Responsibility doesn't end at profit

Sudanese patients receive treatment in a hospital jointly built by the China Foundation For Poverty Alleviation and CNPC. Provided to China Daily

NGOs help provide links for Chinese companies doing business in Africa

Corporate social responsibility has always been a gray area for companies that operate in diverse nations and across various environment. But for many others like Mao Qiping, who looks after the international operations at one of the biggest Chinese oil companies, it is the calling card for sustained engagement and lasting relationships in Africa.

"What it really means is that CSR is something that needs to be handled with care. Failure to do so can be disastrous," he says.

Mao's company, China National Petroleum Corporation, the largest integrated energy company in China, has been making steady progress with its CSR initiatives in Africa after expanding its oil business to Sudan in 1996.

"The real challenge initially was to find the best way to utilize the allocated budget for CSR activities, especially in the overseas markets," he says.

CNPC has to date spent more than $50 million in Africa on public welfare activities such as digging 160 water wells, building four hospitals and 35 schools and numerous roads and bridges. The jewel in its crown is undoubtedly the Sino-Sudan Abu Ushar Friendship Hospital, ranked by the Ministry of Foreign Affairs as one of the best public diplomacy programs in 2011.

The hospital located in Jonglei State in Sudan is the first of its kind in Africa to be jointly developed by a Chinese company and a Chinese NGO. CNPC, which offered $600,000 for the project, serves mostly as a financial provider for the hospital while the Beijing-based China Foundation For Poverty Alleviation is the project operator.

According to current estimates, about 4,000 patients are treated at the hospital in Sudan's Jonglei State every month. The hospital is financially self-sufficient and generates income through treatment and surgeries.

"The performance of the hospital and the positive feedback from the local community has been way beyond our expectations. Much of the credit for the success goes to our partner," says Mao, the deputy director-general of the international department at CNPC.

Though examples of such fruitful cooperation are rare in Africa, experts feel that it could well be the path that needs to be taken by Chinese companies operating there.

Cheng Shuaihua, head of Asia Pacific and China at the International Centre for Trade and Sustainable Development in Geneva and CSR expert, says an increasing number of Chinese companies are now realizing the importance of CSR.

"Africa is the best example for this, as many Chinese companies have been facing the music on labor and environment issues. There are also arguments in Africa that Chinese investment is causing a shift from its traditional textile-based industries to manufacturing," Cheng says, adding it would be "dangerous" if Chinese companies continue to consider profit as their only motive for being in Africa.

"Chinese companies don't have a long tradition of community engagement, especially in the ways that are expected in Africa today," he says.

However, Chinese companies, especially the large corporations, have all been increasing their CSR spend in Africa. Though there are no official statistics, companies, such as CNPC, ZTE Corporation and Huawei Technologies, have all increased outlays in their annual budgets for CSR activities in Africa.

CNPC's CSR budget globally is estimated to be around 150 million yuan ($24.3 million) this year. ZTE Corp says that since 2007 it has been spending roughly 30 million to 40 million yuan on African CSR projects. Huawei Technologies also operates several diversified projects, from energy saving and water supply to knowledge transfer, in Africa.

However, the increasing amount of money doesn't necessarily mean a better performance on the CSR front. Wu Peng, director of the international development department of the China Foundation for Poverty Alleviation, says very few of the more than 30 hospitals that China has helped build in Africa have had a profound and lasting impact on local communities.

"The running of these hospitals after delivery has proved to be a challenge. Some of them have problems in receiving patients due to their remoteness or due to the lack of medicines and doctors," Wu says.

"They are more like empty buildings than hospitals."

Mao from CNPC agrees, adding that the lack of professional management skills in public welfare projects was the main reason for his company to team up with Wu's foundation.

He says that while CNPC is good at construction projects, such as digging water wells and building bridges, it has little expertise in running hospitals or schools.

"Unlike Western companies, we do not have a dedicated team for CSR activities. The whole CSR exercise itself is a new activity for us," says Liu Weijiang, deputy director of international cooperation at CNPC.

As one of the largest employers in Sudan, CNPC has created nearly 18,000 jobs for local employees and over 4,000 positions for Chinese employees. However, it still does not have any full-time employees working in the CSR area. Even at the corporate level, CNPC, ranked sixth among Fortune global 500 in 2012 with revenues of $52 billion, does not have a professional team for CSR.

Many Chinese companies choose their CSR projects spontaneously and often without any actual understanding of the local needs. Instead of doing long-term, sustainable projects, Chinese companies tend to do one-off donations, say experts.

Li Junfeng, chief executive of Huawei's Kenya representative office, says that it is often a challenge for companies to identify sustainable projects in Africa. "Unfortunately most of these projects end up as white elephants."

And Simon Zadek, senior advisor with the Canada-based International Institute for Sustainable Development, an international public policy research institute for sustainable development says:"That's precisely why Chinese businesses operating on a global scale need to work more with NGOs. Such a collaboration will help for more meaningful exchanges with local communities, governments in Africa."

Zadek, who is a visiting scholar at the School of Economics and Management of the Tsinghua University, says for a growing number of Chinese companies going global, aspects like public reporting, making information available to the community and government have become important, which is not the case for them in China.

"Many Chinese companies are still in their second or third generation of operating outside China. It's still early days. Social interaction experience is often the most difficult thing to gain," he says.

Zadek admits that the expansion of Chinese NGOs into Africa is now easing the path for Chinese companies.

"We began our cooperation with NGOs in CSR around two to three years ago," Mao says. "The majority of our CSR projects are run by our company directly, but we plan to team up with more NGOs in the future after the success of the Abu Ushar Friendship Hospital."

He says that apart from the China Foundation For Poverty Alleviation, CNPC has also teamed up with China Foundation for Peace and Development and earmarked 10 million yuan for CSR projects in Africa.

"We want the money to be used for public welfare projects in countries that we have operations," he says.

Contact the writers at mengjing@chinadaily.com.cn and sunyuanqing@chinadaily.com.cn.

(China Daily 04/26/2013 page6)