Monday, August 1, 2011

Doing business in China? Strict compliance and rigorous documentations.

Sustainability has been around for a while now in many cultures at different levels of social awareness. It’s debatable whether environmentalism is ever the collective form we see today, so I give credit to humanity’s progress in shaping a holistic sustainability plan so far.

Leaving archeology aside, it is fascinating to observe sustainability emerge as a new global-grassroots phenomenon - a world’s environmental problems rallied local actions. In an electronic-multi-media-citizen-reporting blogger age, this has created a network of activists who share a collective burden with different ideologies that transcendent politics.

China, for example, intolerable to most public activities or media freedom, has given a “green” light to the loudness of Sustainability folks. Civic environmentalism has put pressure on the State to act against poisonous lakes and toxic airs. Responding to frequent protests over pollution problems, (especially protests for the children affected by lead poisoning), China’s legislators have been busy passing laws such as the Clean Production Laws and the Circular Economy Laws to cure its problems.

Regardless the cause, the actions are noble and results are not yet clear. Passing a Circular Economy Law is one thing, enforcing it is another.

Enforcement is a critical issue of law in China due to lack of accountability and development goals. While the development balance is one thing to be worked out by this proposed circular economy, the accountability issue can certainly be cured.

In working within the State’s “harmonious” plans, the civic environmental groups in China has adopted new media technologies to relay their information. Citizen driven, they have created an effective information system and adopted a new set of language to encode environmentalism, and distinguishing it from the revolutionary days of “grassroots” ideologies. Some scholars have argued that this civic environmentalism is at its infancy only worthy consideration when fully matured; some argued that it is from a long and “harmonious” Chinese tradition and should be analyzed accordingly; even more would have us believe its politically correct intent of creating a “harmonious society.”

But an advantage of the Chinese civic environmental movement is that it has provided the State with a crowd-sourced citizen monitoring system that can quickly spread the news about offenders. To any foreign investments or foreign owned operations, this combination of National laws and grassroots civic environmental actions is dangerous.

First, foreign operations are prime targets for compliance quotas local governance may have to report to the State. Chinese local officials may not be quick to enforce against their own cousin’s shop, but they will raid yours in a heartbeat. Mostly because they think your operation has deep pockets and they stand to benefit from inflating the locally imposed penalties.

Also keep in mind most of the effects of pollution is generalized to a population, sources are often shared. If your Chinese operation does not keep strict compliance and records, in the eyes of the public, you are the guilty party standing next to a local business owner. You are the one they want to stand trial for the death of their loved ones. No Chinese judge will have sympathy for your mistake, neglect, or just plain ignorance. 

On the other hand, if you do keep strict compliance and keep a rigorous accounting and documentation practice, you may just add market incentives. Because the civic environmental movement in China is intractable linked with a global environmental network, any positive reporting from them will get your business noted quickly. But I hold true to the belief that you have to get 10 pieces of good news out the door to counteract a bad press reporting – there, you now have double the incentive to comply with these Chinese laws to the best of your abilities: be free of unwanted foreign litigations and your own international market gains.


If you are a current stake holder of a Chinese operation, or are interested in doing business in China, you should familiarize yourself with this model of the Circular Economy Model according to the State Council.

click to enlarge

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