Zhao Jinping
The role of multinationals in China's development has become an
increasingly pressing issue in recent years.
The economic and social behavior of transnational companies is
judged on three main issues.
Firstly, whether these companies obey the laws and regulations
of the host country. This is a basic rule, necessitating a bottom
line the companies must adhere to.
So far, most of the more than 200,000 foreign-invested
enterprises in China have honored the laws and regulations. But
there are also some enterprises that elude taxation, cause
pollution, disregard the rights of laborers and residents,
manipulate the real estate and capital markets and use dishonest
and unfair competitive practices.
Secondly, how far the companies pursue the localization of their
business operations. This is an important criterion for measuring
their contribution to the local economy. Generally foreign
companies have made great progress in localization, which has
promoted the upgrading of China's economic structure, advanced the
use of technology and helped spur the accumulation of capital.
It helps improve Chinese products' competitiveness and plays an
important role in aiding the country's economic reforms. But
different enterprises have different levels of localization.
Thirdly, whether these companies actively shoulder social
responsibilities. Enterprises' social responsibility mainly means
foreign enterprises should approach their relationships with
domestic companies and other groups in a responsible way. It is not
simply a negation of traditional enterprise values driven by the
desire to maximize profits.
It requires enterprises to be responsible for all related
parties, help protect their rights and interests and drive
sustainable development in economic, social and environmental
fields.
Transnational corporations that perform well on these three
issues play an active role in promoting the construction of a
harmonious society. Their conduct provides a good example for their
foreign peers and they can offer domestic companies a model for how
to improve management and upgrade social responsibility
awareness.
At the same time, the government also needs to enhance its
responsibilities on the following aspects to guarantee a healthy
environment for all enterprises.
China should further improve its legal environment. Legal means
are essential to regulating enterprises' behavior, ensuring market
order and protecting investors' interests. Enforcement should be
enhanced to guarantee the authority of the law. Strict legal
measures, in particular, should be taken to protect the environment
and anti-monopoly legislation should also be improved.
The need for scientific development should be given greater
emphasis.
A rational evaluation and encouragement mechanism should be
built to regulate the behavior of regional governments. Some local
governments' blind pursuit of economic growth has resulted in
damage to the environment and land wasted this has to be
stopped.
A good policy environment should be provided for enterprises,
multinationals included.
Last but not least, the government needs to complete the
redefinition of its functions. It needs to enhance information
services and provide a better investment environment.
The author is deputy-director of Foreign Economic Studies at
the State Council's Development Research Center
(China Daily March 12, 2007)