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Social efforts of multinationals in China
(China Daily)
Updated: 2005-04-27 09:05

Faced with the question "what do you want to be when you grow up?" Hu Xiaohong, a 13-year-old rural schoolgirl offered several answers, ranging from scientist and teacher to artist.

"But if all the above cannot be realized, I want to work for P&G," the girl said at the donation ceremony of a P&G Hope School Project.

The reply not only gave rise to laughter but also impressed listeners, as it became clear P&G's brand had been imprinted on the heart of Hu and those of many other children in poverty-stricken areas who have received help from the world's leading consumer products maker.

But it's not only P&G, many other multinationals, such as McDonald's, Coca Cola, Motorola, Siemens AG and Amway, participate in various social causes in China.

Multinationals' active involvement

P&G became involved in the Hope School Project in 1996. On March 21 of this year, it donated 4 million yuan (US$481,000) to the government-backed programme, taking the company's total contribution to 20 million yuan (US$2.41 million).

"The money we donate this time will mainly be used to improve the conditions at the 100 existing P&G Hope Schools across China, as well as build five more Hope Schools together with our retailers - CenturyMart, CR Vanguard, and Suguo," said Christopher Hassall, general manager of External Relations, P&G Greater China, at the ceremony

P&G also recently launched its new global platform for corporate philanthropy in China aimed at helping needy children around the globe.

"With the theme of 'Live, Learn and Thrive,' our new platform of corporate social responsibility focuses on helping children up to the age of 13," Hassall told China Daily at the event.

Company sources revealed that, in addition to the collaboration with the China Youth Development Foundation on the Hope School Project, P&G frequently contributes to disaster relief and poverty alleviation projects in the country.

McDonald's, playing on its image of a family restaurant, also works with China's youth and designated November 20 as World Children Day of McDonald's.

"Proceeds on every November 20 will be donated to improve the living and education conditions in remote rural areas of China," Tim Lai, senior vice-president of McDonald's (China) Co Ltd, told China Daily during an interview.

What motivates them?

The enthusiasm of the transnationals is, of course, based on their desire to improve their images and enhance the value of their brands in China, which can be seen as a part of a public relations plot, according to Ding Yuanzhu, a researcher with the Academy of Macroeconomic Research attached to the National Development and Reform Commission.

"The reputation of a company is affiliated to its public recognition, and good works set a robust foundation for its marketing promotion," said Ding.

Furthermore, the value-added effects, concerning media attention and government relations, should not be forgotten as motives behind these charity programmes, he said.

"Academic research shows that the effects brought by social causes are much more impressive and well-received than ordinary advertising," Ding pointed out.

However, the researcher admitted that participation in charity projects is a common strategy of most multinationals in the international market and can be viewed as a situation which benefits both companies and society.

P&G's Hossall told China Daily that an enterprise's development should be supported by the social progress of the local market, therefore the returning of profits to society is natural and a must for a responsible firm.

"It is our duty to pay back the nation, as P&G is a responsible company and a member of Chinese society," said Hossall.

Gu Xiaojin, secretary-general of the China Youth Development Foundation, said that, in the matter of social causes, her organization "certainly hopes those businesses with financial clout become more benevolent.

"Such voluntary donations can be utilized in public welfare sectors, involving poverty alleviation, environmental protection, healthcare and education," said Gu.

Gu's foundation works closely with a number of large multinationals, such as P&G, Coca Cola and Motorola.

"We help them arrange the funds and send the money to the areas most in need, moreover, we make sure the money is used efficiently and in a transparent manner," said Gu.

She cited P&G's involvement with the Hope School programme as an example. "Hardware, or infrastructure construction, was the focus during the initial stages, but now we pay more attention to software improvement, in terms of teacher training, the provision of education materials and exchanges between Hope Schools and their counterparts in key cities," Gu said.

According to figures from Zhongtianheng Certified Public Accountants, the China Youth Development Foundation received 94.5 million yuan (US$11.39 million) in donations in 2003, taking the total contribution to the foundation to 1.09 billion yuan (US$131 million) from its establishment in 1989 to the end of 2003.

Rough statistics from the China Charity Foundation reveal that, by the end of 2003, various NGOs (non-government organizations) and NPOs (non-profit organizations), including foundations, social organizations, grass-roots organizations and private non-enterprises institutions in China had received a total of 5 billion yuan (US$602 million) in donations.

About one-third, or some 1.8 billion yuan (US$216 million), was from overseas, with the majority of that figure being contributed by multinationals.

Legal protection

China has issued a series of regulations concerning charity projects and foundation management, including the Public Welfare Donation Law, Foundation Administration Law and Social Organization Registration Management Provisions.

The rules were set not only to standardize the sector but also protect the interests of donators, insiders said.

Such regulations enhance the transparency of charity procedures, highlight a strict and practical auditing mechanism, as well as protect donators' privacy.

"However, the tax reduction or exemption policies are not enough to keep non-profit institutions above water," said researcher Ding.

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