telecommunications and many others (MOC et al., 2011; MOC, 2012).
　　Chinese firms operating overseas were found to have brought positive effects on host country’s economy and society (e.g. Rui, 2010), but they are also frequently criticised by the international community for not fully following their corporate social responsibility (CSR) (Bosshard, 2012; Jenkins and Edwards, 2006; Broadman, 2007). Chinese government officials and firm managers working overseas also admitted that, despite the encouraging progress, CMNEs’CSR performance in general is in need of improvement. The weak performance on CSR by some Chinese firms had brought considerable damage to the national image, corporate reputation and brand building; and that this would handicap the progress of China’s“going out” in the long term.
　　Multinational corporations (MNEs) are coming under increasing pressure to find the balance between the short-term goal of profit-making for the benefit of shareholders and the long-term goal of creating a sustainable business for its stakeholders. Corporate Social Responsibility (CSR) refers to the duty MNEs have to look out for the interests of their employees, consumers, communities and the environment while accomplishing their own goals including profit making. CSR involves managing a firm in such a way that it can be “economically profitable, law abiding, ethical and socially supportive” (Carroll,1999: 286).
　　Despite the various approaches adopted by MNEs to implement their CSR, there is a growing consensus that businesses should make a concerted effort to perform all legally required, socially responsible activities; consider voluntarily performing socially responsible activities beyond those legally required; and inform all relevant individuals of the extent which their organization will become involved in performing socially responsible activities (Dunning and Lundan, 2008).
　　MNEs are considered to play a profound role on CSR issues in both home and host countries. Being the engine of the global business and having great influence on host countries and stakeholders, MNEs are often part of the problem in CSR issues, but might also be part of the solution (Kolk and van Tulder, 2010: 120; Dunning and Landon, 2008). Furthermore, MNEs’ CSR activities are seen as becoming increasingly strategic, in the sense that they affect the core business of the firm and its growth, profitability and survival (Kolk and Pinkse, 2008; Verbeke, 2009), with CSR as a potential source of competitive advantage (Porter & Kramer, 2006). MNEs must go beyond the traditional goal of profit maximization to emphasize the human values in the production process, the contribution to the consumer, environment and society.
　　This study is to explore the role of CSR in the Chinese MNEs (CMNEs) in their host countries. It particularly examines how the CMNEs integrate the economic, social and environmental concerns of the host country into their business activities so that their operations benefit the interests of not only their own but also the host countries. The examination was carried out in the following aspects of the CMNEs we selected: (1) whether its investment/operation served the broad national interest of the host country; (2) whether the CMNE emphasised the human values in their local production or services; and (3) whether the CMNE had social and environment focused support activities in the host country. The examination was mainly based on overseas fieldworks and interviews. In addition, a large amount of books, company documents, public media reports and government documents were consulted.
　　Following this introduction, the second section presents the CSR performance of and effect on CMNEs. The third section analyses the attributes of both the positive and negative CSR performance of the CMNEs. The fourth section offers recommendations before concluding with contributions and limitations of this study.

CSR OF CMNES:PERFORMANCE AND IMPACT
　　Our research has discovered that CMNEs as a whole have become much more aware of the importance of CSR to their business as well as the society. One reflection was that more and more CMNEs make efforts to publish an annual CSR report. In 2009 a total of 582 CSR reports were published among Chinese firms, triple the number in 2008 when 169 CSR reports were published. Meanwhile, Chinese firms’ CSR reports accounted for 5% of the global total [CSR reports] in 2008 but increased to 15% in 2009 (Xinhua News, 4 Dec 2010). Some CMNEs have made considerable progress in all the three concerned areas in the host countries. They have made great contributions to local economic development for the global market, offering not only a large number of job opportunities for local people, but also a considerable amount of tax revenue so as to contribute to the economic growth of host countries. Our research findings are in line with other key research findings. According to the Boston Consulting Group (2011), from 2006 to 2010, there was a 28% increase in number of local employees. In 2010, Chinese firms in overseas markets employed nearly one million people, of which 71% were local residents. On the other hand, our research discovered that many CMNEs had poor CSR performances, which is in line with the findings of other researches. Below we demonstrate both the good and bad CSR performances of the CMNEs by taking relevant corporate cases as examples.
Serve the broad national interests of the host countries
　　Many CMNEs perceived that a socially responsible MNE must firstly make sure that their business/operation can broadly serve the national interests of the host country. As CMNEs are largely investing in developing countries, serving broad national interests indicates that CMNEs’ investment and operation should promote host country’s economic development and social wellbeing. CMNEs indeed endeavour to contribute to industries that are in high demand but short supply, transfer the most desirable technologies and skills, train technicians and employees, and so on.
　　For example, two top Chinese telecommunication firms’products and services have enabled numerous
countries to establish their first ever complete telecommunication industry, and this is believed to be an important part of CSR (Qiu, 2010). Western firms used to monopolise the African telecommunications industry but their expensive communications equipment and services hindered the industrial development. The situation was reversed during the late 1990s when Chinese telecommunication firms entered the market. Chinese firms offered similar products at the price of 5-15 percent lower than that of major Western competitors. While ensuring good quality products and services too, the Chinese firms have entered the competition and forced the Western competitors to reduce their prices, leading to the reduced cost of the entire communications industry in Africa. They have established long-term strategic partnership solutions including 3G broadband intervention with African carriers in dozens of African countries. Their products and services have covered almost all the African countries. They are key contributors to Africa’s mobile telecommunications business which is the fastest developing in the world. In 1990 Sudan had only one fixed-line company and most Sudanese were unable to afford a phone. Since 1997 the Sudanese government has encouraged both domestic and foreign investment in the sector. Local operator Sudani was small and weak, lacking a mobile business, so was unable to compete with Zain and MTN which had mobile business supplied by Ericsson. Sudani chose to cooperate with two Chinese vendors in order to enter the mobile business. The pair each provided lower prices and a better service to compete for the contract. Consequently Sudani grew rapidly by benefiting from the low price and innovative services which caused other operators to struggle. On one occasion the price cutting competition even enabled mobile subscribers to speak for free. It seemed that the inter-Chinese competitive attack in this case facilitated the growth of both rivals as well as the host country. Meanwhile, such development also brought job and training opportunities. In 2011, sales of one of the top Chinese telecommunication companies in the African market reached $ 35 billion, covering more than 40 countries in Africa. Its procurement and subcontracting business volume in Africa reached more than $ 500 million, promoting the development of the telecommunications industry in Africa.
　　CMNEs in other industries hold similar views on CSR. For example, one top Chinese oil company has been investing in Sudan since 1996, which has brought the cascade effect on the country’s economy and society. The initial Chinese investment in the Sudan’s oil industry in 1996 and the consequent oil exportation since 1999 brought the direct effect of large revenues and the indirect effect of industrial linkages for the host country. The subsequent re-investment of the oil revenue by the Sudanese government and diversifying foreign investment in non-oil sectors led to other industries taking off, and the emergence of domestic investment and local entrepreneurs (Rui, 2010). Moreover, to enable Sudan’s oil business to develop a high value added supply chain from upstream to downstream, CNPC cooperated with host government and local firms to build up a complete oil industry, from oil production firms, to refinery, petrochemical, pipeline, road transportations, petrol station and sale. This was drastically different from some western oil firms in Africa that often focus upstream but not downstream resulting in the host country not having an independent oil industry (CNPC, 2008).
　　However, Chinese investment’impact on the sustainable development of the host countries can be controversial. In many countries, “made in China” goods and services are flooding in which have become a double-edged sword. From Brazil to Russia, Nigeria to Australia, there is a wide and rising concern that the flood in Chinese goods and migrates will damage host country’s national industry and other interests. Although individual Chinese firms cannot be requested to put host country interests over their corporate interests such as profit seeking, they are obliged to abide by local laws and regulations and not to damage the national interests of host countries. Some Chinese firms’behaviour such as tax avoidance, selling illegal goods, and using illegal labour forces is obviously harmful to the host country interests. For example, Brazil has a population of 186.77 million, raking fifth in the world. The estimated number of Chinese are 0.25 million, mainly in Sao Paulo and Rio de Janeiro. However,
the massive free market in Sao Paulo supplies goods to not only Brazil but also other Latin American markets, where almost all goods are from China. The main trading building in the free market is unofficially named “smuggling building”, indicating the goods were illegally imported into Brazil. With Brazil’s economic structure already perceived to be irrational with weak manufacturing (except for a few sectors), the flood of Chinese goods entering the market is only exacerbating the problem.
Emphasise the human values
　　CMNEs increasingly emphasize the human values in their overseas activities, such as empowering local managers, recruiting more local employees, providing more formal training, ensuring suitable wages, improving health, safety and environment (HSE) conditions, and avoid after-hour work and so on. For example, the Chinese national oil corporate provided the opportunity to the host country with not only oil production and revenue but also a large number of trained engineers and employees. The 50-50 joint ventured Khartoum Refinery Corporate ruled that the Chinese must train all the necessary local talent to a level where they would be able to sustain the entire corporate once the Chinese handed over the management to the local in a few years as agreed.
　　Employment localization and training have been a central issue and paid particular attention to for the 10 and more years of the oil firm’s operation in Sudan. Three major reasons were identified. One was that with growing experience of dealing with MNEs, the Sudanese government has become much stricter in requiring MNEs to use local human resources. The previously relaxed terms and conditions regarding employment in FDI contracts have changed to the current explicit requirement of at least 50% – in some cases as high as 95% – local employment (Sudanese interviewee, 5 May 2008). The second reason was that the Chinese oil firm understood the importance of meeting such demands for its long-term success in the Sudan as well as in other countries. The oil firm realised that it is the time to improve the national reputation while global available resources are exhausting. Sudan could be an important oil supplier for China. The fact is that Sudan has now become one of China’s most important oil suppliers. Finally, the resulting cost advantage will be important as China’s own labour costs increase with Chinese oil firm’s employee localization in Sudan, for example, increasing to as high as 93% (Rui, 2010). A Sudanese entrepreneur, who was familiar with the overall “Sudanization plan”designed by the government of Sudan, provided the following data: by May 2010, the Sudanization ratio (percentage of the Sudanese in the total workforce) was 93% in GNPOC, 90% in PDOC, 85% in Block 6, which were all run by the Chinese oil company. These numbers could be compared with the 84% Sudanization ratio in Petronas-run WNPOC in Sudan.
　　Three styles of training have been provided in the Chinese oil firm for local employees: on-site training, training in the Chinese firm’s headquarters in Beijing and overseas investment sites, and selecting those with potential to study in China and return to work in the Sudan. For example, between1998 and 2008, the Chinese firm spent $1.5 million to enable 35 Sudanese students to study and obtain degrees in Petroleum at the University at Beijing (Rui, 2010).
　　Many other CMNEs have made similar efforts. For example, one top Chinese telecommunication company set up seven telecommunication laboratories in Ethiopia between 2007 and 2010, during which it trained 1,000 telecommunication engineers (Qiu, 2010).
Offering social and environment supportive activities
　　Chinese MNEs have made significant progress on offering social and environment supportive activities. From dam constructors to oil explorers, CMNEs are learning to improve their social and environment supportive record.
　　The Merowe Dam project on the Nile was the largest hydropower project in Africa when it was under construction between 2005 and 2009. The purpose of the project was power generation, water supply for irrigation and flood control. The total investment was about four billion euros. The dam’s power generation capacity was 1,250 MW, doubling the existing capacity of the Sudan. China’s largest dam construction firm was responsible for dam body construction while ABB provided power equipment and the German firm Lahmeyer was the designer and supervisor. At its peak, this dam construction required 5,000 employees, of which 2,500 were local. Considering the severe shortage of electricity in the host country and the high expectation of completing the dam ahead of schedule, the Chinese firm decided to speed up the construction. However, in Sudan the temperature is high throughout the year and easily rises about 50 degrees centigrade in summer. To ensure both project speed and employees’ welfare, the company arranged for the employees to work late afternoon or at night when the temperature was lower and avoided scheduling work during the peak hours when the temperature was highest. The author also witnessed the Chinese managers and employees demonstrating to local employees how to stir the foundation mixture in order to
ensure the best quality of foundation and also improve local employees’“know how”. Moreover, the project supervisor strictly scrutinised the Chinese firm’s project planning, material choice and project implementation procedure in order to ensure the best practice was adopted for the dam safety, local environment protection and residents’welfare. For example, this Chinese firm used four times more steel for the Merowe Dam than it did for a similar Chinese dam in order to meet the specific quality requirements for the water and geographic conditions of the
Merowe Dam.
　　One large Chinese construction firm built a road in Kenya in 2009. When NGOs warned that the road construction might affect the habitat of nearby wild animals, the Chinese firm moved their operation and material storage locations three times in order to minimize the effect on animals. The subsidiary head stated: “These activities added extra costs to our project as a result of moving the location of our operation and the delay this caused to our schedules. However, we considered that the NGOs’warning was important and environment protection is key for us to maintain the image of a responsible multinational firm”.
　　In 2005 a top Chinese oil corporation acquired PetroKazakhstan (PK) for US$ 4.18 billion, becoming the first successful overseas acquisition in China’s oil industry. PK was Kazakhstan's second largest petroleum producer, owned by a Canadian firm and an integrated international energy company with upstream and downstream operations. Prior to the acquisition, PK’s operational conditions or HSE(health, security and environment) practices were heavily criticised by the government and consequently: “(1) About half of the oil wells in its oil fields were forced to shut down because of the lack of environmental emission permits from the host government; (2) The operational conditions were bad in its oilfield. For example, from 2001 till 2004, a total of 17 contractors were killed because of transportation accidents; and (3) Before 2006, there was no treatment and utilization of drilling mud,
cuttings and waste water” (a manager of PK). Being asked why these could happen, the HSE
　　Manager perceived that under pressure from shareholders the former owner aimed to save costs so the oilfield was low on supplies for quite a long period of time. To resume the production, the Chinese acquirer frequently communicated with the host government with the commitments of keeping local jobs and improving HSE. The host government was persuaded to allow the company to resume the production with conditions of improving HSE and
other requirements. After resuming the production, the Chinese acquirer discarded the old method of using sumps or pits to store the drilling waste despite its cost advantage as it caused pollution of the sub soil, and in 2006 started the “Sumpless Drilling Program”, spending about US$3 million per year to the treat and reutilize the drilling waste. To improve transportation conditions in the road between the city and the oilfield and prevent vehicle accidents, it spent US$17 million in asphalting 60 km in 2010 (an internal file).
　　At the same time, CMNEs in a wide range of industries face criticism for their lack of proper regulations on ensuring human value and employees’rights and environment protection.
Criticism on CMNEs’performance in ensuring employees’ basic rights
　　They were criticised for some “common” issues in their CSR performance or management. The first common issue was CMNEs’ low salary and poor treatment for local employees.
　　They were accused of maximizing profit but neglecting the welfare of their local employees. Chinese firms in Zambia’s mining industry, for example, were frequently criticised. Copper mining is one of Zambia's main industries, providing nearly three-quarters of the country's exports. Coal mining is another important business in Zambia. Many of the mining companies are foreign-owned. In 2011 China invested more than $400m (£250m) in Zambia's mining industry, making it one of the major employers in the private sector. As China has become a major investor, Chinese firms’ behaviour in treating the local employees attracted wide attention. Despite improvements in recent years, safety and labour conditions at Chinese mines were said to be worse than at other foreign-owned mines (BBC, 5 August 2012).
　　One Chinese-owned coal mine in Zambia has been exposed in recent years for the so called “bad labour-capital relationship” (BBC, 5 August 2012). In 2011 the Zambian government dropped charges against two Chinese managers who were accused of attempted murder after they fired on miners at the mine during a pay dispute. A miner working in the coalmine owned by the Chinese claimed that “The salaries are a problem -we get 500,000 kwacha ($100; £63) a month but our rentals cost about 100,000 kwacha ($20; £13)”. The Chinese
　　Director of the coalmine attributed his company's poor pay to problems it faces in marketing its coal. The coalmine produces an average of 150,000 metric tonnes of coal, which earns the mine up to $6m (£4m) a year. The mine’s clients are mainly Zambian copper mines but sometimes they import coal from Zimbabwe. Under the government's brokerage, a temporary wage deal was struck until negotiations between the mine and the workers' union conclude. Miners will now get a minimum of $90 (£57) a month, but will also be entitled to monthly housing and transport allowances totalling $57 (£36) (BBC, 20 October 2010).
　　The latest incident took place on 4August 2012, in which Zambian miners killed a Chinese employee by pushing a mine trolley at him during a riot at the coal mine. A second Chinese employee was injured, as were several Zambians. The workers were on strike at the mine in protest against delays in implementing a new minimum wage, $220 a month. Warned by the Chinese authority that they were not allowed to use weapon in dealing with the protesters as they did a year ago, the Chinese managers and employees simply fled to avoid the angry protestors. However, the latter chased the Chinese and eventually killed one Chinese by pushing the trolley towards him (BBC, 5 August 2012).
　　The second common issue was CMNEs’ putting insufficient focus on safe production. The workers in the Chinese owned coalmine in Zambia also pointed out that there is also a perception that the Chinese management has little concern for their workers' safety. They lack face masks, safety shoes and in many instances wear their own clothes during work. However, the Mine official dismisses these allegations, claiming that "Every year we provide two sets of uniforms for workers but the problem is they go and give the uniforms to wives, uncles and other members of their families" (BBC, 20 October 2010).
　　Nevertheless, Chinese investment in Zambia’s mining has been facing constant industrial disputes amidst allegations of poor working conditions. Chambishi smelter in northern Zambia is part of a huge multi-million dollar
Chinese investment in the area. A blast at the copper mine killed 50 people in 2005. This aroused wide concern on the safety of the mining workers in particular and the Chinese investment in general. In elections in 2006, opposition candidate Michael Sata ran on an anti-China ticket, calling for "Zambia for Zambians" Zambians sacked over China attack”. In 2007 China's president cancelled a visit to Chambishi fearing protests. In 2008 there was another major protest at Chambishi copper smelter which was sparked by rumours that members of the Chinese management team were about to go on holiday, which workers feared would delay negotiations to improve their conditions of service. The workers threw stones at the managers as they attempted to hold talks before police were called in. A Chinese manager was admitted to hospital after the assault. About 500 Zambian mine workers were sacked after
rioting and attacking the Chinese manager. Those sacked had three days to reapply for their jobs, while seven union officials have also been arrested.
　　It is worth noting that host country’s safety concern towards the Chinese employers was not limited to the mining industry but extended to others such as manufacturing, transportation and construction. In Cameroon a local manager criticised the Chinese constructor of the country’s national sport stadium for not training local managers
and employees sufficiently on safety issues.
　　The third common issue was the dismissal of local employees. A large state owned Chinese steel firm acquired shares of a state owned mine in Peru in December 1999. Local people welcomed its presence but soon started to criticise the Chinese. They accuse the Chinese of driving sport utility vehicles, talking to subordinates through translators and eating meals at their own cafeteria, avoiding mixing with Peruvians in town. Problems with the steel firm began when the company slashed the mine’s work force to 1,700 from 3,000 and brought in some Chinese workers, who were soon returned to China due to local resistance. Resentment also emerged when the firm did not invest a promised $150 million in the mine and the town’s infrastructure, opting instead to pay a $14 million fine for failing to do so, and left blocks of housing once occupied by workers vacant in a town with an acute housing shortage (Caploe, 2010). Moreover, this broken promise was considered partially responsible for the resulting accidents with 170 casualties in 2003.
Criticism on CMNEs’ lacking consideration on environmental protection
　　Some CMNEs were criticised for insufficient consideration on environmental protection in their product design and business operation. For example, Chinese companies are the biggest builders of global dams. Chinese banks and companies are involved in constructing some 300 dams in 66 different countries, particularly in Africa and Southeast Asia, including Kamchay Dam in Cambodia, Bakun Dam in Malaysia, Myitsone Dam in Burma and Merowe Dam in Sudan. The global watchdog International Rivers (Bosshard, 2012) commented that “As a result China has a growing and significant global environmental footprint. Many dams built by China overseas are done so
without reference to international environmental and social standards”.
　　There are also concerns that Chinese firms’wood sourcing and processing may have caused deforestation in some of their wood sourcing countries. While the demand for wood products surged, domestic wood supplies dropped. As the world’s largest timber consumer, and the important importer of timber and exporter of wood finished products, China is playing a key role in driving the development of world forest, timber, furniture, and even paper industries. Chinese top wood flooring firms have long operated businesses in forest rich countries such as Brazil, Cameroon and Russia. Chinese wood firms claimed that they made every effort to source certified wood and paper products from responsibly managed forests – as defined by a particular standard from independent organizations. Third-party forest certification was pioneered in the early 1990s by the Forest Stewardship Council (FSC), a collaboration between environmental NGOs, forest product companies and social interests. Sourcing
certified wood is one way to demonstrate that the sourcing firm is at least making efforts on protection of biodiversity, species at risk and wildlife habitat, sustainable harvest levels, protection of water quality, and prompt regeneration (e.g., replanting and reforestation).
　　However, criticism grew and Chinese firms’wood sourcing was resisted or even blocked in many ways. One large Chinese solid wood flooring company originated from a tiny private furniture shop in Zhejiang in 1994. At the
beginning of its business, this firm purchased wood from domestic sources as well as imports from Southeast Asia, like thousands of other Chinese wood firms did. In 1995 the firm started to purchase wood from Latin America, but
through intermediary traders in Taiwan. In 1999 it received the first batch of timber dispatched from Brazil. Soon afterwards this firm established partnerships with over 120 Brazilian wood suppliers. In 2002, it started direct investment in Latin America and entrusted its Brazilian partners to establish two wood processing factories in Brazil
for wood cutting and board processing. The processed boards are mainly exported to China while outdoor floor decking is shipped to Europe and America. In 2004 the firm acquired a large natural forest in Brazil to secure a long-term timber supply, becoming the first Chinese company to own forestry resources abroad. In many conferences the CEO of this company explained how the company fully abided by international as well as Brazilian laws and regulations in terms of planting, cutting, processing, transporting and replanting so that the forest wasable to develop sustainably. However, inside Brazil there are many criticisms of the firm and the Brazilian government for not looking after the Amazon properly. It is signalled that Chinese wood firms will have to follow the global trend to source certified wood. For example, Brazil is under international pressure to reduce deforestation that destroys thousands of
square miles of the Amazon each year and makes the country one of the world's biggest sources of greenhouse gasses. Hence, it launched a small pilot project to use a microchip system in forests, which was said to have the potential to be a big step forward in the battle to protect the Amazon. The chips allow land owners using sustainable forestry practices to distinguish their wood from that acquired through illegal logging that each year destroys swathes of the forest. Each microchip tells a tree's story from the point it was felled to the sawmill that processed and sold the wood, key information for buyers who want to know where it came from (China Daily, 2010).
Impact of the CMNEs’CSR performance
CSR commitment has improved corporate reputation as well as economic gain for many
　　CMNEs. As TCL’s CEO claimed, promoting TCL’s CSR image in France had a positive impact on its overseas business. “Because we work very hard to assume our social responsibility and our efforts to promote the integration of the business, our TV business and the mobile phone business in post-acquisition period achieved relatively good results”. The mobile phone business was particularly successful. TCL’s sales overseas was about 7 million units a year before acquiring Aktale, but it increased to 38 million units in 2011. This made TCL the 7largest mobile phone seller in the world. Li concluded that “The effectiveness of the [business and organization]
integration was largely dependent on that we learn and adapt to the new demands of corporate social responsibility in Europe. We shift our business model [to the European model] and learnt a great deal during the process” (Li,
2012). As proved by all the good CSR performing firms exampled above, they more or less benefited from their good performance. The oil firm in Kazakhstan soon stabilized its management and employee team after hiring a large number of local managers and kept all the local employees from previous owner. The construction firms in Sudan, Kenya and USA consequently won more large projects based on their previous good record on CSR, e.g. local
job creation, empowering local managers and minimizing the negative impact of its project on the local environment. The telecommunication firms expanded overseas business dramatically, which was attributed to the fact that they had advanced host countries’ communication and living standards.
　　However, when the general public’s awareness of CSR such as human rights concerns and environment protection arises, CMNEs’competiveness will be negatively affected if they do not follow the international requirement. Currently the negative consequences resulting from CMNEs’poor CSR performance are visible.

　　Concerns rose in host country and overseas markets on the relatively weak CSR performance of the Chinese firms. Poor CSR performance damages Chinese firms’ reputation and brands which has already hindered their overseas attendance or expansion. For example, they were denied to enter certain countries or markets, e.g. a few years ago some construction firms were black listed by the World Bank for their conspiracy in bidding. Recently the Austrian Federal Chamber of Commerce published for the first time a "blacklist" covering nearly 30 Chinese firms to remind domestic firms to avoid risks. The black list was based on complaints of domestic firms on Chinese firms’ operating behavior. Federal Chamber of Commerce is the highest Austrian Chamber of Commerce Organization, which has a membership of over 40 million and can influence government economic decision-making. This issue has caused a big stir in the business community in Europe.
　　Sometimes CMNEs’ on-going projects were halted due to disputes on pay and working conditions, e.g. Zambian copper mine. In recent years, Chinese business firms and business men and women increasingly suffered hostile attitudes from host country, e.g. in Russia, Italy, Romania and Nigeria. One accusation was that the Chinese “damped” cheap goods to their markets which damaged local markets and national industries. Such hostile attitudes became barriers for further entry for the same or new Chinese business men and women. This is not helpful for the long term strategy of the Chinese government who has been encouraging its firms to speed up their internationalization progress.
　　In many cases poor reputation on CSR directly weakens CMNEs’ competitiveness. In the case of the wood industry, the woods and their products with sustainable forest certificates will give CMNEs a greater advantage than the woods without certificates because the lumber certifications give buyers a guarantee that the wood was produced without damaging the forest it came from, which boosts consumer confidence and corporate reputation. More importantly, unlike illegal slash-and-burn logging, selectively cutting trees can generate timber revenues without damaging forests, and, according to forestry experts, can in some cases even increase the amount of carbon dioxide the forests trap (China Daily, 2010). In contrast, firms without such CSR considerations may find themselves at a disadvantage or even difficult situation. For example, many Chinese firms are doing business related to wood processing in the far eastern area of Russia. Russian central government and local state government issued an increasing number of regulations to constrain Chinese firms’wood cutting and processing in Russia.
　　The relatively poor CSR performance of some Chinese MNEs has had profound impacts on the national image of China. The overall evidence was the great difficulties and low success rate attached to Chinese overseas investment. It was estimated that, among 18,000 Chinese firms investing overseas, about 1/3 were unsuccessful and another 1/3 found difficulty in sustaining an overseas presence. Although various attributors are responsible for the low success rate of Chinese investment, lack of a long term vision and means to become a socially responsible global citizen is one important attributor (Liang, 2012, quoted from Xinhua Net 2012a).
ATTRIBUTORS OF CMNES’CSR PERFORMANCE
　　CMNEs have made considerable progress on CSR, as demonstrated in the last section. It is believed that the guidance of government policies, the driving force of society and the increasing awareness of the firms on CSR requirements are key attributors to the progress made on the CSR performance of CMNEs.

Government appeal
　　It is well known that the Chinese government openly called for the Chinese firms to “go out” in 1999. It is not well known, however, that the government also increasingly appealed to the firms to hold CSR in their host countries. In addition to scrutinizing CMNEs via State-owned Assets Supervision and Administration Commission (SASAC), Ministry of Commerce (MOC) and CCP central organization, the Chinese government made regular requests at any suitable occasion. For example, in the last decade, Chinese top leaders visited African countries every year. During their speeches to the Chinese firms in the host countries they were visiting, CSR was always highlighted. In 2007 Chinese president Hu Jintao visited Sudan, where he received subsidiary and project heads of the CMNEs operating in the country. After praising and thanking their hardwork and sacrifice, President Hu made three appeals:“First, you must adhere to your mission to serve the ultimate goal. You represent not only your own company, but also the great motherland. … You must take the development of China-Africa relations as your first priority. Second, you must attach the most important weight to credibility and quality. … You need to establish the good image of worshipping credibility and quality in the heart of the African by producing corporate brands based on the first class technology, products and service. Third, you must adhere to promoting harmony and benefiting social welfare, and share social responsibility in particular” (Sinohydro office in Sudan, 2007). In 2008 when Wu Bangguo visited ZTE project in Ethiopia, stating: “It is essential [for you] to have an open policy on technology transformation within Sino-Africa economic and trading cooperation projects: use as many local employees as you can, and enhance the training to African managerial and technical personnel” (Qiu, 2010). During the violence in the Zambia coalmine incident in August 2012, as recorded above, the Chinese coalminer was killed without resistance, precisely because the managers received warning for no-resistance from the Chinese government since the 2010 incident when the Chinese manager opened fire amid their fear of being robbed and attacked by the protesters.
　　In recent years, the Chinese government makes formal appeals or requests for CMNEs to submit CSR annual reports. The Director of Research at the Centre of the SASAC said on the 13March 2011 that the SASAC was studying how to enable large central government administered enterprises to fulfill their social responsibilities and regularly publish CSR reports. The Director went further to state that the SASAC was going to introduce a "Guideline of managing CSR in central government administered enterprises”, which will require large central government administered enterprises to fulfill their social responsibility, and regularly publish corporate social responsibility reports (Xinhua Net, 2012b).
　　Chinese government’s active guidance for CMNEs’ overseas operation is related to its policy shift on international relations. In 1953 the former premier Zhou Enlai announced the five principles of Chinese diplomacy, which were“mutual respect of sovereignty and territory, no invasion, no intervention, equality and mutual benefit, and peaceful coexistence”. Since then the Chinese government has been insisting the policy of “no intervention” of internal affairs of other countries’, which was reflected in Chinas dealing with international crises such as Darfur. Between February 2003 and November 2006, Chinese government emphasized that “business is business. We strive to separate political and business issues ... In my opinion the domestic situation of Sudan is an internal affair” (Taylor, 2006; Li, 2006). However, China did not play an active and constructive role to help dissolve the Darfur issue until November 2006. With the rising criticism of the international community on China’s no intervention policy, Chinese government subsequently shifted its policy and started to actively participate in the diplomatic actions in resolving the Darfur crisis. Since then China used multiple methods to participate in the efforts of the international community in dissolving the Darfur issue. It not only played a mediator role to connect Sudan and the international community, but also agreed and participated in UN peacekeeping operations and sent peacekeeping troops to Darfur.
　　Most of our interviewees of CMNEs expressed that they understood the policy shift and considered that the policy shift was essential and beneficial to CMNEs in a long term perspective. Firstly, China has grown to be the second largest world economy, which has caused a subsequent demand for the Chinese to take more international responsibility. Secondly, China has also become the largest outward investment (OFDI) sourcing country among developing countries and has made increasingly significant impacts on host countries, which also caused attracting more attention and closer scrutiny from the international community. Finally, both the growing Chinese economy and OFDI need a more stable and peaceful international community. The Chinese government’s active participation in international affairs will benefit CMNEs to have a stable and friendly international community. With the determination to become an “internationally responsible nation”, Chinese government would place closer scrutiny on CMNEs to abide by international laws and regulations. In recent years, CMNEs were under growing pressure to be in line with the Chinese diplomatic policy and actively fulfil their CSR in host countries. For example, CMNEs in Sudan, Kazakhstan and Brazil were guided for contributing to host country and local community.
Driving forces from society
　　More and more Chinese realize that China is playing an increasingly important role in global sustainable development, which subsequently leads to increasingly important responsibilities. China must find a unique way to carry out social responsibilities within its own characteristics. For example, the recently held World Economic Forum in Tianjin in 2012 focused on the theme of CMNEs’CSR. The Executive Director and Chief Business Officer of the World Economic Forum shared his insight on the theme, stating that during the past 10-15 years, Chinese firms’internationalization was faster than the US firms after the First World War and the Second World War. Chinese firms should focus on becoming a global corporate citizen, and do not repeat the mistakes of Western firms during their
internationalization process. He emphasized that, "Chinese companies are in emerging economies. It is much easier to build a good reputation for the first time than to restore the damaged credibility" (Xinhua Net, 2012c).
　　More recently on 14September 2012, the First International Forum on China’s Corporate Social Responsibility Education was held in Beijing. The Forum was to address issues including the shortage of talents specialized on CSR, and how to introduce international education resources and important measures to promote CSR education. Moreover, Beijing Normal University even set up a new subject from 2012 dedicated to CSR education. This was the first time that CSR as an independent subject is formally and systematically studied in a Chinese university. The new subject was expected to foster excellence in corporate social responsibility leaders and search for innovative ways to solve CSR problems.
　　Social forces also came from press. The newly published "China Corporate Social Responsibility White Paper” was the important research result of the Chinese Academy of Social Sciences on the basis of a comprehensive analysis of corporate social responsibility reports published in 2010. Such a publication promotes the best practice while generating pressures on the firms with relatively poor CSR performances.
　　It is worth noting that, although the focus of this paper is on CMNEs in international markets, social forces from China’s domestic market also facilitates CMNEs to improve CSR performance in international market. For example, in recent years, Chinese media frequently exposed the cases such as toxic milk powder, the production and sale of counterfeit goods, greedy coal miners and extremely depressed foreign assembly factories in China, which either related in some ways to these firms’foreign operations, or warned CMNEs’of the negative consequences of MNEs’failure to fulfill CSR.
Improved awareness of the importance of CSR
　　With the rapid growing overseas activities, CMNEs face increasing demand and challenges to participate in CSR actively and effectively, which in many cases actually helped CMNEs to learn and improve CSR.
　　TCL acquired France's Thomson TV business and Alkalta’s phone business in 2004, brining enormous challenge to TCL in not only integrating and managing businesses but also meeting the demand of CSR locally and internationally. Mr. Li Dongsheng, the CEO of TCL, admitted that before the acquisitions, they considered the economic contribution derived from the M & A much more than they considered corporate social responsibility commitment. For the latter they prepared to behave in accordance with local labor laws as they understood and assessed some possible problems. But in fact, Li acknowledged that “the post-acquisitions difficulties greatly exceeded our expectations. There were shortfalls in our own management experience and capacity, but the relatively large change in TV and mobile phone businesses during our acquisitions also enhanced the difficulty”. For example, as Li pointed out that, technology shift meant that they had to dismiss more employees than they planned. “In the post-acquisition process, we really felt that in Europe, particularly in France, social responsibility requirements for a corporation are much higher than those in China” (Li, 2012). Li described that it was a learning process. The two sides, acquirer and being acquired companies, did have some differences, and problems, but eventually these issues have been properly resolved. It was by 2010 that the final dispute on employment was reconcilably solved based on French labor contract regulations.
　　TCL’s CSR challenge is not limited to just changing its views and behavior on emphasizing human value, but also social and environmental values. Mr. Li vividly recalled the three stages that his company had experienced to meet the CSR challenge in social and environmental aspects.
　　When TCL exported its products to Europe and the USA more than a decade ago, the company began to receive overseas customers’ requirements to ensure the products achieve a certain level of environmental standards. Li considered that this was the first stage as the company passively learnt how to be able to make greener products. Moving to the second stage, the company developed technology and designed energy saving green products to adapt to the requirements of society and consumers. This was because the Chinese government made a great effort to promote domestic industrial technology to be more energy saving and environmental protecting. The Chinese
government has taken effective measures for several years and encourages businesses and firms to do so by awarding state financial subsidies. This enables enterprises to be more motivated to carry out R&D on energy saving and environmentally sustainable products. In the third stage, Chinese firms like TCL are self-conscious in investing in greener products as they have realized the importance of CSR to both society and their own business gain. (Li, 2012).
　　Such a learning process reflects the experience of not only TCL but also other CMNEs. A few years ago, a large Chinese drilling firm in Pakistan cooperated with Shell on a project. Shell supervised the Chinese partners to fulfil “normal”CSR routines during their daily operations. The Chinese manager recalled that:“we were at the early stage of operating in overseas oilfields. We did not know the CSR requirements precisely. We are very grateful to our
partners for their strict demands and detailed guidance that allowed us to start learning and performing. For example, we were required to plan in advance our schedules and do sufficient preparations before that. Our colleagues were not allowed to depart from the camp base to remote oilfields if they did not bring sufficient drinking water. … These were very basic issues and we Chinese could easily follow but the problem was that we simply did not know these were international standards on employee welfare. We have learnt a great deal from such cooperation”.
　　In contrast, some CMNEs did not show good CSR performance as shown in the last section, which has been an example to other CMNEs, albeit a negative one. As one Chinese Commercial Council member commented, “Some bad apples damage the entire Chinese image. Not good for us at all.” The following aspects are found to be key attributes to the poor CSR performance.
Failure to acknowledge the importance of CSR
　　While some CMNEs have recognised that CSR is not only an obligation but also a strategic tool to promote a firm’s overseas success, many CMNEs still consider CSR a burden rather than an opportunity. This was especially true for small firms or firms without a long term strategy in overseas markets, and therefore endeavoured to minimize the “cost”on CSR. For example, many small Chinese firms overseas were unable to predict their future in the host country and hence spending on CSR such as spending on security and donations to locals were “unnecessary” in their views. Many CMNEs have not integrated CSR into their corporate goals. They were still unable to have a clear vision and strategy to use CSR to boost their reputation and improve firm performance. Consequently, they were reluctant to add more investment on environmental protection. Cost minimizing is common sense for them in the early stage of internationalisation.
Lack of international experience on managing CSR
　　Many Chinese MNEs were unable to deliver satisfactory CSR performances because they lack experience at managing CSR at an international standard or do not have sufficient knowledge or understanding on local laws,
regulations and culture on CSR. The Chinese invested Rio Blanco mine in Peru is the case in point.
　　Rio Blanco mine in Northern Peru is a large copper concession with a planned open pit mine with an estimated 1.257 billion tons of copper. If developed, it will be amongst the 20 largest copper mines in the world. The predicted production will be about USD 1 billion worth of copper per year for at least twenty years. The concession was first established in 2002 by the British company Monterrico Metals, whose primary asset was the Rio Blanco Mine. In April 2007 90 per cent of the company was acquired by a consortium of Chinese companies led by a Mining Group originating from Fujian. After the acquisition Monterrico Metals under its new owner began exploration of the mine and was expected to produce copper in 2011. However, this plan was severely handicapped by the protests of local residents. The Chinese also learnt that Rio Blanco was an illegal concession as the former owner of Monterrico Metals failed to get permission to mine from local communities in 2002. One cause of the failure to get permission was said to be the pollution from the mine, which was infiltrating the region’s waterways (which local people depend on for organic farming) and destroying the fragile cloud forest ecosystem. Following the purchase local residents held demonstrations throughout 2004 and 2005 against the illegal mine of the UK company, 3 during which two people were killed and many were arrested.
　　In 2007 after the Chinese bought Monterrico Metals, the majority of local residents voted in the referenda against the proposed mine. Conflict has continued between the communities and Rio Blanco's new Chinese management. Several violent conflicts erupted at the end of 2009, leading to more casualties on both sides. The Chinese acquirer was also claimed to have violated Peruvian environmental laws -including drilling beyond the approved limits and improperly disposing of toxic waste -which has fostered distrust among the communities and has drawn fines from the Peruvian government. In February 2008, the Peruvian government fined the leading Chinese firm in the Consortium US$100,000 for noncompliance with the Environmental Evaluation Study approved by the government for the initial phase of exploration.
　　This case illustrated that lack of knowledge on local regulations and culture was the obstacle for CMNEs to perform CSR properly. For example, many host countries now have regulations on minimum wage, working hours, the required percentage of local employees and procured materials and equipment in MNEs’ operated projects”. Some CMNEs did not do detailed enough “homework” to check these requirements and consequently they were criticised as not considering the welfare gain of host country. In 2009, charges were brought against Monterrico Metals in the United Kingdom by victims of the 2005 kidnapping and torture, for which £5 million of the company's assets were frozen by the UK courts.
Lack of legal restriction and moral guidance in home country
　　Strong evidence is available to support the argument that CMNEs’ poor CSR performance overseas was rooted in their perhaps even worse CSR performance in domestic market. For example, the lack of human and environmental concern in China’s mining industry was recorded vividly in earlier research (e.g. Rui, 2005). When Chinese mining firms lacked the experiences of emphasising CSR at home and with many of them still performing poorly in CSR in China, they found difficulty in improving their CSR in host countries in a short period of time. Against the recent incident in the Zambia mine in which a Chinese manager was killed by angry local protestors, Chinese media reported the incident which incurred tens of thousands of comments from the Chinese. Taking one medium size Chinese internet company 163.com as an example, the website copied the coalmine news from Xin Jing News on 7August 2012. In the first few hours there were 96,248 comments on the incident being placed on the 163.com website. More than 95 per cent of these comments held a similar argument, which was that the CMNEs deserve such consequences because they treated local employees badly. Most of the comments were read as: “Do not assume that you are still in China so you can exploit employees at will. In China you bloody coal miners can get away from legal punishment because you can bribe the authority for not punishing you for your treatment of employees. But Africa is not China. You deserve [the attacks by Zambia employees]”. Among the comments there were only less than 5 per cent who argued that African local employees did not work hard and were not disciplined so they did not deserve a higher salary (163.com, 7 August 2012). In other words, these Chinese commentators believed that Chinese MNEs did not treat their employees well in China and they extended such attitudes and behaviour to host countries.
　　The case of the Chinese consortium in Peru, analysed in the last sub-section, also proved that overseas behaviour was the extension of domestic behaviour. The Chinese firm who led the consortium to invest in the Rio Blanco Mine had an environment violation record in China as well. In July 2010, toxic waste spills at the gold mine of this company contaminated a nearby river and poisoned 2,000 tons of fish (enough to feed 72,000 people for a year). This accident was among the worst mining spill cases in China. The accident was firstly covered up by the company but later was reported by the media. In the following investigation led by the Chinese Banking Regulatory Commission, the company’s vice president was detained in connection with the mishandling of the disaster and the company was fined 30 million yuan (US$4.5 million) for environmental damages (Xinhua News, 2010).
Lack of corporate system to integrate CSR into corporate goals
　　Given the short period of internationalisation history for many CMNEs, the process for integrating CSR into their corporate goals is still preliminary. Although CSR reports have increased as stated above, many reports were still simple and basically reported the“best performance”but neglected all the negative performance. Many CMNE managers also admitted“we are still not clear what our CSR responsibilities exactly should be”.
Lack of communication with local media, NGOs and host governments
　　CMNEs were, in common, reluctant to expose their operations to local and international media, NGOs and even general academic researchers. Our Chinese interviewees often expressed that this attitude is in line with the Chinese culture, which favours that “do it but not say it” or “do more but say less”. Many CMNEs practice CSR very well but do not actively communicate with local media, NGOs and host governments in order to “shine” what they’ve done. They admitted such an attitude was disadvantageous for their operation in host country because they were criticised by local media and NGOs as “not transparent” on their behaviour and CSR and were sometimes misunderstood as well.
　　In Peru’s copper mine case, the leading Chinese firm did not communicate sufficiently or effectively with local communities, NGOs and media. In July 2011, the case brought by Peruvian torture victims against Monterrico Metals in the UK High Court was settled when the company agreed to pay the claimants an undisclosed amount. In March 2011, Friends of the Earth-US, in collaboration with Peru's Cooper Accion and Fedepaz and Belgian solidarity organization CATAPA, petitioned the Hong Kong Stock Exchange to ensure that the leading firm of the Chinese consortium fully discloses risks associated with the Rio Blanco Mine.
RECOMMENDATIONS AND CONCLUIONS
　　Majority of our interviewees believed that establishing systematic regulations to improve CSR is more fundamental, while other means such as consistently educating, improving corporate governance of CMNEs and enhance CMNEs’communicate with NGOs and host governments are also important. As CSR performance becomes more and more crucial to MNEs’success, the Chinese government faces the urgent task of promoting a healthy environment for, and encourage CMNEs to improve, their CSR. Our study collected the following recommendations for them.
Ensuring CMNEs abide by international laws and regulations
　　The interests in CSR is increasing rapidly in Western countries as well as developing countries along with the rapid progress of globalization or information technology, civil society, the changing of consumer behavior, and intensified competition between companies. Many international institutions such as the OECD, the United Nations, and the ILO have been making great efforts to enact the international standard on CSR in international organizations and demand increasingly stricter CSR regulations to impel MNEs to follow up. This is especially true in the natural resource sectors. Research expressed concern that resource MNEs would damage and distort the national economy through the mispricing of key inputs, outputs and factors of production. Their government-influences strategies could not only misallocate scarce capital and technology, but also – to the extent that they opened up a successful export of natural resources – impose a ‘resource curse’, inhibiting the growth of non-commodity production by channeling resources away from it and imposing an overvalued exchange rate (Ross, 1999; Sachs & Warner, 1999, 2001). State owned MNEs are generally able to get preferential access to capital and grow to a larger size, so are more likely to bring the resource curse than private MNEs. The idea of an“Extractive Industries Transparency Initiative” (EITI) was launched on the global stage in September 2002 by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg. During the past decade the EITI has grown to be an influential coalition of governments, companies, civil society groups, investors and international organizations. At a conference in London in June 2003, a Statement of Principles to increase transparency of payments and revenues in the extractive sector was agreed. EITI was not evolving into a voluntary standard for companies, but rather a disclosure standard implemented by countries. With increasing numbers of countries and companies joining, CMNEs in the resource sector are receiving more intense pressure for not joining. A similar case has evolved in wood processing CMNEs which will suffer from not only criticism for not using certified wood from sustainable sources but the potential decline in the demand for their products as an effect of rising public consciousness for supporting sustainable development of forests. International organizations also placed more pressure on MNEs in other industries to commit to a high performance on CSR. For example, OECD published its guidelines for MNEs (OECD, 2000); United Nations issued its principles of the UN at its Global Compact (www.unglobalcompact.org) and UN Convention against Corruption; and the ILO issued its Declaration on Fundamental Principles and Rights at work. Thousands of MNEs have signed to abide by these principles, which indicate that CMNEs in all the sectors will face rising pressure if they do not follow the footprint of other MNEs.
Establishing government regulations
　　The following documents are good examples that the Chinese government is making efforts to encourage and regulate CMNEs to improve CSR in the future: China's State Council's Nine Principles on Encouraging and Standardizing Foreign Investment (October 2007); China's Ministry of Environmental Protection's Green Credit Policy; China's State-owned Assets Supervision and Administration Commission's Guidelines on Fulfilling Social Responsibility by Central Enterprises (January 2008); and China's Export-Import Bank's Environmental Assessment
Policy. Meanwhile, Ministry of Commerce (MOC), National Development and Reform Commission (NDRC) and other ministries have also established regulations for Chinese firms to meet CSR conditions during their internationalization.
　　However, much more needs to be done in terms of our interviewees. Interviewees of CMNEs pointed out that establishing more regulations is important but monitoring CMNEs to execute CSR by following up the regulations is more important. They were concerned that CMNEs would not fully fulfill regulations in their practice. As these regulations are guidance only, there are big question as to how the government monitors and assesses CMNEs’ CSR behaviour and how the CMNEs are rewarded or punished if their CSR performance is outstanding or poor. Moreover, China is implementing the market economy and the government cannot legitimately intervene to stop firms from entering the international market. While the government could threaten the SOEs by punishing them for not performing CSR well, how can a private firm be evaluated and controlled if it did not wish to get government assistance at all(Commercial Counsellor in UAE).
Establish industrial associations or similar organisations
　　One commercial counsellor offered details on the proposed strategy: “I don’t think we should rely on the government to sort out the issue. We must make use of the function of business associations. In Germany, companies must be members of a business association before they are eligible for a trading business. But we don’t have such regulations in China, and our business associations have no power” (Commercial counsellor in Cameroon, 11 June 2009, Yaounde). Many interviewees recommended to control Chinese firms’ going out in the first place by establishing business associations which grant qualification to firms with a good record of CSR. While qualified firms are allowed to go global to invest or operate, disqualified firms lose the chance of going overseas and therefore they are prevented from spreading a bad image of the Chinese around the world. These business associations can also play the role of monitoring and assessing the CSR achievements of CMNEs.
　　The experience of Japan’s CBCC was also recommended by our interviewees. In the late 1980s, Japanese companies encountered increasing criticism in the U.S. because of Japanese firms’rising investment and their
business behavior. In 1989, Council for Better Corporate Citizenship (CBCC) was founded with the support of Keidanrenin an effort to solve the issues surrounding that situation. Since then, CBCC has worked diligently to promote good relations between Japanese-affiliated companies and various stakeholders as "good corporate citizens". Over the years, CBCC participates in foundation processes of international standards of CSR and promotes CSR of Japanese firms through various activities. For example, seminars and discussion meetings were held to promote deeper understanding of international standards and the latest development of CSR, CBCC invites CSR experts from KEIDANREN (Japan Business Federation) is a comprehensive economic organization with a membership comprised of 1,285 representative companies of Japan, 127 nationwide industrial associations and 47 regional economic organizations (as of March 29, 2012).
　　Japan and abroad to give lectures and participate in meetings. CBCC dispatches dialogue missions on CSR to overseas and sponsor’s symposiums in order to bolster understanding of the current status of the trend on CSR activities, ascertain the needs of local communities, and learn more about new, locally emerging issues about CSR. Finally, CBCC also works to develop networks with NGOs or international organizations which operate actively to promote CSR activities and standardization. CBCC also participates in the foundation processes of international standards.
　　In recent years, CMNEs have incurred more criticism in host countries’, as what Japanese MNEs did in the USA in the 1980s. It might be effective for the Chinese to establish similar institutions like CBCC to promote CMNEs’ awareness and performance of CSR in their host countries.

Consolidating the “going out” team through M&As
　　M&As were considered a possible “effective solution”. The logic from some interviewees was that, small firms, of which many were private firms, were almost out of control by any Chinese institutions when operating overseas. They did not register at the Chinese Embassy as required by the Embassy in the host country if they did not perceive the registration was helpful to their business. These firms in general were pursuing profit maximization without a long term commitment. With such a mind-set it was understandable if these firms did not pay attention to their CSR. Many believed that M&As could facilitate CMNEs to be strong and large and are hence more concerned about their image in host country.
Enabling a healthier business environment emphasising CSR in China
　　Chinese firms would have been more active in pursuing CSR overseas if the domestic business environment favoured more CSR. The majority of interviewees recommended that the Chinese government must “enable a healthier and cleaner business environment in China so as to reduce the parasitic behaviour and opportunism”. Meanwhile, “Chinese society must put a greater pressure on its own firms to uphold integrity and honesty, which to some extent determines how far the Chinese enterprises can go. Internationalization is only the extension of a
firm’s business. It will not be successful if it has no proprietary ability" (China Youth Daily, 2011).
Concluding remarks
　　It has been two decades since a large number of Chinese firms started to internationalise. Many Chinese firms have grown up but face more pressure on improving their CSR performance. On the one hand, there is an increasing concern on China’s rise, reflected in the growing trend of nationalism and anti-Chinese activities in more and more host countries. A Poor CSR record will enhance such concernS and create barriers to Chinese firms’going out and overseas operation. On the other hand, Chinese firms have accumulated more experience on international management including CSR management. They increasingly realise that a good record of CSR can facilitate them in entering new markets and overcome difficulties brought on by nationalism in host countries. However, despite the increasing awareness of the importance of improving CSR performance, many CMNEs do not deny that it still has a long way to go for the majority Chinese firms overseas to have a satisfactory CSR performance in host countries. The relatively poor CSR performance for many CMNEs are not only initiated by economic forces such as to reduce cost but also energized by institutional, social cultural and organisational forces. Researching these numerous variables
leading to a better CSR performance is a new and massive territory for policy makers, corporate executives and researchers.

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