In recent years Low Cost Country Sourcing (LCCS) has been a huge initiative in many sourcing organizations resulting in relationships with suppliers in regions like China. Riding on this wave is the call for companies to have a Corporate Social Responsibility (CSR) to the consumers who purchase their products. This is not just a concern for consumers outside of China but those within the country as well.

A recent survey found that 73 percent of educated Chinese consumers would rather purchase goods from firms with strong ethical credentials and developed Corporate Social Responsibility (CSR) programs. The local suppliers focus on CSR has been “average” at best, while multinational corporations were viewed as leading their Chinese counterparts. Companies headquartered outside of China have advantages over domestic companies in terms of management, technology, capital and resource allocation. This lengthens the journey for Chinese companies to catch up with foreign companies in terms of CSR performance.

Product safety was named as the most important issue for businesses to address following high-profile events like the sale of large amounts of unsafe baby milk in 2008. Positive environmental activity came in second, with the perceived integrity of company management in third. Procter & Gamble and Coca-Cola were the two Fast Moving Consumer Goods (FMCG) companies seen as leading the way in implementing responsible business practices. Chinese food and beverage companies are lauded as being trustworthy by consumers, with Coca-Cola and PepsiCo the only foreign members of the top ten in this category.

(Also posted on Ariba Exchange)

Kimberly Davis-Gerst is a Paper and Packaging Category Manager in Ariba’s Global Sourcing Organization. Prior to joining Ariba, Kimberly was a Buyer with Colgate-Palmolive, where she sourced, negotiated, managed and procured packaging and raw materials. She is recognized by the Institute of Supply Management as a Certified Purchasing Manager (C.P.M.).