Pierig at WethicA has submitted another fantastic piece on the issues faced by manufacturers operating in China.

Firms are always looking for answers, and what makes Pierig’s words so powerful are simply that he is in the field on a daily basis, and set up his firm specifically to asset firms overcome the ethical hurdles that often lie in their way.

Some countries are infamous for their child labor issues. India and Bangladesh are unsurprisingly on this list along with countries such as Pakistan and Turkmenistan. In these countries, first in India and just a few months ago in Bangladesh, factories are starting to get involved to prohibit child labor. It has started to respond effectively to requests of the buyers in this particular area. A very common policy is now to forbid minors from being allowed within the factory limits.

This general situation leads to several comments:

What compelled factories to finally form a non-minor policy?
The lack of awareness about social compliance is most likely the origin for initial non-conformity. Child labor and young workers’ management are very often confusing from both buyer side than from factory side. The main difference being young workers ( young workers are minors but older than children by legal age definition – different by country but roughly between ages 14-16) are allowed to work under specific regulations (relatively lighter jobs). When we find issues regarding young workers management, we make sure to explain accurately the legal differences to avoid any misunderstandings which could lead to drastic consequences. However, to avoid confusion and ultimately, risk losing customers, factories find it easier to ban all minors from their workplace. Two other reasons for this strict no-minor policy are the: 1) legal limits on working conditions factories are subjected to with young workers, and 2) the lack of awareness that having children on-site as long as they’re not working and kept in a safe environment does not have legal ramifications.

This ban on all minors has its own consequences:

• The first consequence of this non-minor policy is discrimination. Actually, the young workers are discriminated on the basis of their age and not their skills. Even if young workers regulations are sometimes pretty hard to match with factories practices, a general no-minor policy is without a doubt discriminatory, calling for a real human resources approach to be implemented instead.
• The second consequence of this non-minor policy is not on the factory level, but on the country level. As many factories implement such policy, it becomes almost impossible for young workers to find jobs. This will relegate them to the informal economy and the worst factories with no concept of social compliance.

The strong involvement of buyers in the fight against child labor has seen huge improvements, but such one-sided actions effectively marginalize an important healthy group of the workforce and decreases opportunities for improvement in their working conditions. Social compliance requires buyers and factories to take into account the impact of their actions and direct consequences on the community. A simple, strict approach can not address the real needs of workers.

Qifang, a Shanghai based enterprise focused on providing student loans, has just become the first Chinese enterprise to be named an World Economic Forum Technology Pioneer.

According to their website, Qifang’s core is one of social benefit:

In the early stage of development, Qifang focuses on helping poor students with higher education expenses and complete loan repayment, and gradually leading undergraduates to get more education financial service and to make their financial plans correctly in order to develop their career healthily

Why is providing loans a social benefit (especially in the wake of the recent credit crisis). Simple, buy providing access to these instruments, it allows students who would otherwise not be able to afford college tuition to be able to do so. These loans, and this platform, will allow students who were otherwise unable to make the full payments to a school - or guarantee the full costs of a 4 year degree - the opportunity to afford higher education.

So, from all of us at Crossroads. Congratulations. We are proud of our friends at Qifang, and are very happy to see that their efforts have been recognized in this way.

The story in the China Daily this weekend Charities fear donations will dwindle peaked my interest at (1) I am currently fundraising and (2) the financial downturn has left many wondering what the impact would be on NGOs

According to the article:

Corporate donations to China’s charities are expected to fall significantly next year, despite them hitting a record 100 billion yuan ($14.5 billion) this year

A few charities expressed their concerns:

Fuyang AIDS Orphan Salvation Association - The slowdown has begun to affect our operations

China Foundation of Poverty Alleviation - We definitely expect donations to fall next year, but we will do our best to minimize the impact.

A few groups expressed their ongoing support

Microsoft - citizenship programs will remain central to its commitment to growing together with China.

Novartis - will maintain its support next year, especially in terms of the provision of volunteers

From my perspective, there are a few things that are important to note:

1) Of the 100 billion Yuan donated this year, the vast majority was in support of the earthquake, and benefited only a few NGOs
2) Many of the grassroots NGOs have largely been cut off from corporate funding as they lack the ability to issue a receipt
3) the potential impact on grassroots organizations could be much larger as their reliance on friends and family may lead to lean times as the threat of unemployment, the reduction in the stock market, and other economic shocks reduce the individuals ability to donate funds
4) Like many other industries in China, and around the world, we are looking at a time where being small and unknown will increase the difficulties faced by NGOs.  Larger NGOs will continue to attract donations (aleit at a lessor level than this yer), but their scale and capabilities will continue to be attractive to those corporations with money.
5) Now is not the time to launch new operations, or a new NGO.  Ensuring the ongoing fndncial stability of new operations could be difficult unless a reserve to weather then next 12-18 months is guaranteed

Earlier this year, I conducted a study on the importance of transparency as part of a larger corporate study.  for many that I interviewed, this was one of the most important issues when the decision to donate money was being made, and for many of those who had donated funds for the Sichuan relieve efforts it was an ongoing issue.

In an apparent attempt to quell some concerns, the website www.ccdic.org/ywxt/eoa/cx.jsp has been established to allow donors to check up.

According to the Xinhua article Quake relief donations go transparent as China opens online database, about 1.7 million donations are searchable so far - accounting for 31.4 billion RMB.

According to Denmark’s minister for climate and energy, Connie Hedegaard, the current financial crisis can provide an opportunity to rebuild a more environmentally sustainable financial system:

“When the world looks at how to handle the financial crisis, it has to look for more sustainable growth patterns. Investments in energy-efficient solutions and other green technologies are the investments that will pay off very fast. And it will also create large employment opportunity. It’s a win-win solution.”

Nearly two million people around the world are employed in renewable energy industries, half of them in China. In fact, China’s recent RMB 4-trillion financial stimulus package will have a large amount of money channeled to the energy and environmental sectors over the next two years. Most of this money is going to go to large infrastructure projects: nuclear plants, natural gas pipeline, oil refinery, power grid upgrades, etc. One trillion yuan will be raised in addition to the package and will go towards addressing environmental problems via supporting renewable energies and pollution treatment (see: http://www.china.org.cn/business/2008-11/24/content_16813841.htm).

With the financial crisis and the government worried about the potential unrest that could result from unemployment, more green jobs would be a great way to go. During the US-China Green Energy Forum a couple of weeks ago, a panel on demand side energy expressed a similar viewing at the sector level. In his speech, Terry Fry (China-US Energy Efficiency Alliance) stressed how the implementation of utility demand side management plans in Jiangsu and Hebei provinces created long-lasting green jobs for hundreds of people because learning the trade did not require so much technological transfer as it did mere experience transfer.

Of course, major hurdles that I see at this point would be creating green jobs suitable for migrant workers/workers in the export sector that would not require too many technicalities in terms of training (if the green jobs require a fair amount of schooling, then they wouldn’t target the high number of unemployed migrant/export workers). Perhaps retrofitting buildings, power grid, utility demand side management etc.would be the way to go? Another concern about the stimulus package for me is how to ensure to make sure it doesn’t go missing while dispersing across the country and will be used efficiently for proposed projects. A possible solution, according to an opinion article in the China Daily, would be to create a taskforce at the cabinet level to police the large projects financed by the 4 trillion RMB stimulus package.

This week, Nanjing Hopkins will be hosting a workshop entitled Volunteerism: Innovative Practices and Pathways for Future Engagement that will be bringing together academics, government officials, NGO leaders, and scholars to discuss the various issues of volutneerism in China - and around the world.

Wtih 2 speaking slots, I am honored to be apart of this event and to share the stage with some very interesting people.

As volunteerism is a key tenant of civil society, I will be taking notes and posting them as possible.

h/t to Danwei for pointing out the recent write up in Chutian Metropolis Daily on the condition of Project Hope schools in China.

It is a story that I think follows up on my post last week Credibility Gaps In the Foundation of China’s Civil Society

Particularly galling to many readers was the fact that out of 76 “Hope Schools” (希望小学), buildings whose construction was funded by donations, 58 had been abandoned.

Where I think this gets tricky is that (1) Hope has been publicly addressing this situation for a while now. They knew there was a problem, and they have been telling donors not to fund schools, but to fund training programs instead, and (2) what about all the money that they raised, and what have they been telling those donors?

In 1996, Yang was 28, and over his parents tearful objections, he donated 70,000 yuan to build an elementary school in the village. The village committee spent 300 yuan on a monument that called him “A spiritual exemplar to be praised by the world.”

The praise lasted less than three years. Then the school was abandoned, leaving Yang to feel that his donation had become a joke.

How is it that these buildings are now becoming government offices or are simply planned so poorly that they can no longer be used as part of school mergers and measures to improve school conditions?

More importantly, when you have hundreds of these schools get their funding from citizens and corporations, and these schools simply close as part of a new policy, what happens to these donors?  How can you look to build society on one hand, but at the same time undermine the credibility of key programs?

For me, what I find most irksome is that many foreign corporations have partnered with China’s GONGOs because they have been told that these are the only groups capable of implementing nationwide programming.   The money is donated to and spent by these groups in large part becuase of that promise, but through stories like these we are seeing that more needs to go into their ability to develop and manage programs on a long term basis.

It is not about spending money.  It is about investing it in the right way.

Measuring the impact of a CSR program is subject that I am discussing with firms on a regular basis. Those who are starting up their programs are often looking to benchmark firms who have established programs, those with established programs are looking to measure the effectiveness of programs, and others who question the value of programs (or are looking to convince others) are looking for validation that CSR does make sense.

Fortunately for us, there are firms like GE who not only have a passion for CSR, but also for measuring everything, and fortunately they were willing to share their most recent results.Results that will go a long way to show how through their programs they are effectively engaging their employees, developing long term programming, and building the internal branding of their firm.

One of the key reasons why GE is so successful in driving volunteerism, is simply because employees are the greatest supporters of this meaningful initiative.

Therefore, at the end of this year, we conducted the 2008 Greater China Volunteer Survey to listen more closely to employees’ voices, and collect their opinions in order to make more future improvements

It is perhaps the most comprehensive study (over 800 responses recorded) that I have seen to date, and I would encourage everyone to take the time to go through the results:

• 64% said that volunteering increased their work satisfaction
• 85% said that GE’s program has improved their brand position in the market

But perhaps the most stunning statistic I found in looking through the report:

In 2007 41% of respondants said that GE’s volunteer programs was one of the key reasons they joined (or would stay with GE).  That number was 46% this year

It will not take you long to see just how valuable their CSR programming is in the eyes of their employees, and through this see make some judgments about your own firm’s programming

To download the full report, right click here

As the year comes to an end, we are seeing the various CSR award ceremonies take place, and this week Intel received their award at the China Corporate Citizenship Forum and Award Ceremony.

Cohosted by Corporate Citizen Committee of China Association of Social Workers, CCTV-2 and the Foundation of Tecent Commonwealth Charity, Intel was awarded 2008 Special Contribution Award for Earthquake Relief

Its programs included:

Intel donated RMB 2.1 million (US$307,229) to the Red Cross Society of China (RCSC) and its employees donated a total of RMB 48 million (US$7.02 million) to the earthquake-affected areas in Sichuan. After learning that the RCSC Web site would be inaccessible due to increased Internet traffic to the site, Intel China immediately provided RCSC with a server and network equipment worth RMB 1 million (US$146,000); and the Web site was fully operational just days following the earthquake.

Intel Chairman Craig Barrett visited the disaster areas in June and launched the iWorld Project together with the Sichuan Provincial Government. The project focuses on restoring and developing education in earthquake-devastated areas by establishing 200 state-of-the-art e-classrooms, and extending the Intel Teach Program, Intel Learn Program and the company’s employee volunteerism program to schools across eight severely-affected counties in Sichuan province.

Working to develop long term programming in the area, what I admire about their programs is that they are not of the “cut a check and run” variety.  Intels’ equipment, volunteers, and financial donations in combination are going to have a measurable long term impact within the communities they are operating in.

Over the last 2 years, there has been a discernible change in how the Chinese government works with unrest, uncertainty, and historically uncomfortable issues.

It isn’t 100% yet, but as point out through a few incidents in Xiamen, Shanghai, and the many cities that recently experienced taxi strikes, the government is moving away from a hard line stance to a stance that involves dialogue and negotiations.

More interestingly though, is that these changes are taking place publicly, and whereas other agencies were responsible from cleaning the daily news of any events, the stories are now entering the media on a regular basis.

Mass unrest shocks China does a very good job of loking at how this process has evolved and how the new approach is working:

The government is trying to set up a negotiation mechanism to deal with incidents of mass unrest. Three days after the Chongqing cab drivers’ strike, the secretary of the Chongqing Municipal Committee of the Communist Party of China, met with representatives of cab drivers and other citizens to listen to their complaints and suggestions. The meeting was televised and broadcast on the radio and the Internet.

Gao Xiaodong, deputy director general of Chongqing Public Security Bureau, said a new philosophy was needed to deal with such incidents. The key step is to set up effective channels and negotiation mechanisms to allow people to protect their interests. Only in this way can conflicts of interests be resolved according to law and the principle of equality.

An encouraging step, this step has surely been a difficult one to take for some and the time required to build the level of trust needed was surely one of the largest items of focus.

Going forward, we can only hope that this process will continue to take steps forward and will be employed on a wider range of issues.

While there were glitches along the way, we all know the recent strikes could have gone a lot worse, and with teachers now going on strike in a number of areas, I believe we have another opportunity for parties to exercise restraint, to keep the lines of communication open, and to develop solutions that last.