Chinese Investors Should Listen to the Complaints of the Locals

Tuesday, January 11, 2011

Unofficial translation of an opinion piece from a senior China EXIM bank official.

Originally published at

Abstract: Most Chinese companies are not good at dealing with communities, non-governmental organizations, and local and foreign media, with the exception of local governments and business partners.

Last year, I visited Cambodia and Laos with a delegation on a field trip to explore the social and environmental impacts of Chinese investments in Southeast Asia countries, especially in the Mekong River Basin. During the trip, I not only felt what Chinese companies had achieved by undertaking the "going out" strategy, but also heard some complaints from locals about "environmental pollution, demolition and relocation, which resulted from Chinese investments" and the like. Those complaints, though unpleasant to the ear, deserve our reflection.

Quite a number of Chinese companies, in need of experience in multinational operations, called upon by the state's "going out" strategy, and driven by domestic demand and the pursuit of their own interests, have gone into foreign countries to log and mine. They routinely replicated their business practices at home, regardless of the business culture and rules of practice, such as respecting local customs and adopting internationally accepted practices.

In response to the complaints and doubts, Chinese investors tend to argue: "What Chinese companies have done is not the best, but it is not the worst either." While this is true, it is neither expressive nor convincing, and it is also inappropriate for them to assess themselves. We take it for granted that we have come to help the local people by pouring in investments, but people in the host countries will not simply appreciate this. They probably believe that these investors have come for economic and diplomatic rewards, or they think the companies should do better than what they are currently doing. The mainstream voice of the host countries (mainly from the local governments) has expressed appreciation, but there are non-mainstream voices (mainly from local residents, non-governmental organizations and some of the media) airing dissatisfaction and complaints. With respect to whether we should give them fish or teach them how to fish, we have correctly done the latter. However, the host countries have found what they want is "fishing" in a sustainable way, rather than "fishing" in a good way mixed with bad, let alone "fishing by drying the pool."

Unfortunately, most Chinese companies are not good at dealing local communities, non-governmental organizations, and local and foreign media, apart from local governments and partners. Some companies have not made any efforts to communicate with different voices and have even refused to do so. We actually heard this at the local Chinese Chamber of Commerce: "We have been busy every day at the construction site, and cannot spare any time for such empty talk." Almost none of the Chinese companies have ever received training on public relations. Their public relations is to directly target the local government for projects while ignoring other people who are also stakeholders. Consequently, the positive evaluations for the Chinese companies from governments and partners are offset by these stakeholder groups and individuals who lodge complaints and exhibit anger. Many such cases exist, in which Chinese companies have their reputation damaged and sometimes their economic interests hurt as well.

In order to do something well, it has to be done carefully. All parties within host countries believe that aid and investments from China have helped them to rapidly improve their infrastructure, power-generation and agricultural capabilities. At the same time, they are concerned about their forests and plants, migratory fish, environmental protection, and resettlement. The concerns of local people are not only aimed at Chinese investments, but also at investments from South Korea, Japan, Thailand and Vietnam. But China, as a major power, "invites wind like a tall tree" and is often required to be a good example to othersl. Therefore, whenever a feasibility study is done for any project, it is very important to conduct social and environmental impact assessments.

▲ (Li Fusheng, Deputy General Manager of Assessment Review, Import and Export Bank of China; Professor, Graduate School of CASS.)