An Evolving Framework for Outward Investment: A Chinese Approach to Conflict Sensitive Business

January 2015 | Dr. Jiang Heng

This book incorporates lessons from CDA’s Corporate Engagement Project into a discussion on Chinese state-owned enterprises and their relationship with the communities they work in. Portions of this book were compiled and edited by Ben Miller, Dost Bardouille (CDA), Kong Zhe, Jason Tower and Elizabeth CHey (AFSC).

Key Findings

Chinese state-owned enterprises often have easy access to investing in certain countries in Asia, Africa and Latin America because of China’s political and diplomatic influence and the low investment thresholds in some recipient countries. The relationship with governments and business partners is given much more attention by Chinese enterprises than the relationship with communities or attention by Chinese enterprises than the relationships with communities or CSOs/NGOs. This results in a gap, where communities and local civil society organizations feel their concerns are often not considered.

This results in mounting discontent among affected people and increasing tension between Chinese enterprises and local communities. In order to control and mitigate such risks, China needs a more balanced investment model with closer links to the communities.

Effective consultation needs sincere attitudes. Some Chinese enterprises see communications with communities as a way to advertise, but this self-centered communication style does not help enterprises to learn new information, and may even be met with more suspicion. In addition, when enterprises talk only about the benefits they may offer to communities, this may generate unrealistically high expectations within communities, which can lead to profound disappointment and resentment when the expectations are not realized. Every word and action in communications with the community can reflect whether the enterprise has a sincere attitude and fully respects communities’ opinions.

 

Suggested Citation: Dr. Heng, Jiang. An Evolving Framework for Outward Investment: A Chinese Approach to Conflict Sensitive Business. 2015

Additional Credits

In July 2013 the China Economic Publishing House published a Chinese version of this book titled “Out of the Mine Fields and Blind Areas Overseas Investment Security – Conflict Risk Assessment and Management.” (ISBN 978-7-5136-2427-5) A Chinese translation of CDA’s Preventing Conflict in Exploration: A Toolkit for Developers and Explorers is an annex to the book.

With the intention to broadly share information to international actors about new approaches to conflict sensitive business being adopted in China, the American Friends Service Committee and CDA jointly adapted Chapters 1, 2, and 3 of the Chinese version. Instead of simply translating the chapters, this edition reflects what we deem as relevant information for English-speaking audiences.

CDA's Engagement with Chinese Companies, Experts, and Financial Institutions

In partnership with the America Friends Service Committee (AFSC) and Chinese partner the New Century Academy on Transnational Corporations’ (NATC), CDA has engaged in dialogue with Chinese companies, experts, and financial institutions, and continues to explore field-based opportunities to institute conflict sensitivity within Chinese companies operating in countries such as Cambodia and Myanmar.

CDA acted as a reviewer for NATC’s resource book for Chinese companies, which includes key CDA guidance tools. More recently, with AFSC and NATC, CDA conducted an initial conflict sensitivity assessment of the operations of the Union Development Group in Cambodia.