Deep pockets

Bruno Lafont's latest visit to China seemed to come at a bad time. When the chairman and CEO of Lafarge, the world's biggest cement maker, boarded a plane to Beijing, it was just hours after the May 12 killer earthquake hit Southwestern China's Sichuan province.

So he rescheduled his calendar and held an emergency meeting in Beijing as soon as he arrived. After the meeting, Lafarge set up a 50-member taskforce to fly to Dujiangyan city in Sichuan, where the firm has a factory.

By May 15, Lafarge had provided shelter and support for over 3,000 people at its Jiangyou plant in Mianyang and over 300 people in Dujiangyan, giving them food, water, sanitary facilities and temporary shelters. Also, around 100 Lafarge employees worked with local rescue teams to help search for survivors.

On May 15, Lafarge announced a donation of 1.5 million euros to Mianyang and Dujiangyan, which were hard hit by the 8-magnitude earthquak.

After attending the Women's Forum Asia in Shanghai on May 15, Lafont immediately flew to Dujiangyan to visit the cement plant in Dujiangyan, which was already damaged by the earthquake. In fact, one of Lafarge's 16,000 employees in China was killed in the earthquake by the collapse of his home. That tragedy, as well as the shocking images of the victims broadcast on China's TV networks, prompted Lafont to call for all of the employees to make donations. The company promised to match another corporate donation with the amount donated by employees.

Outpouring of support

The show of support by Lafarge is just a part of a wave of funds poured by multinationals into the earthquake relief efforts in China.

Chen Deming, minister of commerce, said on May 22 that foreign-invested companies, multinationals as well as companies from Hong Kong, Taiwan and Macao, had already donated more than 1.7 billion yuan in cash and goods worth more than 200 million yuan. Also some other companies have committed to donating more than 200 million yuan.

That figure is still not comparable to those donated by State-owned enterprises (SOEs) and private businesses, but could well reflect multinationals' corporate social responsibility (CSR) practices as well as their commitment to local communities as donations by SOEs and private businesses are partly spurred by patriotic spirit.

"Since the earthquake, we have been focusing on helping our employees, their families and the local communities around our plants affected by this tragedy," says Lafont.

Besides donations, Lafarge has supplied equipment such as quarry vehicles to free those people still trapped in the rubble and to transport food supplies into the affected regions.

The generosity is receiving applauds from people in China where a number of multinationals are losing respect in recent years although they have enjoyed overwhelming popularity in 1980s and 1990s.

Images of some multinationals such as P&G, Nike and McDonald's have been tainted by negative news reports about product quality, environmental negligence, commercial bribery, unethical advertising and poor labor relations.

Thanks to its economic boom, China has become a market many multinationals cannot afford to lose. And they are stepping out philanthropy activities to win Chinese people's hearts and minds.

"We believe the stability and prosperity of China are the basis for our fast development at this world's fastest growing market," says Nam K Woo, CEO of LG Electronics Greater China. The firm donated 17 million yuan to the Red Cross Society of China.

However, for many multinationals that already integrate philanthropy into their regular corporate practices, the importance of the China market is not the deciding factor. Many, in fact, have been mobilizing all the resources to increase donations to aid the quake-hit regions.

In the following day of the earthquake, Canon China donated 1 million yuan and its headquarters in Japan added 10 million yuan in May 14. Canon China also joined a local partner to donate medical equipment worth 3 million yuan. UK-Netherlands giant Unilever announced a donation of 10 million yuan, including $ 1 million from its overseas offices.

To show his commitment to China, Airbus CEO Tom Enders flew to China on May 20 and donated 5 million yuan to the quake-hit areas via the Ministry of Foreign Affairs. In addition, Airbus China and its partner China Aviation Supplies Holding Company jointly donated 10 emergency mobile stretcher units, worth $300,000 for transport aircraft to Chinese life saving teams in Sichuan. The stretchers are very useful and efficient in transporting traumatized victims by air to other hospitals.

"At Airbus China, many of us have seen TV pictures of distressed children, which moved us greatly, and I think we will try to identify a project involving children, such as the rebuilding of a school or an orphanage, as children are the future for all of us", says Laurence Barron, President of Airbus China.

France's Veolia provided its expertise to aid the quake-hit region. The firm announced on May 14 that it could donate both cash and three mobile water treatment plants capable providing emergency water supplies to 15,000 people daily. That could be a much-needed help for rescuers and survivors as restoring clean water supplies and avoiding plagues are the one of the most arduous tasks for rescue efforts.

Expanding CSR activities

Still, there is a long way to go before multinationals can completely win over the Chinese people who are increasing looking at a number of factors such as environmental protection to assess a company's CSR practice.

Zhang Shenwei, a researcher at non-profit Samsung Economic Research Institute (SERI), suggests multinationals find new approaches and expand the scope of their CSR activities.

"Multinationals used to focus on environmental protection, disaster relief, anti-poverty, educations when talking about their CSR practices. In fact, a focus on their contribution to the Chinese economy by expanding employment, introduction of advanced technologies and expanding the supply chain can equally improve their corporate citizenship images," says Zhang.

The researcher cites US-based Dell as an example. The PC maker has been notorious in China due to problems with quality, and delivery as well as its slow response to public relationship crisis and its executives' improper attack on its Chinese rival Lenovo.

However, its corporate image was been significantly improved when Peking University released a report last year which found Dell has contributed, directly and indirectly $36.4 billion to China's GDP and has offered nearly 1.5 million jobs.

"Dell's effective control on manufacturing and supply chain management has had a spillover effect (on China's economy)," Zhang says.

(China Daily 05/26/2008 page3)