A Tale of Two States: Explaining Corporate Social Responsibility Weaknesses of Chinese Investments in Southeast Asia
Date of Issue2017-05-08
S. Rajaratnam School of International Studies
Rajaratnam School of International Studies
China’s efforts in cultivating close economic ties with Southeast Asia, which often result in asymmetric interdependent relations, have been a key element in its regional strategy. However, in recent years, Chinese investments in the region have encountered local resistance and criticisms for their disappointing performance of corporate social responsibilities (CSR). This work seeks to address the question of why Chinese businesses’ CSR performance in foreign countries has been weak and problematic, despite the fact that the Chinese authorities have issued relevant laws and regulations that encourage and require Chinese companies to do well in fulfilling their CSR duties. This study proposes two hypotheses to answer the research question. First, the thesis hypothesizes that China’s fragmented institutional structure and incomplete political reforms hinder effective supervision and enforcement of the CSR activities of Chinese businesses overseas. Second, the paper posits that the development level of CSR regime in the target country also contributes to the Chinese companies’ CRS standard. These two major factors work together in shaping the CSR performance of Chinese investments in Southeast Asian countries. This study examines Chinese investments’ CSR in three regional countries, including Indonesia, Vietnam, and Myanmar. The findings of the three cases suggest that the lacklustre CSR performance of Chinese businesses can be broadly attributed to two major reasons – Chinese domestic institutional shortcomings and the under-developed CSR regimes in the host countries. This research is significant in that it explores a very important yet under-studied area in China’s international political economy. The proposed two-pronged approach may serve as a useful foundation for the field of CSR studies in general and future research on CSR issues of Chinese investments in particular. The study is also practically significant and policy-relevant given the fact that Chinese capital and industrial sector are increasingly moving out of China for investment opportunities throughout the world. Both China and the international society can draw many good lessons from the CSR experiences of Chinese investments in Southeast Asia.