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December 14th, 2011 WW Staff | NikeLeaks Cables: Asia
 

CORPORATE SOCIAL RESPONSIBILITY WITH CHINESE CHARACTERISTICS

     
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Reference ID: 06BEIJING24312    
Created: 2006-12-05 23:06    
Released: 2011-08-30 01:44    
Classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY    
Origin: Embassy Beijing
                  

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UNCLAS SECTION 01 OF 02 BEIJING 024312
 
SIPDIS
 
SIPDIS
SENSITIVE
 
DEPT PASS USTR FOR KARESH, A. ROSENBERG, MCCARTIN
LABOR FOR ILAB
TREAS FOR OASIA/ISA-CUSHMAN
USDOC FOR 4420/ITA/MAC/MCQUEEN
GENEVA FOR CHAMBERLIN
 
E.O. 12958: N/A
TAGS: ELAB EINV PGOV CH
SUBJECT:  CORPORATE SOCIAL RESPONSIBILITY WITH CHINESE
CHARACTERISTICS
 
¶1.  (SBU)  Laboff met with the China National Textile
and Apparel Council (CNTAC), a quasi-government body,
to discuss "CSC-9000T," the code of conduct CNTAC is
trying to establish for China's textile and apparel
industry.  CSC-9000T is intended to cover the entire
supply chain, not just export-oriented factories.  It
is based on Chinese law and will focus on training for
Chinese companies to improve compliance.  CSC-9000T
will not involve accreditation or third-party
monitoring.  Corporate Social Responsibility (CSR)
executives from several American companies told Laboff
that CSC-9000T is in line with the trend in the CSR
community away from monitoring and toward capacity
building.  However, some of these executives doubt
whether CSC-9000T will have sufficient credibility to
be useful to buyers if it does not have accreditation
or third-party monitoring, or deal with
internationally recognized labor standards, including
the freedom of association and collective bargaining
rights.  Others said CSC-9000T's biggest challenge
will simply be to show that its capacity building
program can noticeably improve factory conditions
across China's enormous apparel industry, a big task
for a small and inexperienced organization.  CNTAC
said it would welcome USG assistance. End summary.
 
¶2.  (U)  Laboff visited CNTAC on 16 October 2006 to
discuss CSC-9000T, its code of conduct for garment
manufacturers and their supply chains.  CNTAC Vice-
President Sun Ruizhe said CNTAC's goal is to develop a
robust, voluntary code for the industry, based on
Chinese laws and regulations, which will not involve
accreditation or invasive audits.  CSC-9000T will
apply to the entire supply chain, not just major
exporters.  Chinese companies are already working with
their suppliers to set up the Responsible Supply Chain
Association (RSCA) to work with CSC-9000T.  CNTAC got
help from the ILO, the Fair Labor Association (FLA),
United Nations Industrial Development Organization,
the EU, and several well-known brands in designing and
promoting its code and training programs, and intends
to remain engaged with these partners as it refines
its program. Sun said CNTAC would welcome assistance
from the United States Government as well.
 
¶3.  (U)  CSC-9000T is currently being implemented on a
pilot basis in 10 factories to demonstrate
feasibility.  CNTAC hopes to expand the program to 100
large manufacturers and then 1000 small- and medium-
sized factories over the next three years. Reflecting
Chinese law, the CSC-9000T code focuses predominately
on working conditions, and makes virtually no
reference to freedom of association or collective
bargaining rights.
 
¶4.  (U)  Impetus for the development of CSC-9000T
comes from both the Chinese Government and Chinese
industry.  Implementation of the program is included
in China's 11th five-year plan.  CNTAC itself is a
government-supervised industry association (the
successor to the Ministry of Textiles) and receives
budgetary support from the Central Government.
However, CNTAC intends for CSC-9000T to be self-
funding, through training program fees. Sun said the
Chinese Government recognizes that CSR is a "business
issue".  At the same time CNTAC also wants to reduce
the burden on Chinese suppliers who now must contend
with multiple codes of conduct and auditing
requirements from various buyers.  Sun said Chinese
suppliers are unhappy with existing codes and auditing
programs because they do not provide solutions to the
problems they uncover, and because they do not afford
any real protection to a brand's or supplier's
reputation.
 
 
BEIJING 00024312  002 OF 002
 
 
¶5.  (SBU) Western buyers have varying views of CSC-
9000T.  CSR executives from Disney and Hewlett Packard
(HP) told Laboff that CSC-9000T is probably the first
of several standardized codes of conduct the
Government will attempt to promote for various
industries.  Disney and HP consider the industry-wide
code a positive approach that could help bring order,
better compliance and better cooperation on CSR among
China's many suppliers.  Disney believes that without
accreditation or some from of third-party monitoring,
most buyers will probably not view CSC-9000T as an
acceptable  substitute for their own codes.  Disney
and HP both also said that CSC-9000T does not address
labor-management relations, and that buyers were still
looking for "parallel mechanisms" to prevent and
settle labor disputes in suppliers' factories.  (The
HP executive noted that in the city of Shenzhen, the
local labor bureau told her that dispute settlement
was a company responsibility because government
agencies did not have the resources to do anything.)
A CSR executive from Nike told Laboff that third-party
monitoring is not as important as bringing about
changes in the factory.  An Adidas executive agreed
and noted that CSC-9000T took its lead from the Fair
Labor Association and some of the big buyers who are
moving away from monitoring and toward capacity
building. Adidas said CSC-9000T's biggest challenge
will be to find enough qualified staff to carry out
effective capacity building for its subscribers. CSC-
9000T may just be too small and too shallow to make a
difference, he said.  As for credibility with the
labor rights community, the Adidas executive added
that CSC-9000T?s reliance on Chinese law rather than
internationally recognized labor standards, will
probably be a bigger obstacle than the lack of third-
party monitoring.
 
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