[CSR Monitor Vol.6] The Two Faces of CSR in China: Corporate Trust and Underlying Anxieties of Chinese Consumers

2013-2014 GlobeScan · East Asia Institute · Center for Social Value Enhancement Studies

Focusing on Survey Results from China

1. Introduction

Since China's accession to the WTO in 2001, the issue of Corporate Social Responsibility (CSR) and its role in China has gained significant traction. The emergence of CSR issues in China is both an internal Chinese matter and a global one. This is not an exaggeration, considering China's weight and scale in the occurrence and resolution of global issues. For South Korea alone, with bilateral trade exceeding $250 billion in 2013 and a dramatic expansion of Korean companies' presence in China, China has long been Korea's largest economic trading partner. As CSR issues gain prominence in China, they have become a necessary localization strategy to consider in trade, investment, and operational expansion processes between Korea and China.

Factors driving the strengthening of CSR issues in China include, first, increasing international pressure for environmental and labor standards for sustainable growth, and the rising influence of multinational corporations (MNCs) operating in China that espouse socially responsible management. Domestically, the emphasis on CSR by the Hu Jintao government, which came to power in 2003 with the national goals of "Scientific Outlook on Development" and a "Harmonious Society (調和社會)," and the revision of the Company Law (公司法) in 2006, are also significant factors. The revised Company Law explicitly stated ethical and social responsibilities, stipulating that "companies shall, in their business activities, comply with laws and administrative regulations, abide by public and commercial ethics, and assume social responsibilities under the supervision of the government and society." Subsequently, related laws such as the Labor Law, Consumer Rights Protection Law, Product Quality Law, and Environmental Protection Law have been strengthened. Meanwhile, major CSR-related incidents such as the Jilin Petrochemical plant explosion in Jilin Province in 2005, the Sanlu Group melamine milk scandal in 2008, and the Foxconn factory worker suicides from 2010-2012 have significantly increased social pressure for CSR (Nam Young-sook 2015; Lee Kwan-seung & Jeong Seon-wook 2011). Amidst increasing instances of Korean companies failing to establish a stable presence in China, greater attention is being focused on CSR strategies within China (Kim Byung-gyun & Seo Min-kyo 2012; Yoo Hee-moon 2014).

There is a growing consensus, among both domestic and foreign companies operating abroad, that CSR not only contributes to solving social problems but also enhances corporate image and reputation, aids in crisis management, strengthens relationships with stakeholders, and fosters employee loyalty. Korean companies operating in China, in particular, are actively developing and implementing diverse local CSR strategies and programs to meet the rising CSR demands of Chinese society. However, it is pointed out that there is still a long way to go (Yoo Ryuk-cho & Kwon Young-cheol 2011; Jeong Sang-eun 2007; Choi Byung-heon 2008, 2009). According to an assessment in the "2012 White Paper on CSR of Korean Companies" published by the Korea Chamber of Commerce in China, the main reasons why the CSR activities of companies operating in China have not progressed beyond a standstill include not only "cost burdens" and "lack of personnel" but also the difficulty in "finding suitable CSR activities for China" (Park Sang-soo & Ko Myung-geol 2014).

The inability to properly establish strategies and directions for CSR activities suitable for China implies a lack of empirical understanding among Korean companies regarding the CSR perceptions and needs of Chinese civil society and consumers. While domestic CSR research has become more active since CSR discussions were formally introduced in Korea in the 2000s, research and discussion on CSR in China, Korea's largest trading partner, remain insufficient (Kim Byung-gyun & Seo Min-kyo 2012, 237; Yoo Hee-moon 2014, 99-100; Jeong Sang-eun 2007, 245-7). To date, domestic research on CSR in China has been quantitatively insufficient and has largely focused on introducing the development process of CSR discussions in China (Lee Kwan-seung & Jeong Seon-wook 2011), CSR reporting and evaluation systems in China (Lee Chan-woo 2013), and the process of establishing CSR-related systems, or on summarizing CSR case studies of multinational and Korean companies in China (Kim Byung-gyun & Seo Min-kyo 2012, 237; Yoo Ryuk-cho & Kwon Young-cheol 2011; Yoo Hee-moon 2014; Jeong Sang-eun 2007; Choi Byung-heon 2008, 2009).

Empirical studies that objectively diagnose the level of CSR in China or that are essential for establishing CSR strategies/policies, such as the strategic environment and the CSR perceptions and policy demands of stakeholders other than the government (especially Chinese consumers and civil society), are difficult to find. This contrasts with the trend in overseas academia to expand interest to civil society, NGOs, and consumer factors in Chinese CSR (Geoffrey 2009; Davis and Moosmayer 2014). Consequently, assessments of the reality and current status of CSR in China presented in domestic research are often confusing (Lee Kwan-seung & Jeong Seon-wook 2011; Jeong Sang-eun 2007).

On one hand, it is argued that due to the strong CSR commitment of the Chinese government and local governments, advocating for a "Harmonious Society," CSR in China is a factor that determines the survival of both Chinese companies and foreign companies operating in China. On the other hand, it is argued that despite the government's efforts, companies do not properly comply with relevant laws, and supervision and punishment are inadequate due to collusion between local governments and state-owned enterprises. As shown in [Figure 1], while some evaluate that CSR activities are strengthening, with a surge in CSR reports published by Chinese companies due to the Chinese government's intensified CSR drive, others point out that the quality of these reports does not keep pace with quantitative growth, as depicted in the right side of [Figure 1]. Regarding the CSR awareness of Chinese companies and consumers, there are claims that they accurately understand the concept of corporate social responsibility and exert influence that can determine a company's survival if it fails to meet their expectations. Conversely, there are also diagnoses that the CSR awareness of Chinese companies and consumers is still rudimentary and not yet properly formed. Multinational corporations are simultaneously viewed as role models for CSR activities and objects of high expectation and trust, yet they are also described as dual targets that can rapidly fall into disrepute if problems arise, due to the application of stricter standards compared to Chinese companies and the emotional reactions of Chinese consumers (China WTO Tribune 2011; Nam Young-sook 2015; Park Sang-soo & Ko Myung-geol 2014; Jeong Sang-eun 2007; Consulate General of the Republic of Korea in Shanghai 2013).

Figure 1 _ Trend in CSR Report Publication by Chinese Companies and Comparison of Report Quality by Country

Source: Xinhuanet, "2014 Corporate Social Responsibility Report: 8 Major Findings" (2015), cited from KPMG Survey of Corporate Responsibility Reporting 2013. Nam Young-sook (2015, pp. 257-258).

Resolving this confusion in perceptions is the starting point for companies entering China to develop CSR strategies and policies tailored to the local context. It is urgent to accumulate objective and empirical research on how Chinese society views corporations (especially multinational corporations), what social problems it considers to be solvable, and what responsibilities it demands from corporations to address them. This report aims to empirically present the reality and changing trends of Chinese consumers' perceptions of corporations and CSR, which have been overlooked, by utilizing data from 2013-14 of the annual survey conducted by Globescan, a sustainable management consulting firm and international comparative research institution, in partnership with the East Asia Institute and the Social Enterprise Research Institute in Korea. Chapter 2 categorizes Chinese consumers' emotional attitudes and images towards corporations (corporate trust) and their perceptions and attitudes towards CSR. Chapter 3 presents an analysis of CSR demand necessary for establishing local CSR strategies and policies in China, along with an analysis of CSR information acquisition behavior and ethical consumption behavior that should be considered in CSR communication strategies.

2. Types of Chinese Consumers' Attitudes Toward Corporations and CSR Perceptions

In China, where the party-state dominance system is maintained and civil society is weak, the emergence of CSR issues and the establishment of a institutional framework for CSR have been led by the Chinese Communist Party and the Chinese government. It is true that the will of the party and government, the guidelines they set, and the government's management and oversight systems connecting central government-local government-corporations and securities regulatory commissions have played an important role. However, international norms and market pressures and discipline are increasingly strengthening. With the rapid spread of the internet and social media, and the growing power of civil society organizations such as NGOs, the influence of the private sector on the direction of CSR development in China is emerging as an important variable (Davis and Moosmayer 2014). Even under restrictions on freedom of the press and expression, private actors such as civil society and consumers exert influence on corporate brand and reputation formation, and the basis of social trust in corporations practically constrains corporate activities (Lee Jae-youl 2011; Jeong Han-wool 2015).

In this context, it is essential to examine what emotional attitudes Chinese consumers have towards corporations and how they perceive CSR (cognitive attitude). This chapter first categorizes the level of trust in large corporations, which fundamentally constrains perceptions and attitudes toward corporations in a given society, the direction of CSR preferred by Chinese consumers, and the regulatory methods that enforce it, as characteristics of Chinese consumers' CSR perceptions. Regarding the direction of CSR preferred by Chinese society, we will examine the conflict between the "priority of legal and economic responsibility" versus the "priority of ethical and social responsibility," which has been a core issue related to the concept of CSR, as well as the extent to which the perspective of "creating shared value (CSV)" is being accepted, which is spreading among Western academia and consumers in developed countries (Jones 1995; Porter and Kramer 2011). The characteristics of Chinese consumers' perceptions of CSR regarding the regulatory methods for strengthening CSR will be examined by determining whether they prefer "government regulation" or "voluntary self-regulation" (Sethi 2003; Vogel 2008).

1) Trust in Large Corporations: The Social Environment of CSR

Social trust is an emotional attitude that influences cognitive evaluation attitudes toward targets, political and social preferences, and civic participation, and it affects the stability and sustainability of society. Unlike general likeability, it is relatively stable and, once formed, is difficult to break, but once broken, it is hard to restore. However, its importance in overcoming social risks and mitigating conflict cannot be overstated (Erikson and Tedin 2005; Park Jong-min 2003; Lee Jae-youl 2011; Lee Suk-jong and Yoo Hee-jung 2010; Jeong Han-wool 2015b). A basis of trust means that if a problem occurs, it can be relatively easy to elicit positive changes from consumers if the company genuinely addresses the issue. In a society with high distrust, there is a lack of trust in society as a whole, including corporations, making even small problems likely to escalate significantly, creating a social environment where achieving visible results in CSR is much more difficult.

According to media and academia, the backlash from Chinese consumers and NGOs towards Chinese companies and multinational corporations operating in China that have caused social controversy is severe. The foundation of trust Chinese consumers have in companies has been shattered, and anti-corporate sentiment has spread throughout society. The profound distrust of corporations in Chinese society appears to be a latent fuse that could determine corporate survival. However, as [Figure 2] shows, the trust Chinese citizens place in large Chinese corporations is at a very high level, reaching 69% in 2014. The proportion of respondents who trust foreign companies operating in China is also a considerably high 62%. The level of trust in large Chinese corporations surpasses that in media, academic research institutions, and international organizations like the UN. Excluding the government, large corporations in China are the most trusted institutions by the Chinese public. The level of trust in multinational corporations, while slightly lower than in large corporations and media or academic organizations, is also shown to be high.

[Table 1] shows that China's trust in domestic large corporations and domestic multinational corporations is high compared to other countries. As of the 2014 survey, trust in domestic large corporations was the second highest among 24 surveyed countries, following Indonesia. Trust in domestic multinational corporations ranked fourth, among the top tier, following countries with high economic growth rates such as Nigeria, Indonesia, and Ghana. Thus, it is noteworthy that CSR in China unfolds within a highly trusting social foundation.

However, despite the high level of trust Chinese consumers and civil society place in corporations, there are factors of instability. Let us return to [Figure 2]. Examining the gap between the lowest and highest points of trust for each institution since 2004 allows us to infer the robustness of trust in these institutions. The maximum gap in trust for large Chinese corporations is 16 percentage points (2004-2012), and the maximum gap for global corporations operating in China is 25 percentage points (2004-2010). This instability is comparable to that of Chinese NGOs at 22 percentage points (2013-2005) and the media at 18 percentage points (2014-2010). This is in contrast to the trust in government, academic institutions, and the UN, where the gap remains below 10 percentage points. The trust in global corporations operating in China rose to 69% in 2004, but sharply deteriorated after 2005, the "Year of the Multinational Corporation Crisis," when CSR-related issues involving multinational corporations emerged intensively. Since then, it has shown a gradual recovery trend due to strengthened CSR by overseas corporations and enhanced government will.

Figure 2 _ Comparison of Institutional Trust Among Chinese Consumers (%)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint China Survey Data, Globescan China Survey Data (Question Q4At, n=500)

[Table 1] <2014 RADAR> Trust in Domestic Large Corporations and Domestic Operations (%)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint Survey (Question Q4At, n=500)

Conversely, the steady maintenance of government trust around 80% and the strengthening trend of trust in media and NGOs create conditions where government regulation and social pressure from consumers and NGOs regarding CSR exert significant influence. Let us examine [Table 2], which summarizes CSR-related issues that have drawn the attention of Chinese consumers, NGOs, and civil society. Indeed, around the period when the government's "Harmonious Society Theory" emerged in 2005-2006, incidents causing ethical and social controversy by domestic and foreign corporations have continuously occurred and their repercussions have been escalating. While environmental issues and controversies over harmful substances were initially the primary concerns, recently, food safety and labor-related issues have also emerged on the agenda. Overall, a social trust foundation favorable to corporations is being formed, but simultaneously, sensitive reactions to social and ethical problems created by corporations are leading to fluctuations in corporate trust. Furthermore, given the high trust in entities that can influence corporations, such as the government, media, and NGOs, corporate trust can be significantly affected depending on how these entities respond.

[Table 2] List of Major Corporate Social Responsibility Incidents Since 2005

Note: Compiled by the author based on Darigan and Post (2009), Nam Young-sook (2015), Park Sang-soo and Go Myung-geol (2014), Lee Kwan-seung and Jeong Sun-wook (2011), Jeong Sang-eun (2007), and Chao Jian (喬健, 2011).

2) Changes in Chinese Consumers' CSR Perception Types

To analyze the characteristics and changes in Chinese consumers' perception of CSR, let us examine a framework for analyzing CSR perceptions across different countries. This report extracts a framework for classifying perception types based on attitudes towards two core issues surrounding CSR. The core issues of CSR can be broadly summarized into two main points. (1) Considering the content and priorities of CSR, there is the debate axis of "prioritizing economic responsibility" versus "prioritizing social responsibility": whether to view the company's inherent role of generating profits and creating jobs within legal boundaries as its social responsibility (shareholder model), or to prioritize normative social responsibility that includes contributions to the environment, poverty, education, health, and local communities, linked to the application of high ethical standards and the social demands of various stakeholders (stakeholder model). (2) The second axis for classifying perception types is the debate concerning whether to rely on government regulation or prioritize autonomous market regulation as a mechanism for governing CSR ("government regulation type" versus "autonomous regulation type"). By crossing these two issue axes, we can extract four basic perception types for classifying CSR perceptions in each country (Jeong Han-wool 2009; Sethi 2003; Vogel 2008).

Recent comparative studies on consumer CSR perceptions worldwide indicate that throughout the 2000s, public opinion favoring the prioritization of economic responsibility has decreased, while support for prioritizing social responsibility has stagnated. Meanwhile, the perception type of Creating Shared Values (CSV), which advocates for the sharing of both economic and social values, has been spreading. Consequently, the perception axis regarding the content and role of CSR is expanding from two types to three. Indeed, in developed OECD countries, public opinion of the CSV type is tending to spread and become the majority. In contrast, in developing countries experiencing high economic growth, while prioritizing economic responsibility was the majority opinion, normative CSR perceptions emphasizing social responsibility are strengthening, indicating that perceptions of CSR's role are diversifying according to national circumstances. Meanwhile, in terms of CSR governance methods, developed countries generally show a relatively stronger preference for market regulation, whereas developing countries invariably show strong support for government regulation. Summarizing this, we can derive a 2x3 perception analysis framework [Table 3]. In terms of CSR roles, the focus of discussion is shifting from economic responsibility to social responsibility to the concept of shared value creation. In terms of governance methods, market regulation and government regulation are in a tense standoff. Using this framework, developing countries are seen as moving from type (1) to type (2), while developed countries are transitioning beyond type (3) to stages (5) and (6) (Jeong Han-wool 2013a).

[Table 3] Classification Types of CSR Perceptions

What about China? Let us classify China's CSR perception types using this framework. First, regarding the values that large corporations should pursue in their CSR, let us examine the results of asking Chinese consumers to choose between: "generate profits within the legal framework, pay taxes, and create jobs" (prioritizing economic responsibility), "establish ethical standards beyond legal requirements and contribute to creating a better society for all" (prioritizing social responsibility), or "pursue both positions" (shared value creation). In the 2013 survey, 41% of Chinese consumers favored prioritizing social responsibility, while only 21% held the view that economic responsibility should be prioritized. Support for the shared value creation approach, which seeks a balance between social and economic responsibility, was 36%, appearing to divide public opinion with the prioritizing social responsibility stance.

Comparing this question with previous results, it is noteworthy that there has been a significant change in Chinese consumers' perception of CSR. Support for the social responsibility theory exceeded that for prioritizing economic responsibility, rising from 37% in 2003 to 39% in 2006 and 44% in 2008, but it has stagnated at 41% in the 2013 survey. Support for prioritizing economic responsibility, which was at a similar level to prioritizing social responsibility at 38% in 2003, declined to 35% in 2006 and 34% in 2008, and plummeted to 21% in the 2013 survey. With the amendment of the Company Law in 2006 explicitly stating CSR, the promotion of "Harmonious Society Theory," and events such as the 2008 Sichuan earthquake, the Beijing Olympics, and the melamine milk scandal, discussions on CSR rapidly expanded, and in this process, the position of prioritizing economic responsibility appears to have narrowed. In contrast, while the shared value creation approach remained at the 20-22% level from 2003 to 2008, it rose to 36% in the 2013 survey. Overall, the perception landscape in China, which was divided between the traditional prioritizing economic responsibility and prioritizing social responsibility in the early 2000s, is now shifting to a structure where prioritizing social responsibility and shared value creation are dividing public opinion. This suggests that Chinese consumers' CSR perceptions are showing signs of shifting from a developing country type to a developed country type, at least in terms of content. This is an aspect that warrants close attention going forward.

Figure 3 _ Role of CSR to be Pursued by Large Corporations (%)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint Survey (Question Q6t, n=500), Globescan-East Asia Institute, Globescan.

Meanwhile, public opinion on CSR governance methods is confirmed in [Figure 4]. This question asks for agreement or disagreement with the statement: "The government should enact laws to ensure that large corporations strive to create a better society, going beyond their traditional economic roles, even if product prices rise or jobs decrease." Chinese consumers have consistently shown overwhelming support for enacting laws that compel large corporations to engage in CSR. Although support for the government regulation theory showed a slight decrease in the early 2000s during the reform and opening-up period, it has steadily increased since the mid-2000s, with a remarkable 71% agreeing in the 2013 survey. While the causal relationship is not clear, it is presumed that there is a significant correlation between the strong trust in the Chinese government and the public's support for government regulation.

Figure 4 _ Agreement/Disagreement on CSR Regulation Law Enactment (%)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint Survey (Q8t, n=500)

However, it is contrasting that while trust in corporations remains at a high level, its fluctuation based on changing circumstances is significant, whereas trust in government and support for regulation are consistently maintained. Further analysis of the unstable attitude towards corporate CSR activities reveals that a duality is at play in corporate trust. [Figure 5] shows that seven to eight out of ten people agree with the statement: "Corporate CSR activities are for improving their image, not for society." The unstable attitudes observed at different times and the fluctuations in trust, despite the high levels of trust in large Chinese corporations and multinational corporations, appear to be related to this underlying distrust in corporate CSR activities. For a more precise interpretation, further analysis is needed to understand the coexistence of high overall corporate trust and distrust in the sincerity of CSR activities.

Figure 5 _ Attitudes Toward CSR Authenticity (%)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint Survey (Q11Bt, n=500)

In summary, China is currently experiencing a situation where public opinion is equally divided between the "prioritizing social responsibility - government regulation type" and the "shared value creation - government regulation type." Tracking the changes in China's CSR perception types using the CSR analysis framework presented earlier, we see that in the early 2000s, types (1) and (2) were in contention. After 2008, type (2), "social responsibility - government regulation type," became dominant, and in the 2013 survey, there is a movement towards strengthening type (3). Strong trust in the government is maintained, while trust in corporations is unstable. Public opinion favoring market regulation has not strengthened, and the tendency to rely on government regulation has not significantly changed.

3. Policy Considerations: Conditions for CSR Demand and Communication

This chapter summarizes the results of a survey on Chinese consumers' perceptions of factors to consider when formulating CSR policies. It aims to understand the CSR policy environment suitable for China by examining (1) the CSR demands of Chinese consumers, (2) their information acquisition paths and levels of information, and (3) the extent of activation of ethical consumption behavior based on CSR. These aspects will provide important implications for selecting the domains of CSR activities and establishing strategies and policies to enhance CSR-related communication.

1) Chinese Consumers' CSR Demand

To understand the areas of CSR that Chinese consumers desire, we will first analyze the social problem areas that Chinese consumers consider serious, along with their trust in CSR activities by industry, to identify CSR sectors that require particular attention.

First, let us examine Chinese consumers' assessment of social problems they consider serious. [Figure 6] presents the results sorted by the severity of the problem (very serious + generally serious) across 14 social problem areas. Overall, the perceived severity of problems is high in the order of health (85.7%) > rising prices of food/energy (85.6%) > environmental pollution (84.8%) > weak social safety net (84.7%) > economic inequality (83.7%). Relatively less serious social problems identified include gender discrimination, human rights, and poverty/homelessness. Violations of labor rights and unemployment, although higher than the latter, were ranked as lower priority issues. However, even for these lower-priority issues, the perception that they are serious far exceeds the majority, meaning that the severity of the problems cannot be underestimated in an absolute sense. Based on the "very serious" response, the intensity of concern for environmental issues was the highest (46.6%), followed by rising prices of food/energy (39.6%) > health issues (34.1%) > social safety net (34.2%).

Regardless of the ranking criteria, the results consistently point to environmental and health issues related to quality of life, stabilization of essential goods prices for living stability, and ensuring economic equality and safety nets as urgent CSR tasks. These tasks largely align with the government policies proposed by the "Harmonious Society Theory." For companies operating in China, prioritizing CSR initiatives in areas where government policies and societal demands align would be a safe choice. However, from a differentiation perspective, selecting issues ranked lower in severity is also a viable strategy. Even for issues ranked lower, the response indicating seriousness exceeds the majority on an absolute basis, and these are issues that have become more serious around 2010. If leading companies' CSR activities are concentrated on high-priority issues and their activities on lower-priority tasks are weak, latecomers could potentially develop differentiated programs by focusing on these lower-priority tasks.

Figure 6 _ Assessment of Social Problem Severity (%)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint Survey (Q3t at-n, n=500)

Meanwhile, [Figure 7], which shows the evaluation of trust in CSR activities by industry, indicates that the average score for all industries exceeded 3, suggesting a generally trusting sentiment. However, the average score for the banking/finance sector, which recorded the highest average, was only 3.31, slightly above 3, indicating that even for this sector, it is difficult to assert strong trust. It does not seem to take a long time for these sectors to fall into distrust if they fail to expand their trust base.

The ranking differences observed in the industry-specific evaluations show that sectors such as banking/finance, automotive, beer/alcohol, and mobile telecommunications/mobile phones have relatively high trust, while pharmaceutical, chemical, oil refining, tobacco, and food companies have relatively weaker trust ratings. As reflected in the incidents that have occurred during China's CSR processes, distrust towards environmental and health-harming foods generally appears to be relatively strong. Another significant characteristic is that the evaluation of information/communication industry companies, which receive high ratings in developed countries, is relatively low, while the positive evaluation of the banking/finance industry, which receives low ratings in countries like South Korea, is noteworthy. It appears necessary for companies currently receiving relatively high trust to further strengthen it to a higher level, and for companies with a relatively weak trust base to secure the trust of Chinese consumers through special CSR measures (Jeong Han-wool 2013b).

Figure 7 _ Average Trust Score for Corporate CSR Activities by Industry (Points)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint Survey (Q8At at-ft, 15At at-ft, n=500)

2) CSR Communication Strategy: Information Volume and Acquisition Channels

In a company's CSR strategy, communication strategy is as important as preparing and providing CSR activities that meet demand. If a company's CSR activities are not sufficiently communicated to stakeholders, the expected benefits of CSR cannot be achieved.

First, to what extent are Chinese consumers making decisions based on sufficient information about individual companies' CSR activities? The survey results in [Figure 8] show that despite the growing awareness and importance of CSR in society, consumers are not sufficiently exposed to information about individual companies' social responsibility activities. In the 2013 survey, regarding the question "In the past year, how often have you heard or read about specific companies working to contribute to social development, environmental protection, or social contribution?", only 3% responded "very often," and 26% said "a few times." In contrast, nearly half (53%) responded "not much," and 16% responded "not at all." While this is a slight decrease compared to the 2010 survey, it is only similar to the level in the 2006 survey. This indicates a red flag, as the communication of specific CSR activities by individual companies is stagnating, beyond the general information about CSR through government or media, or information about negative incidents and accidents.

Figure 8 _ Frequency of Exposure to Information on Individual Corporate CSR Activities (%)

Data: Globescan-East Asia Institute-Social Enterprise Research Institute Joint Survey (Q10Bt, n=500)

To examine whether the stagnation of CSR communication is due to the limitations of media, we asked 149 respondents who indicated they had encountered individual companies' CSR activities in the previous question about the media through which they obtained information. A comparison with the 2013 survey and previous survey results shows that until 2010, news reports were the dominant medium, and corporate advertisements and the internet were important channels for conveying news about individual companies. However, the 2013 survey reveals a significant decrease in the influence of news reports, while the media effects of the internet and corporate advertisements persist. Instead, word-of-mouth (from acquaintances) and corporate reports, which had remained at around 40%, have improved to nearly 60%. It is encouraging that corporate advertisements continue to be an important communication channel and that the impact of corporate CSR reports has increased. This indicates a favorable environment for companies to lead communication, as it demonstrates the effectiveness of traditional communication strategies and expanded efforts in CSR reporting. However, among the major communication media, news reports in mass media, internet media, and word-of-mouth are media that companies cannot unilaterally lead, which is a point to consider in corporate communication strategies. This underscores the necessity of a detailed media strategy in the CSR communication process.

Figure 9 _ Media for Obtaining CSR-Related Information

Data: GlobeScan, East Asia Institute, and Social Enterprise Research Institute Joint Survey (Q11 at-ft, n=149; 13t, n=99)

Considering the diversification of internet media, the last figure shows the results of a follow-up question to the 99 respondents who obtained information via the internet about which specific internet media they used. 57% of those who obtained information online cited internet news articles. However, a nearly equal proportion, 52%, cited social media (SNS). Only 17% mentioned individual company websites. This result indicates that in CSR communication strategies, it has become crucial to develop measures for utilizing SNS, moving beyond a traditional website-centric approach.

3) Ethical Consumer Behavior: Elevated Awareness, Latent Action

While there is no disagreement that Chinese consumers' influence on CSR is growing, this survey reveals a significant gap between subjective awareness and actual behavior.

Figure 10 shows that Chinese consumers' willingness and efficacy regarding their own ethical consumerism, and their proactiveness, are at very high levels. 85% agreed with the statement, "As a consumer, I can influence corporate behavior" (consumer efficacy), and they have internalized a reflective attitude, stating "I must reduce consumption to protect the environment" (83%) and "I feel guilty about the negative impact I have on the environment" (71%). Specifically, they perceive that "There are sufficient products/services made considering social responsibility" (77%) and, based on this, they themselves "pursue ethical consumer behavior (purchasing CSR products)" (76%) or even express willingness to "engage in ethical consumption even if the price is higher" (74%). Furthermore, they exhibit proactiveness in spreading ethical consumer behavior to third parties, such as "recommending products from companies that do CSR well" (77%). The evaluations in previous studies that Chinese consumers' and civil society's CSR awareness has matured appear to reflect this public opinion.

Figure 10 _ Chinese Consumer Awareness of Ethical Consumption (%)

Data: GlobeScan, East Asia Institute, and Social Enterprise Research Institute Joint Survey (Radar 2014 Q28 at, dt, et, ft n=1000; Radar 2013 8t at-dt, n=1000)

However, Figure 11 indicates that this willingness and confidence in ethical consumer behavior do not translate into actual consumer actions. Ethical consumer behavior based on CSR can be broadly divided into positive actions (purchasing products from companies that do well and recommending them) and negative actions (boycotting or criticizing products from companies that do poorly). While positive actions serve as incentives and rewards for companies with good CSR, negative actions function as punishment for companies with poor CSR. The 2013 survey results show that only 14% of respondents had engaged in positive actions in the past year, and negative actions were also at a level of 13%. In contrast, over half of respondents indicated they had merely considered positive actions (52%) and negative actions (51%). The proportion of respondents who stated they did not consider ethical consumer behavior at all was 34% and 35%, respectively. This suggests that ethical consumer behavior remains latent among the majority of consumers.

Awareness of ethical consumption behavior is high, but the level of direct consumer action is low. This can be interpreted as a form of hypocritical duality. However, it is noteworthy that the trend of ethical consumption behavior has not always been low since 2002. Around 2006-2008, when anti-social incidents involving corporations were concentrated, Chinese consumers' negative actions rose to 33%, but this trend has somewhat declined since 2010. Considering that the level of ethical consumption behavior among Chinese consumers has varied over time, this suggests that ethical consumption awareness may not immediately translate into consumer action. This could be a result of reduced necessity for direct consumer action due to strengthened government and local government responses to corporate anti-social incidents. Alternatively, it could be that strengthened CSR activities by corporations themselves have weakened the necessity for direct consumer action. However, the steady increase in responses indicating that ethical consumption behavior was neither considered nor practiced must be taken into account. While consumers' punitive role in the event of problems is important, positive actions are also crucial for establishing a virtuous cycle that enhances corporate voluntary CSR. Therefore, it is regrettable that consumers' positive actions are generally lower than their negative actions.

Figure 11 _ Changes in CSR Consumer Behavior: Positive and Negative Actions

Data: GlobeScan, East Asia Institute, and Social Enterprise Research Institute Joint Survey (13At, n=500; 16t, n=1,000)

4. The Bright and Dark Sides of Chinese Consumers' CSR Perceptions

Based on the recent CSR perception survey conducted among Chinese consumers, this report analyzes the characteristics and changes in the sentiments and CSR perception types that Chinese people currently hold towards corporations, and summarizes the factors to consider when formulating CSR policies in China.

The analysis of Chinese consumer perceptions reveals notable changes compared to the past. First, there is a strong social foundation of trust in both large Chinese corporations and global companies operating in China. Despite the rise of the "harmonious society" theory in the 2000s and the widespread attention and impact of various anti-social corporate activities, this indicates that these have not solidified into anti-corporate sentiment. Second, regarding the perception of CSR roles for large corporations, the emphasis on social responsibility has continuously strengthened but recently stagnated, while the emphasis on economic responsibility has continuously declined, becoming a minority view. Instead, the spread of CSV (Creating Shared Value) awareness, which emphasizes the coexistence of economic and social values, is notable. This demonstrates potential for development from a developing country type to a developed country type. Third, the social issues that consumers consider serious align with the direction of the "harmonious society" theory emphasized by the government. Key policy demands for CSR in China include health, food safety, the environment, expanding social safety nets, and reducing polarization. Additionally, issues such as unemployment, labor rights, and human rights, while currently having lower priority, are areas of growing interest in contemporary Chinese society and can be considered for differentiation strategies by late-entering companies. Fourth, Chinese consumers have strong efficacy regarding CSR and a strong, internalized willingness for ethical consumer behavior.

Despite these positive findings, latent anxieties are also present. Firstly, trust in large and global corporations is unstable, underpinned by skepticism about the sincerity of their CSR activities. This latent distrust is the driving force behind the overwhelming preference for government regulation as a method for promoting CSR. The issue is that as long as CSR is passively driven by government regulation, there will be limitations in fundamentally solidifying corporate trust. Thirdly, despite the strengthening of Chinese consumers' CSR awareness, there has been no significant progress in the quantity or channels of information acquisition regarding the specific CSR activities of individual companies. This may be a factor that keeps Chinese consumers' CSR awareness at an abstract and normative level, rather than leading to concrete judgments and actions. Fourthly, ethical consumer behavior, which was active until the mid-2000s, appears to be latent. The proportion of those who have experienced actual ethical consumer behavior has decreased, while the proportion of those who have neither considered nor experienced ethical consumer behavior has increased. The activation of both positive and negative consumer actions is crucial for CSR to proceed as voluntary responsibility rather than government regulation or legal compulsion, making this a regrettable aspect.

In summary, despite numerous controversies, the advancement of CSR awareness among Chinese consumers is evident. However, the path ahead still appears challenging. Although a CSR boom is occurring under government initiative, the social pressure from Chinese consumers and civil society fluctuates depending on the time and situation. This duality is expected to present both opportunities and risks for CSR in China, particularly for companies operating in China. The future trajectories of companies that pursue CSR programs and strategies aligned with objective diagnoses of consumer and civil society awareness changes, as well as those that do not, are likely to diverge significantly. There is an urgent need to establish CSR strategies based on an objective and accurate understanding of changes in Chinese consumers and civil society, in addition to responding to government CSR policies and institutional advancements.

The data from the GlobeScan, East Asia Institute, and Social Enterprise Research Institute's China survey used in this report are published under an agreement between the responsible institutions, stipulating that they are to be used solely for academic policy research purposes. Therefore, the China survey data from the three institutions used in this report may only be utilized for research activities by academia, government, media, and corporations. Any processing, publication, or sales activities for profit by third parties (including consulting materials and report sales) are strictly prohibited and may be subject to legal sanctions.

Research Methodology

The 〈China RADAR Survey〉 was conducted via telephone interviews with a sample of 1,000 respondents, proportionally allocated by region, gender, and age, representing 45% of the total Chinese population across 18 cities (Beijing, Beiliu, Chengdu, Dujiangyan, Fenyang, Fuyang, Guangzhou, Hangzhou, Manzhouli, Quanzhou, Qujing, Shanghai, Shenyang, Xhuangcheng, Wuhan, Xi’an, Xining, Zhengzhou). The survey questionnaire comprised questions for the entire 1,000-person sample and for a 500-person half-sample. The 2014 survey results were collected from January 14 to February 23, and the 2013 survey results were collected from February 18 to March 24.