Confronting Complexity: Lessons Learned from Engagement with Chinese Enterprises

July 2016 | Ben Miller, Dost Bardouille, and Jason Tower

This report includes preliminary findings regarding Chinese business practices that either help build positive relations with local communities or engender community dissatisfaction and opposition. The findings presented here can provide insights and options for working with Chinese companies to advance social engagement, enhance contributions to development and strengthen conflict risk management practices.

 

Suggested citation: Miller, Ben, Dost Bardouille, and Jason Tower. Confronting Complexity: Lessons Learned from Engagement with Chinese Enterprises. Cambridge, MA: CDA Collaborative Learning Projects, and the American Friends Service Committee, 2016.

From the Introduction

A little over a decade ago, the Chinese Government began to actively encourage Chinese companies to invest abroad as part of its “going out” strategy. Since then, with the introduction of the One Belt One Road (OBOR) Initiative in 2013, the overseas investment of Chinese State Owned Enterprises (SOE) and private companies has increased exponentially. While both companies and local stakeholders in the recipient countries have high expectations for these projects, many companies become quickly frustrated at their inability to identify and manage various risks, particularly at the societal level. Chinese corporate projects have, in many cases, provoked community dissatisfaction and unrest, and in some cases contributed to broader tensions and instability within the host state.

This has resulted in substantial losses incurred by Chinese companies, particularly when involving highly complex environments such as Libya, Myanmar, or the DRC. This experience is leading to a growing awareness in China about the need to learn from responsible business practice approaches in order to better manage risks to and impacts of their overseas investments.

One such Chinese company, The Union Development Company (UDG), operates a concession in Southwestern Cambodia for development of the Cambodia Tourism Coastal Zone Development Project. In the early 2010s, UDG recognized growing tensions between its project and local communities. It identified a need for a new approach to stakeholders and sought to learn from global experience in responsible business practice to enhance the conflict sensitivity of its approach and to strengthen its social license to operate. In 2015, UDG invited the New Century Academy for Transnational Corporations (NATC), CDA Collaborative Learning Projects (CDA), and the American Friends Service Committee (AFSC) to provide UDG with a consultation and pre-assessment of UDG’s operations in Cambodia towards those ends.

A NATC, CDA, and AFSC field team visited Cambodia and the UDG project in October 2015 for the purposes of analyzing how the company and communities interact, examining the impacts of company activities on the lives of local people, identifying the broad outlines of a strategy by which the company can approach constructive engagement. This report, which is based on that visit, includes insights about the operations and the context in which UDG operates and preliminary findings regarding Chinese business practices that either help build positive relations with local communities or engender community dissatisfaction and opposition. The findings presented here can provide insights and options for working with Chinese companies to advance social engagement, enhance contributions to development and strengthen conflict risk management practices.

CDA's Engagement with Chinese Investment, 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.