Chinese enterprises are assuming an increasingly prominent role overseas, with Chinese outward direct investment (ODI) rising at an average rate of 36.4% each year since 2000. Yet, while welcome in principle by developing countries, the story about the impact of Chinese companies operating overseas has often been misunderstood. A new report, the 2015 Report on the Sustainable Development of Chinese Enterprises Overseas was today launched in Beijing to investigate and counterbalance this narrative, with ground-breaking new evidence.
Analysis within the report exposes six key findings. Firstly, Chinese companies operating overseas, overall have a positive impact on the host countries; secondly, government's enforcement and penalties have made a difference in regulating Chinese enterprises' practices, for example in the areas such as employee safety.
"Chinese enterprises overseas actively take on the Corporate Social Responsibility: in 2014, the tax paid to the host countries by Chinese enterprises totals $19.15 billion; the Chinese companies overseas hire 833,000 local staff," said Qian Keming, Vice Minister of Commerce, highlighting the positive impact of Chinese companies abroad. "In the future, MOFCOM will continue to improve the interconnection among policies and establish a fair, stable and transparent outbound investment cooperation policy system for a better overseas sustainable development environment."
Thirdly, the report reveals that the size of an enterprise bears strong relevance to its sustainability performance overseas; and that the longer an enterprise operates overseas, the better its overall sustainability performance. It is therefore likely that through knowledge-sharing between companies the sustainable development practices of Chinese enterprises overseas will continue to improve.
Fourthly, the report highlights that looking forward there are still major challenges in regards to Chinese companies having a positive influence on the host country they are operating in. This is especially true in ensuring further employment of local people, technology and services, alongside better environmental stewardship.
Fifth, the report identifies that these challenges vary across regions, and Africa and Asia will require particular focus in the future. Last but not least, the report calls for more research that seeks to compare Chinese and other foreign companies operating in the same circumstances overseas to ensure more objectivity (as the report itself did not include data from non-Chinese firms) and for companies to continue to be transparent about their impacts and learn from each other.
The report also makes specific recommendations for the governments both at home and in host countries to ensure Chinese firms continue to actively support sustainable development in the future.
"Corporations are key stakeholders for the successful implementation of the new sustainable development goals, agreed in September this year. This report shows that Chinese businesses are striving to be amongst the leaders converging their core businesses with development goals, but much more can be done, and UNDP will be here to support them in doing so," said Magdy Martínez-Solimán, UN Assistant Secretary-General during the event.
The 2015 Report on the Sustainable Development of Chinese Enterprises Overseas represents the first ever joint publication by Chinese government think tanks and the United Nations with more expected on an annual basis.
Specifically, the United Nations Development Programme (UNDP), the Research Center of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council and the Chinese Academy of International Trade and Economic Cooperation (CAITEC) of the Ministry of Commerce (MOFCOM) worked together for over a year to deliver this groundbreaking research, based on the largest survey to date of Chinese enterprises' perceptions of their own sustainable development performance, using indicators related to corporate governance, environment, society and economic effects.
The report contains analysis of the policies and measures by the government and other key stakeholders of Chinese companies, as well as thirteen case studies of Chinese companies' practices - including cases where lessons have been learnt and improvements made.
"SASAC attaches great attention to the sustainable development of the central enterprises supervised by the Chinese central government and their fulfilment of CSR," said Wang Wenbin, Vice Chairman of State-owned Assets Supervision and Administration Commission of the State Council in his keynote speech. "In the future, the central enterprises will learn from the world-class international enterprises to promote the sustainable development, integrate the principle of sustainable development into the overseas development strategies to have an edge in the international business competition, and serve as role models for other 'going global' Chinese companies."
Plans to collaborate with other interested parties through a new initiative, the three parties is planning to initiate the "Alliance for Sustainable Chinese Enterprises Abroad" (ASCEA), which aims at enabling a dialogue, research and pilot projects to help Chinese companies' overseas operations.
The launch of the report took place at the Diaoyutai State Guesthouse in Beijing, where renowned government officials, embassies and consulates in Beijing, international and national experts, business leaders, members of civil society and international organizations gathered to discuss its implications.