Chinese Manufacturers Seen Making Progress in CSR

China’s textile and apparel manufacturers are battling tough market conditions, but they are still committed to corporate social responsibility.

BEIJING — China’s textile and apparel manufacturers are battling tough market conditions, but they are still committed to corporate social responsibility, according to a new report from the China National Textile & Apparel Council.

This story first appeared in the July 2, 2009 issue of WWD.  Subscribe Today.

“The financial crisis has had an impact,” said Sun Ruizhe, vice president of the council, a government-led industry association, speaking on the sidelines of a conference here on Monday. “Obviously, exports are down, but companies are not abandoning corporate social responsibilities.”

Sun said Chinese companies are making progress in areas such as energy consumption and CSR management training.

“Though the textile industry is labor-intensive, we are not looking at only labor relations, but environmental progress and fair trade issues, too,” he said.

Still, the industry struggled last year to uphold what Sun identified as one of its most fundamental social responsibilities: providing employment.

“The financial crisis severely eroded the industry’s ability to perform its social responsibility in offering jobs,” said the report.

The annual survey did not state exactly how many jobs were lost in 2008, but it did note that large-scale textile companies suffered negative growth rates in employment and workers at small and medium-sized companies were particularly vulnerable.

In Kaiping, a city in southern China’s Guangdong Province, more than 40 textile and garment companies — about 10 percent of all textile and apparel companies in the city — had ceased operations as of October, according to a municipal survey. The report also noted that Chinese companies faced increased pressure from the appreciation of the yuan against the dollar, the rising costs of labor and compliance with state regulations.

China’s Labor Contract Law, implemented in January 2008, boosted protection for employees and increased their pay and benefits. But it also contributed to rising labor costs. Over half of the 80 enterprises surveyed in the report gave a “cautious welcome” to the law. Many respondents said the new legislation has helped companies develop a more self-conscious appreciation for employee rights, but pessimistic ones predicted the law would lead to a substantial increase in labor disputes and litigation.

To help offset costs, the government has issued several tax rebates over the last year and mandated state loans for the textile industry. Survey responses indicate that such state regulation, which effectively relieves financial pressures, enables companies to remain committed to CSR initiatives.

Regarding fair trade issues, the report indicates the industry is still smarting from protectionist measures in the U.S. It acknowledges the new U.S. consumer protection mandates will become increasingly important in future textile trade between the two countries. In contrast, chemical bans from the European Union were viewed rather favorably.

“From an objective perspective,” the report states, “the ban on PFOS [perfluorooctane sulfonates, commonly used in dyeing and pretreatment of textiles in China] may play a positive role in raising the social responsibility awareness of domestic enterprises and elevating the environmental protection level through technological progress.”