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Chinese leaders learn about corporate social responsibility

China, May 24, 2009

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Hal Bernton

The Seattle Times
May, 2009

Chinese leaders come to U.S. to learn strategies from companies such as Nike and Starbucks

BEAVERTON, Ore. — Wu Qungang, a young government official from China, came to Oregon this month for an unusual nine days of study about social innovation in a capitalist country. He learned how Nike funds youth athletics and Starbucks gives grants for community projects and heard about a host of other ways that business and philanthropy can be harnessed to make life better.

Then Wu asked a question: What about the shareholders and the bottom line — all this giving reduces profits. "What can the corporation do to convince the shareholders to continue all of this social responsibility?"

Wu's comments reflect the debate brewing among a generation of Chinese who came of age amid a juggernaut of entrepreneurial growth that made some in their nation rich while expanding the gap with those who remain poor.

They see a need for more philanthropy and more public-private partnerships to tackle the social, economic and environmental problems of 21st-century China.

Wu was one of 21 young Chinese leaders at the Beaverton seminar, which was intended to give them some fresh approaches to tackling some of the grass-roots issues they face back home.

Their Oregon stay began with four days of talks on the Nike campus and wrapped up with field trips that included a visit to the Columbia Gorge and ended with a dinner and tribal dancing in Lyle, Klickitat County, Wash.

"This is so different from China, which is government taking the lead," said Dong Xia, a deputy secretary general of the All China Youth Federation, which two years ago reached out to Mercy Corps — a Portland-based aid group active in China — to organize the Social Innovator Leadership Program.

The participants in the conference were selected from provinces all across China and included leaders in regional youth federations as well as a journalist from the People's Daily, a chairman of an electric-power construction company, a general manager of an automobile-trading company and a professor at the China Youth University for Political Sciences.

The All China Youth Federation is an umbrella organization that was birthed by the Communist Party, and still has the Chinese Communist Youth League as a core member even as it has grown to include associations of young entrepreneurs, scientists and even the Chinese Young Men's Christian Association.

Many of the Chinese participants are already active in efforts to reduce youth unemployment, rural poverty and other social programs. But in the future, they are likely to be tapped to serve as mayors, governors and other political leaders in their provinces, Dong Xia says.

Volunteers get mixed reception

Originally scheduled for May of last year, the seminar was postponed by the earthquake that ravaged Sichuan Province. The tragedy unleashed a huge wave of volunteers in China as tens of thousands of people donated time and labor to aid in the recovery.

Those efforts gave a boost to civic activism and helped raise expectations for a broader effort that would spread across the country. But in the month that followed there were disappointments as the Communist Party kept much of this work under government control, and independent groups tackling social problems remains a sensitive area in this one-party nation.

Still, there is a small, but expanding, nonprofit sector that is funded by private donations.

In Guangxi Province in southern China, for example, a wealthy businessman who sells motorcycles has organized 20 volunteers who look after children and help clean the homes of the elderly. It's a good program, said Luo Rixin, vice president of the Guangxi Regional Youth Federation. But it needs to get bigger and serve more people.

There also is an expanding network of partnerships with international-aid groups such as Mercy Corps and multinationals such as Starbucks, which now contributes to a Chinese program that trains teachers.

But international-aid groups may also face suspicions as work in China. "We do have negative comments," said Dong Xia. "There is not enough understanding of why they come."

Paul Dudley Hart, a Mercy Corps senior vice president who helped organize the training, said the teaching could flow in both directions.

"We are really excited to learn from you ... You have taken more people out of poverty than any other country in history, and your response to disaster (as in the Sichuan earthquake) is extraordinary."

Social entrepreneurs

One of the kickoff speakers at the conference was Greg Dees, a Duke University professor who sought to offer a definition of just what it means to be a social entrepreneur, a term that still evokes lots of questions in America and plenty of misunderstandings as translators attempt to sum up the term in Chinese.

Dees said social entrepreneurs are driven by a mission, implying that success is defined not simply by creating economic value, but a social value. They tend to try new approaches and mobilize new resources as they attack problems.

As an example of a social entrepreneur, Dees cited the work of Steve Mariotti, a Bronx teacher who found he could motivate tough students by training them to run a business. He then launched the National Foundation For Teaching Entrepreneurship, which has helped prepare more than 230,000 urban youths in 22 states and 13 countries for business careers.

But success can be difficult to measure. And Dees noted that social entrepreneurship can range across a broad spectrum — from nonprofits that offer small microfinance loans to help people out of poverty, to corporations that spend some of their money to achieve a broader public good.

Starbucks, for example, says that over the past year it devoted about 3 percent of its profits to philanthropic efforts as part of a global "social-responsibility strategy" that also includes building energy-efficient buildings and using more renewable energy.

By 2015, the company also wants to have all of its coffee "ethically sourced," which would mean workers received fair and equitable wages, said Rodney Hines, Starbucks director of community investments who spoke at the seminar.

Andrew Ogilvie, a Nike executive who oversees corporate responsibility, talked about Nike's grant program, which involves $311 million in spending over a five-year period that ends in 2011.

One part of the program uses the Internet to sponsor global competitions to find creative ways that sports is used to improve people's lives. Hundreds of projects have been submitted from dozens of countries, and the best are then awarded grants and spotlighted in hopes that their ideas can spread around the world.

So, as Wu asked, what is the reaction from shareholders to all this philanthropic spending?

Ogilvie said consumers who buy Nike products want the corporation to shoulder social responsibility. As for shareholders, "they see a value in a brand that is growing because the corporation is doing the right thing."

Throughout the week, the Chinese participants had plenty of questions. They wanted to know what would happen to a business-supported social program once the corporate money stopped flowing. They asked how to evaluate the competence of a nonprofit group.

Since private sources of funding in China are scarce, they need to find ways to get their government to cut loose more money. After hearing that U.S. organizations sometimes hire lobbyists to gain funding from Congress, Zhou Mi, vice president of the Chongqing Municipal Youth Federation, wanted to know how much such a lobbyist costs.

Several said they had a specific issue they wanted to address upon their return. These ranged from youth unemployment, improving "financial literacy" and building trust in the role of nongovernmental organizations in China.

"This is very much an experiment," said Dudley Hart, of Mercy Corps. "The hope is that they can adapt some of this to their own political culture, and use what they have learned to empower their communities ... If it works, we'll do it again."