Chinese firms urged to act more responsibly to gain respect
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Chinese companies need to champion social responsibility in their global expansion if they wish to gain worldwide respect, said Xiang Bing, Founding Dean and Professor of China Business and Globalization at Cheung Kong Graduate School of Business in Beijing.
By gaining such respect, China and Chinese firms can take a leading role in global business as it reconfigures and play a significant role in accelerating the creation of a good global governance system, Xiang said.
“Global governance was created by US dominance, but now the Chinese government needs to contribute because as China increasingly globalizes, its companies, people and interests are increasingly intertwined with the global environment,” Xiang said in London recently.
“And if China can make the most of current opportunities to solve global problems it will truly become a respected leader. It can lead the creation of a new business civilization that no longer puts profits before everything else.
“The values that China can bring to global development are not military or economic power, but leadership in business ethics. China can contribute to creating governance that will bring rules and certainty to global business.”
He has been a keen advocate for the concept of a new business civilization over the years, and talked with many Chinese businesses executives about the idea, as alumni of Cheung Kong Graduate School of Business, China’s first privately funded and faculty-governed business school, founded with the support of the Li Ka Shing Foundation.
Xiang, who gained a bachelor’s degree in Engineering from Xi’an Jiaotong University and a PhD in business administration from the University of Alberta in Canada, was one of the seven founding faculty members of China Europe International Business School in Shanghai and a professor of accounting at the Guanghua School of Management at Peking University before joining CKGSB.
One big problem with the China-US relationship is that while the two countries are powerful economies they have not agreed to work together on many issues, such as creating a coherent global trading environment.
For example, there are various trade pacts led separately by the US and by China that produce a system that is less efficient than if the two countries collaborated to create a coherent global trade environment, Xiang said.
The US led the creation of the Trans-Pacific Partnership, a free trade agreement signed by 12 countries accounting for 40 percent of global GDP. The agreement does not include China.
The other US-led key free trade agreement is the Transatlantic Trade and Investment Partnership, proposed between the European Union and the US, and which is seen by the US as a companion agreement to the TPP. This also excludes China.
China led the creation of the Asian Infrastructure Investment Bank to fund the building of infrastructure in the AsiaPacific region, aiming to promote connectivity that would improve regional trade and investment ties.
The bank has 37 founding member states but did not attract support from the US.
Xiang said such division of trade into camps is a hindrance to global trade and results from different views that the US and China have of trade organizations such as the World Trade Organization.
One major root cause of the trade divisions between the US-led side and the China-led camp for trade is the different understanding the two countries have about the implications of China’s joining the organization in 2001.
In those days the US wanted to gain certain benefits by supporting China’s membership such as gaining more access to China’s market, encouraging China to take on more global responsibility and encouraging it to support the US on important global issues, Xiang said.
A decade later, when the US assessed that many of these expectations had not been achieved, the US started to lead discussions on trade agreements excluding China, such as the Trans-Pacific Partnership and the TTIP, Xiang said.
Another trigger point for the US to welcome China into the global trade system is the threat that China brings to its global prominence.
For example, three years ago during free trade agreement discussions between China, Japan and South Korea, Japan proposed the idea of settling China-Japan trade in renminbi.
“This is a trigger point of the US becoming alert, because the US would think there are many other Asian countries very keen to settle their trade with China in renminbi directly, which means less use for the US dollar.”
hese tensions all result from a reconfiguration of global trading system, which is an extension of the fractures from the China-US relationship, Xiang said.
“In the past when the US said yes, no one could say no, which formed the basis of a global governance system, but this is no longer the case.”
So within the new global environment, there is a lack of overall governance.
If solving the US-China issue is the key to creating the foundations of a new global governance system, then Xiang’s suggestion is for the Chinese government to encourage key US multinational firms to lobby for better US-China relations.
China can contribute to creating governance that will bring rules and certainty to global business.”