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Why Big Business needs China Games success
By Benjamin A Shobert

liberty and unjust punishment, companies with a high profile in China may be surprised at the repercussions of unhappy Americans.

GE need not wait for the Olympics to acknowledge the difficulty of its position. As has already been established, the State Department has recently spoken on China's human-rights record, raising the question of where the lines of demarcation are between



commercial interests and legitimate limitations on doing business with China.

As China's sixth-biggest trading partner, the US retailer Wal-Mart will be another company watching the Olympics cautiously. Already struggling with domestic public-relations concerns of its own, the company could face an enormous backlash if the US public believes Wal-Mart somehow facilitates an authoritarian regime. Conversely, Beijing needs Wal-Mart as much as the retailer needs China's low-priced manufacturers, which places the company in a unique position to influence the country's political development positively.

During a debate this month in Washington hosted by the Carnegie Endowment for International Peace, Sharon K Hom, executive director of Human Rights in China (HRIC), reinforced this. "If [Wal-Mart] were a country it would be the 20th-largest in the world, with its huge group of suppliers, and over 6,691 stores worldwide - it could have enormous impact on China. With 73 stores and super-centers in 36 cities and over 36,000 associates [employees] in China by the end of 2006, Wal-Mart recently agreed to acquire another 101 stores in China ...

"Although it's complex, this kind of corporate clout has an enormous impact on labor conditions, supply-chain issues, environment, and human rights."

Sam Walton certainly never envisaged retail success pushing his company to the forefront of international relations, but the sheer size and scope of Wal-Mart's involvement in China demands that the company not ignore the real issues it can constructively impact within that country.

What needs to be improved in all of this discussion is the application of political realities and international relations to language and concepts business understands and can use. Successful companies are good at many things: raising capital, product development and marketing, to name but a few. While the prolific success of multinationals such as GE and Wal-Mart may thrust them into the international realm, their original intent was likely not to play in these arenas.

Content to focus on profit and growth, these organizations now find themselves facing issues they can appreciate but feel largely powerless to impact. Labor and environmental reforms are more easily understood and implemented than others, and companies should be held to the expectation that their international businesses will reflect the lessons learned from more developed economies and ecologic systems.

The HRIC has taken the unique step of establishing a website (IR2008.org, for "incorporating responsibility") in an effort to educate multinationals on the human-rights issues unfolding in the dynamically changing Chinese story and to encourage companies to focus on specific policies and procedures they can use to impact the Chinese political system positively.

Last month the United Nations Human Rights Council released a report titled "Business and Human Rights: Mapping International Standards of Responsibility and Accountability for Corporate Acts". The report's conclusion states, "There are lessons to be drawn from earlier periods. The Victorian era of globalization collapsed because governments and business failed to manage its adverse impact on core values of social community.

"Similarly, the attempt to restore a laissez-faire international economy after World War I barely made it off the ground before degenerating into the destructive political 'isms' that ascended from the left and right ... all championed in the name of social protection against economic forces controlled by 'others' ... this is the dystopia states and businesses need to consider - and avoid - as they assess the current situation and where it might lead. Human rights and the sustainability of globalization are inextricably linked" (p 23).

This report's impact on the China debate may only be indirect, but its underlying assertion - that it is in the best interests of multinationals to use their influence carefully and constructively - should not be lost. The future of globalization may very well rest on highlighting areas where China needs to change, not glossing over them in an act of blind faith that their internal problems will somehow resolve themselves.

Corporate sponsors who choose wholly to overlook China's human-rights issues may face not only the wrath of their shareholders and customers, but also a broader dysfunction within global markets as political bodies take up increasingly hostile positions against one another in the interests of placating citizens unhappy with the perception of governments that value economics over freedom.

Benjamin Shobert is the managing director of Teleos Inc (www.teleos-inc.com), a consulting firm dedicated to helping Asian businesses bring innovative technologies into the North American market.

(Copyright 2007 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

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