Chinese firms, which are becoming increasingly important offshore investors, were urged to pay greater heed to issues of corporate social responsibility (CSR) at the recent China Overseas Investment Summit in Hong Kong.
'Chinese firms must improve their CSR because the international community assesses them on this basis,' said Wang Zhongyu, vice-chairman of the 10th Session of the Chinese People's Political Consultative Conference.
'If they improve their image, it will improve their competitiveness. When Hong Kong and Chinese firms partner in investing abroad, they must give priority to CSR in environment, as well as respect for local governments and communities,' said Wang, also the president of the China Enterprise Confederation.
Wang Zhile, a researcher at the Ministry of Commerce, told delegates that Chinese firms did not lack funds when they went abroad, but they faced a challenge when it came to abiding by the rules. This year, about 30 United States-listed Chinese firms had trading in their shares suspended or were delisted, Wang noted.
'If this problem is not solved, the ability of Chinese firms to continue expanding overseas will be affected,' Wang said, warning that firms found guilty of paying bribes faced stiffer sanctions since the UK Bribery Act took effect in July, and the provisions of the US Foreign Corrupt Practices Act (FCPA) were strengthened.
On September 15 last year, the US Congress passed a law that bans firms that violate FCPA provisions from receiving US government contracts.
'In developing markets like Myanmar, Laos and Africa, CSR is a big issue that Chinese firms must pay attention to,' said Wang. For instance, the World Bank could ban Chinese firms from tendering for its projects if they were found guilty of corrupt practices, he said. In September, the bank banned China First Metallurgical Construction, a state-owned firm, for three years for alleged fraudulent misconduct over a project in Bangladesh.