Chinese State Lays the Law for Better Corporate Culture

Article excerpt

BYLINE: Ann Crotty

In what may be interpreted as an indication of its developing status as a world power, the Chinese government is showing increasing signs of concern about the environmental, social and governance aspects of how its companies operate both at home and internationally.

The current high-profile bribery investigation against UK pharmaceutical company GlaxoSmithKline (GSK) represents the first investigation of a foreign company since China introduced anti-bribery legislation in 2011 and 2013.

And while commentators seem unsure about whether GSK was chosen because it is such a large player in the Chinese market, or because it is a powerful non-Chinese company, few deny that the government is intent on changing Chinese and international perceptions about how business is done.

It appears that the Chinese government is also concerned about how Chinese companies operate overseas.

To this end China's Ministry of Commerce (Mofcom) and Ministry of Environmental Protection (MEP) recently issued guidelines on environmental protection and co-operation.

According to Hu Tao, a former senior environmental economist at the MEP, the guidelines set the basic principles for Chinese companies to integrate environmental protection into their corporate governance strategies.

These are aimed at addressing the concerns of host country governments and the communities within which the Chinese companies operate. "This is the first time that the Chinese government has made explicit, progressive, and across-the-board environmental and social rules for Chinese overseas investments," Hu wrote for the World Resources Institute earlier this month.

Hu welcomed the guidelines but pointed out that they were voluntary. …