Dell has released their 2008 CSR report (h/t Environmental Leader) and it has a lot of China content in its 112 pages (40 mentions to be exact), something to be expected as Dell has a large investment in an operation in Xiamen.

For those looking to gain a sense of what Dell finds important as a company, you only need to look at the website itself where Michael Dell lists 4 of their operational achievements/ focuses (2 philanthropic focuses are also listed outside of the below):

• Pledging to make Dell’s operations carbon neutral beginning in 2008 .
• Committing to producing energy-efficient products that deliver the most performance per watt for our customers .
• Launching ReGeneration.org , a global meeting place that enables people to learn about going “green,” share ideas and protect the environment .
• Continuing our focus on environmentally responsible product design .

As you can see, all of these goals are environmentally related, and all very worthy on their own right.

I am going to be interested to learn how they intend to achieve these goals (i.e. will carbon neutral be achieve through 100% solar panels or offsetting?  Are their efforts in product design focused on packaging alone, or are they looking to find ways for consumers to reduce their need to scrap a computer carcass every time their Intel chip dates itself?

China though adds another layer, and perhaps were Michael Dell to write a China report, his comments would reflect the fact that with nearly 80% of Dell’s supplier spend in the region, labor conditions are as important as the environment.

Some highlights from their China supplier portion

• Dell brought in its tier 1 and 2 suppliers to a EICC (code of conduct) training session in Shanghai, with those sessions also including workshops on how to create effective manager/ employee relationships, how to mitigate and address child labor, and hiring diversely
• Another workshop was held in Shenzhen to address business process improvement and the EICC.
• Dell has put in place an internal citizen team that identifies high-risk suppliers, arranges site visits , and conducts ongoing evaluation and training

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What comes into my mind when reading some of the endless articles of Chinese companies irresponsible practices in Africa, like this from Bloomberg news, is not the reasons why it is happening (of course there is pressure to keep costs low and pressure to access resources), not if Chinese companies are any worse than Western companies (either past or present) or other ‘developing countries’ companies (presumably not that much difference, but more Chinese companies out there and China is in the spotlight more) -but i wonder what the people running these companies are thinking.

I am a strong believer that people are inherently good, though also selfish. This thus means many people will put themselves over others, but if it is a matter of ‘a bit more wealth’ vs ‘death for a child’, i am mystified how people can, as human beings, make such a choice. The answer might be that such a choice never happens -that poor decisions create accidents, rather than people purposely acting irresponsibly knowing the impact it will have. Besides, if it is not forced labour, if it was so bad, wouldn’t the workers find work elsewhere?

read on for more on China in Africa and the role of the Chinese government…

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There is a good summary of the impact of the labour law 6 months on here. Most commentators realise the labour law has not introduced too many new laws -it is just trying to enforce the current ones:

It is precisely those companies who have not previously paid the minimum wage or paid worker benefits who may well claim the new law will add costs of up to 40 percent - a figure often quoted by corporate observers. If a company has been compliant in most areas of the law then the new law will not cause more than a fraction of the estimated 40 percent.

The relocating of factories out of the PRD (Pearl River Delta) to other countries or inland in China has been under way for a while; it was not just caused by the Labour law. Why are the factories reloacting?

Among the main reasons contributing to the closure of enterprises are increasingly high and rising inflation, local and regional labour shortages (especially in skilled labour), the continued strength of the Chinese currency, rising taxes, tougher environmental standards, rising costs of raw materials and the end of certain government subsidies.

What impact might the law have then?

One major result of the new law – if implemented - will not necessarily be the automatic improvement of workers rights and living conditions but perhaps the shift in industrial relations to a situation where employers no longer routinely flout the laws – as is common now – but instead seek to legally circumvent the new law.

Overall we can see that the government has decided to start implementing the law; it is serious this time -and it is having big impacts on those that broke the previous law (i.e. 60% of employers did not give labour contracts before!). I wonder what impact would there be if there was a new environmental law similar to the labour law -so it would not issue anything new, but would tidy up the existing laws and enforce them. If the impact from that law on the incredible abuses and disregard of the current environmental law could be half as high as the impact seems to have been from the new labour law, there might still be hope for the environment in China -and the World!

One of the trends I saw last summer was that your average Zhou was beginning to recognize that they had an opportunity to participate in the development in their society, and unlike before they were taking that opportunity. they were going for strolls in Xiamen, outing polluters online, and putting pressure on local officials who were not acting in their best interests.

It was a huge change that took the 3rd largest lake, a labor scandal, and a product scandal, but it happened.

I predicted then that we were at a turning point and companies would need to Clean Up or Close Up, and as I discussed in a post a couple week ago, the trend has continued. Where I see the biggest change, and where things are different than before, is that unlike the past where civil society was managed from Beijing pushing down onto the prvincies/ cities/ villages policies that would be ignored at the local level, and local officials would do so without any real fear.

Sure, there were the ever so often examples of bad cadres making the news, but in reality many never felt the heat. but that is all changing, and while there are certainly a number of things that have motivated the masses, there mediums of initial action is via internet and SMS, as the People’s Daily enterprises feel pressure from netizens in China suggests:

Enterprises in China - either Chinese or foreign-funded enterprises - have felt a magnitude of pressure from the massive number of Chinese netizens who urge them to shoulder more corporate social responsibilities (CSR).

Only strengthened by the recent emotional response that swept China in response to the earthquake relief, we are process by which not only are netizens and citizens more likely to express their opinions in a pubic forum, they are given a longer leash to do so, and once they do… they do so en masse. and when you have reports from Jones Lange LaSalle reporting statistics like:

A February Policy paper released by the China Council for International Cooperation on Environment and Development stated that by 2005 84% of FIEs were involved in an industry is considered to be heavily polluting compared to 30% in 1995.

companies need to take more care when operating in China to make sure their labor codes and practices are in order, that environmental codes are observed, that a firm is not seen as exploiting China in any way, and that they are giving back to their local communities.