On February 28, MOFCOM held a press conference on corporate social responsibility of Chinese companies operating abroad, which was attended by Yao Jian, MOFCOM spokesperson, Chen Lin, Commercial Counselor of the Department of Outward Investment and Economic Cooperation of MOFCOM, Bie Tao, Deputy Director General of the Department of Policies, Laws and Regulations of MEP, and Chi Changhai, Vice Chairman of CHINCA. Here is the transcript of the press conference.

MOFCOM spokesperson Yao Jian: Friends from the media, welcome to the press conference on CSR of overseas Chinese companies and the Guidelines on Environmental Protection for Chinese Companies Investing and Operating Abroad jointly issued by MOFCOM and MEP. With me here are Chen Lin, DG-level Commercial Counselor of the Department of Outward Investment and Economic Cooperation of MOFCOM, Bie Tao, Deputy Director General of the Department of Policies, Laws and Regulations of MEP, and Chi Changhai, Vice Chairman of CHINCA.

First, let me give you an overview.

China has witnessed a rapid increase of outward investment in recent years. In 2012, Chinese domestic investors made direct investment in 4,425 companies in 141 countries and regions, with cumulative non-financial investment totaling USD 77.22 billion, up by 28.6% year on year. The lasted data of last year shows that at the end of 2011, China ranked the 13th in the world in terms of FDI outflow, climbing up from the 9th place a year ago.

China’s outbound investment covers 70% of the countries and regions around the world, and flows into diversified sectors. In 2012, investment from the Chinese mainland to seven major economies, namely, Hong Kong, ASEAN, the EU, Australia, the US, Russia and Japan, stood at USD 59.99 billion, accounting for 77.6% of China’s total FDI outflow in that year. In breakdown, Hong Kong attracted USD 46.51 billion, representing 60.2%; ASEAN, USD 4.42 billion, 5.7%; the EU, USD 4.19 billion, 5.4%; Australia, USD 2.16 billion, 2.8%; the US, USD 1.88 billion, 2.4%; Russia, USD 660 million, 0.9% and Japan, USD 170 million, 0.2%. By sector, USD 37.81 billion or 49% flowed into leasing and commercial services, USD 11.35 billion or 14.7% into mining, USD 9.25 billion or 12% into wholesale and retail, USD 6.37 billion or 8.2% into manufacturing and USD 2.85 billion or 3.7% into construction. By investment form, transnational merger and acquisition has become an important way of China’s outward investment. In 2012, Chinese companies were engaged in 455 outward investment and M&A projects, with a transaction value of USD 42.62 billion.

In January this year, the non-financial OFDI made by Chinese companies registered USD 4.914 billion, up by 12.3% year on year. The turnover of overseas contracting and engineering projects topped USD 6.76 billion, up by 15.1% year on year. 29,000 workers were exported under labor service cooperation programs, flat from last year. At the end of January this year, China’s cumulative non-financial OFDI totaled USD 439.5 billion, cumulative turnover of overseas contracting and engineering projects stood at USD 662.4 billion and cumulative workers exported under labor service cooperation programs reached 6.42 million.

China pursues mutually beneficial results and common development with the recipient countries through outbound investment. China’s FDI outflow has not only upgraded practical cooperation between China and the recipient countries but also boosted bilateral relations. Through localized operation, Chinese companies have employed and fostered local talents and promoted industrial upgrading and self-reliant development of the host countries. MOFCOM figures show that in 2011 Chinese companies operating overseas contributed over USD 22 billion of taxes to the host countries and employed 1.22 million people, among whom 888,000 or 72.8% were foreigners and 100,000 were from developed countries. Through resource and energy cooperation, Chinese companies have helped recipient countries increase value added of resources and translate their resource endowment into drivers of economic growth. For instance, China has helped Chad and Sudan enhance energy self-sufficiency rate through energy cooperation projects and generated profound influence on their social progress and people’s livelihood.

Second, the Chinese government provides guidance on CSR implementation of overseas Chinese companies.

CSR has always been a hot issue and a global concern. In 2000, Annan in his capacity as the UN General Secretary initiated the concept of Global Compact for the first time, calling for companies to voluntarily align their operations with universally accepted rules, pay attention to social welfare while carrying out economic activities, and take relevant social responsibilities. In the past 10 years and more, companies around the world have responded to Global Compact positively and embraced CSR as a global action.

The Chinese government also takes CSR very seriously. President Hu Jintao once said, “Companies should take global responsibilities, incorporate social responsibility into business strategy, improve operational model and achieve a balance between economic and social benefits.” Premier Wen also unequivocally required companies to implement CSR. That explains why, from the perspective of its jurisdiction, MOFCOM worked with relevant authorities to provide CSR guidance to overseas Chinese companies: First, MOFCOM raised clear requirements and initiatives, asking companies to strictly abide by local laws and regulations, take necessary social responsibilities, build amicable relations with local communities, take an active part in local public, charity and environmental activities and establish a good image of putting people first and rewarding the society. Second, MOFCOM issued guiding documents, including the Notice on Further Regulating Outward Investment and Economic Cooperation of Chinese Companies, the Guidelines on Staff Management of Overseas Chinese Companies (Organizations), the Opinions on Cultural Development of Overseas Chinese Companies, and the recently released Guidelines on Environmental Protection for Chinese Companies Investing and Operating Abroad. These documents show directions on social responsibilities related to staff management, cultural construction and environmental protection. Third, MOFCOM strengthened CSR training. By organizing training programs, seminars and forums, MOFCOM helped Chinese companies operating abroad to familiarize themselves with the universally accepted rules and enhance CSR awareness.

Third, Chinese companies operating abroad have been earnestly implementing CSR.

Thanks to the advocacy and guidance of the government, companies have placed increasing emphasis on CSR as they go global. First, participate into public welfare activities to improve the livelihood of local people. Overseas Chinese companies have helped local communities to improve backward infrastructural, medical and educational conditions as their ability permits, so as to enable local people of the host countries to benefit from overseas operation of Chinese companies. For instance, China Metallurgical Group running Salndak copper mine in Pakistan spent over USD 50,000 each year to offer free medical services to villagers living nearby. The group also built a school and covers all of its costs to provide free education to local school-age children. Second, pay close attention to resource conservation and environmental protection. Through scientific designing, good construction and effective management, Chinese companies operating abroad work hard to save energy, cut emissions and minimize pollution and environmental damage caused by relevant projects. For example, the Mexican Branch of Henan Golden Dragon Precise Copper Tube Corporation places great emphasis on environmental protection. It built a sewage treatment plant with USD 1 million and reduced polluted water discharge to zero. The company also invited local environmental authorities to review its infrastructure, equipment and operation, and results showed 100% compliance with local laws and regulations. Third, protect the rights of employees and foster local talents. Overseas Chinese companies always apply the principle of “equal work, equal pay” and have fostered a large number of management professionals and technical workers. For example, in 2011, CNPC invested over RMB 100 million yuan in Kazakhstan to support the development of local public utilities, culture and education, and created 31,000 jobs for local communities. The company has not only kept sound business performance, but also earnestly implemented CSR, and built good relations with local government, social organizations and communities. It won the Sustainable Companies Award, Presidential 2011 Gold Paryz Award of Corporate Social Contribution and was hailed by President Nazarbayev as a model of China-Kazakhstan oil cooperation. In 2011 CNPC’s Aktobe oil project was granted the Award of Business Training with best Social Contribution by the Ministry of Education of Kazakhstan. CNPC has also built 35 schools in Sudan, allowing 70,000 school-age children the access to education. China Nonferrous Metal Mining Group committed not to cut production, payroll or investment at the copper mining project in Zambia during the financial crisis, and thus ensured the welfare of local employees. Fourth, localize operation and seek common development. Chinese companies operating abroad have expanded converging interests with the host countries through local procurement, partnership and hiring. For instance, since Shenyang Machine Tool Group bought Germany's Schiess AG, it has localized management, with Germans put in charge of the daily operation and only several Chinese executive managers in charge of the coordination and liaison between Schiess and the Group.

CSR is important not only for business strategies but also for the sustainable development of outward investment and economic cooperation. The full implementation of CSR requires concerted actions from the industries, the companies and the society, as well as the guidance and mobilization efforts of the government.

Moving forward, MOFCOM will continue to encourage and support Chinese companies’ CSR commitment, and will step up training to enhance the companies’ capacity of CSR implementation. Taking this opportunity, I want to ask all the friends from the media to pay attention to CSR stories of overseas Chinese companies. You may contact relevant companies if you need to do in-depth reports, and MOFCOM is ready to provide help.

Yao Jian: Now I will pass the floor to Commercial Counselor Chen Lin and he will brief you on the background, significance and relevant work of the Guidelines on Environmental Protection for Chinese Companies Investing and Operating Abroad.

Chen Lin: Dear friends, good morning. Recently MOFCOM and MEP jointly issued the Guidelines on Environmental Protection for Chinese Companies Investing and Operating Abroad. Taking this opportunity, I would like to brief you on the relevant work of the Guidelines. Mr. Bie Tao will talk about the details of the Guidelines later.

First, background.

Environmental protection has become a global concern and a common challenge faced by all countries. The Chinese government not only attaches great importance to environmental protection, but also identifies energy conservation and environmental protection as the basic state policy. It also pays close attention to environment-related issues of overseas Chinese companies. The 12th Five Year Plan for National Economic and Social Development explicitly points out that overseas Chinese companies and project teams should implement CSR and bring benefits to local people. The 18th CPC National Congress requires that the awareness of ecological protection should be enhanced to respect, comply with and protect the nature and contribute to ecological progress of the world.

Since the going global strategy was adopted, Chinese companies have accelerated outward investment and economic cooperation. An increasing number of Chinese companies have invested overseas with expanding scale and areas. At the end of January this year, the stock of cumulative non-financial OFDI of China ranked the 13th in the world, registering USD 439.5 billion, while statistics of 2012 put China at the world’s 5th in terms of annual OFDI outflow, which was USD 77.2 billion.

Most Chinese companies pay close attention to environmental protection in foreign economic cooperation by earnestly abiding by the laws and regulations of host countries and implementing CSR. However, some companies still lack experience in environmental protection and urgently need government guidance based on international experience and business practice.

With that in mind, MOFCOM and MEP drafted the Guidelines based on international experience, concepts and China’s national conditions. The purpose is to call for companies to build environmental awareness, take environmental responsibilities, abide by environmental laws and regulations of host countries, adopt international practice and draw upon the environmental research results, standards and practice of international organizations.

II. Significance

The Guidelines will strengthen environmental guidance of overseas Chinese companies, step up environmental protection under the legal framework of host countries, and help host countries achieve sustainable development based on mutual benefit and win-win results.

Strengthening guidance on environmental protection of overseas Chinese companies is conducive to improving their capacity of international operation, accelerating business integration, achieving long-term development and promoting the sustainable growth of outbound investment and economic cooperation.

Going global is a business behavior. The government’s responsibility is to serve and to guide. With the Guidelines, the government for the first time offers environmental guidance to companies engaged in outward investment and economic cooperation. It reflects the government’s commitment to governance through service and is a concrete step to build a service system for companies investing and operating abroad.

Third, related work.

In the drafting process, we solicited opinions not only from domestic authorities and companies, but also from overseas Chinese companies through economic and commercial counselor’s offices of the Chinese embassies. Some economic and commercial counselor’s offices also informally collected comments from local environmental authorities and organizations. That helped us a lot in the drafting of the Guidelines.

Going ahead, we will guide and encourage agencies and companies to study the Guidelines and abide by it in daily operation. We will further leverage the public service function of the government, improve public service, speed up policy formulation and promotion, enhance policy incentives, and strengthen service and guidance for companies engaged in outward investment.

Friends from the media, going global is a long-term and systematic process for Chinese companies. It requires hard work of the companies and objective reports of the media. Hereby, I sincerely hope that you will report more on our work, help companies understand the government’s policies on serving businesses, and portray Chinese companies in a positive way by summarizing and publicizing their success stories.

Thank you.

Yao Jian: Next I will invite Bie Tao, Deputy Director General of the Department of Policies, Laws and Regulations of the Ministry of Environmental Protection, to introduce the basic contents of the Guidelines.

Bie Tao: Good morning, friends from the press. On February 18, MOFCOM and MEP jointly issued the Guidelines on Environmental Protection on Environmental Protection for Chinese Companies Investing and Operating Abroad, which is the first specific guidelines on environmental protection for companies engaged in outward investment and economic cooperation. The Guidelines aim to guide environmental activities of companies, encourage them to earnestly implement environment-related CSR, and achieve mutual benefit and common development with the host countries. Now I will talk about the Guidelines in detail.

The Guidelines have 22 articles, covering five aspects:

First, contents and purpose. The Guidelines were drafted to guide businesses to regulate environmental activities in outward investment and economic cooperation, implement environmental responsibilities and support the sustainable development of the host countries.

Second, concept of environment-related CSR. The Guidelines call for businesses to build the awareness of environmental protection, implement environment-related CSR, respect local communities, residents, religious belief and customs of the host countries, safeguard the legitimate rights of workers, conduct cooperation based on mutual benefit and win-win outcome and seek economic, public and environmental benefits.

Third, basic norms and requirements. One the one hand, the Guidelines provide guidance for businesses to build internal environmental management strategies, plans and training systems, strengthen environmental, health and safety management and raise employees’ environmental awareness. On the other hand, the Guidelines set forth a host of rules and requirements for business production and operation behavior with environmental implications ranging from project construction and operation to emergency response to pollution accidents, including environmental and social impact assessment for new projects, emission compliance, environment monitoring, environmental due diligence in mergers and acquisitions, hazardous waste prevention and non-hazardous treatment, use of resources, prevention of and emergency response to environmental accidents, biodiversity protection, and ecology restoration. Meanwhile, businesses are encouraged to draw on advanced international environmental protection practices, such as clean production and auditing, recycling and green procurement, to brush up their environmental profile.

Fourth, encouraging businesses to step up information disclosure and take part in environmental protection activities. The Guidelines urge businesses to publish their own environmental information and unveil plans for compliance with environment protection laws and regulations while prodding businesses to strengthen communication with local environment authorities, communities and civil organizations for environment protection, and play an active role in environment protection. Businesses are encouraged to solicit comments extensively by calling meetings and hearings to actively improve their environment protection behavior and establish a good environmental profile of Chinese business overseas.

Fifth, promoting business initiative to study and borrow from international environment protection standards and practices. The Guidelines encourages well-equipped businesses to follow international common practices, and study and draw on environment protection principles, standards and practices of international organizations and multilateral financial institutions, such as the UN’s Principles for Responsible Investment, OECD Guidelines for Multinational Enterprises, the guidelines of the World Bank and the International Finance Corporation, and the Global Compact.

We would like to thank the press for championing the environment protection cause and cordially hope that parties involved, including chambers of commerce and businesses, can work together to navigate and advance the going global drive aimed at win-win of profits and local environmental interests and coordinated development based on a responsible approach and care for the eco-environment of host countries.

Thank you.

Yao Jian Thank you, Director-General Bie Tao. Next, I will give the floor to Mr Chi Changhai, Vice Chairman of CHINCA.

Chi Changhai Ladies and Gentlemen, good morning. As Director-General Yao mentioned in his introduction, China International Contractors Association is a nationwide trade association composed of going global infrastructure constructors and accompanying enterprises. Chinese overseas contracting business is paying increasing attention to fulfilling corporate social responsibilities abroad. We believe that the core of CSR is for business to improve competitiveness and manage sustainable growth by achieving win-win with all stakeholders in overseas operation. Facilitating the transformation of development pattern and the going global drive, CSR fulfillment is vital for business to improve internal and external environment and counter overseas risks. In view of the significance of the issue, starting from 2007, decision-making bodies across the levels of the industry, from the Members’ Congress to the Council, to the Chairman’s Meeting, kept boosting CSR fulfillment capability on the top of their agenda for five to six years, adopting a bevy of resolutions and solutions. Responsible for the day-to-day running of the sector, the standing offices of CHINCA have listened to the requests and wishes of the industry, given full play to the platform of trade association, and carried out a series of CSR capacity building and promotion tasks with a view to promoting philosophy, establishing role models, setting standards and improving abilities.

First, promoting the philosophy of CSR and forging industry consensus. By placing special pages in trade journals, issuing the Industry Social Responsibility Declaration at CHINCA Council meeting, and holding CSR forum at the International Infrastructure Investment and Construction Forum among other workshops and meetings in the past five or six years, the philosophy is spread and sinking in across the industry.

Second, establishing CSR role models for experience sharing and learning. To set examples and provide reference for the industry, CSR Golden Award and Silver Award were created for Chinese overseas contractors and a CSR report for Chinese overseas contractors and a casebook of CSR best practices were published.

Third, setting social responsibility standards for the industry to provide norms of conduct. With CSR philosophy well entrenched and role models established, standards are needed for stepping up social responsibility building, which shall live up to international frontier understanding of CSR while accommodating China’s actualities. Bearing the two principles in mind, CHINCA compiled the Social Responsibility Guidelines for Chinese Overseas Contracting Business under the guidance of MOFCOM. The Guidelines received great attention from MOFCOM, which circulated the document nationwide to standardize CSR practices.

Fourth, organizing training and performance assessment in CSR. Since last year, we have organized seven sessions of CSR training in Beijing and other cities. CSR performance assessment was carried out, which classified businesses into four levels based on their CSR fulfillment record, namely, advanced, progressive, up to standard and in preparation， to provide reference for further improving business social ability. Companies taking part in the CSR assessment were given tailor-made suggestions for improvement by professional assessment institutes. All the assessment work was commissioned to professional CSR institutes, which evaluated each participatory company’s CSR profile and took into account both strengths and deficiencies.

After years of practice, CSR development of overseas contracting business has registered three trends.

First, CSR awareness has increased continuously. Instead of defining CSR narrowly, most companies have recognized the correlation between CSR and value creation and business expansion. Some companies have taken the initiative to integrate social responsibility into their development strategy and outlined social responsibility with marked industrial and business characteristics. Others have charted responsibility course, made social responsibility commitments or revealed social responsibility rules on their websites to facilitate public supervision.

Second, CSR management has continued to improve. A survey of companies participating in the 2012 social responsibility performance assessment shows that businesses have one after another introduced CSR management department and assigned special staff or appointed a special committee to see to CSR affairs. Besides, some companies have put in place CSR institutions and made CSR commitments to add CSR elements to training program and assessment. Others have stepped up CSR information disclosure to strengthen communication with social stakeholders through websites, magazines and social responsibility reports.

Third, CSR practice is ever deepening. Guided by the sectoral Social Responsibility Guidelines, businesses have identified seven topics of CSR, including project quality and safety and employee rights and career development, while deepening their social responsibility practice. Copies of the Guidelines are available here today for your reference. The survey of companies participating in the performance assessment indicates that enterprises are paying more attention to project quality and safety. They have set up quality safety management system and draw on certifications to optimize processing and improve engineering quality and efficiency. More than half of the respondents have actively promoted Chinese engineering technical standards while going global. In terms of respecting and guaranteeing lawful rights and interests of employees, most businesses treat employees of different ethnic groups, races, sexes and nationalities equally, provide welfare in line with local laws and regulations for foreign workers and offer various conveniences to Chinese and foreign employees that accommodate local customs and ethnic habits. On supply chain management side, most businesses have set up complete supplier interest protection system to integrate social responsibility into procurement and subcontracting contracts. Attaching great importance to environment protection during construction, many companies have extensively introduced environment management system and passed related certifications. About 80% of the businesses have appointed special staff for environmental protection and worked out environmental protection goals and plans. The majority of companies use raw material and water resources responsibly, adopt environment friendly techniques, reduce and recycle construction waste, and minimize environmental impact. As for support for social and community development of host countries, most companies actively recruit local staff and engage in localized operation, perform charities, support local infrastructure development in education, transport, communication, and health, and improve the environment of host communities. Some businesses reach out to local residents to resolve problems arising from construction through consultation. You are welcome to refer to the CSR casebook available here today for specific cases. Volume II is under compilation and will come out soon.

Despite remarkable progress in Chinese overseas contractors’ CSR awareness and practice, there is much room for improvement as business expands. For instance, CSR fulfillment needs to be aligned with local laws and regulations, culture and customs. Much needs to be done to integrate CSR fulfillment into local society. Besides, it is vital to maintain smooth communication with local stakeholders. CSR fulfillment is more than doing good in a closed-door manner. Communication is needed for social supervision and understanding, which help achieve real CSR fulfillment and local recognition. How to communicate is also a challenge facing the business.
CHINCA will continue to meet the requirements of competent authorities by actively boosting CSR fulfillment capability of the membership. We look forward to your continued interest in the industry’s progress in CSR fulfillment and value your suggestions. Thank you.

Yao Jian Ladies and Gentlemen, just now we briefed you on the background, purpose and significance of launching the Guidelines on Environmental Protection for Chinese Companies Investing and Operating Abroad and the work done so far. Next is the Q&A session. Please focus your questions on environmental protection in outbound investment cooperation and CSR and identify yourself before the question.

Correspondent with Economic Daily: I have two questions. The first question is for Director-General Bie Tao. Is the Environmental Protection Guidelines accompanied by specific measures to guide and promote its implementation? The second question is for Director-General Chen Lin of MOFCOM. We all know that MOFCOM has done a lot in outbound investment early warning and risk alert. What does MOFCOM intend to do to guide Chinese business in risk identification and countering? Thank you.

Bie Tao As I understand, you are interested in the implementation of the Guidelines. Moving forward, the Ministry of Environmental Protection will continue to work with the Ministry of Commerce in the publicity and implementation of the Guidelines and focus on work in the following areas.

First, calling meetings of related businesses. Today we launch and publicize the Guidelines, introducing and explaining the Guidelines to the press. Moving forward, we will call meetings for companies with overseas investment cooperation business, including big central and private companies, to brief them on the purpose, contents and basic requirements of the Guidelines while listening to their comments and suggestions for the implementation of the Guidelines. We share the goal of MOFCOM in policy guidance and service provision. In the past, China attracted foreign investment. Now China also exports capital. We hope to install the consensus among Chinese companies that taking environmental protection seriously when investing abroad will bring about win-win for business and local ecology. Otherwise, it will be lose-lose situation.
Second, organizing training. We will organize special training sessions for management and relevant personnel of Chinese companies, especially those with outward investment cooperation business, to guide these companies in formulating environment strategy, setting up internal environment management institution and training staff in environment protection. For example, businesses will receive guidance in respecting local customs and protecting local natural and cultural heritage, strengthening internal risk countering, making contingency plan for environmental risks, responding to accidents promptly and appropriately, publishing environmental information actively, and stepping up communication and coordination with local governments, communities and environmental protection organizations.

We will strengthen publicity and organize training to boost the awareness of Chinese companies of environmental protection and achieve win-win of business profits and public environmental interest.

Chin Lin Since you mentioned environmental risk countering, I would like to say a few words on MOFCOM’s work on security and operation risk prevention and control and share with you a case of environmental risk countering.

MOFCOM attaches great importance to overseas risk prevention and has worked in concert with relevant departments in establishing a going global risk prevention and control system underpinned by early warning, supervision, service and response. Security work has been toughened up for going global businesses and personnel. Efforts have been made in the following six areas.

First, issuing early warning in a timely way and setting up outward investment cooperation and overseas risk alert system. We join forces with relevant departments and embassies and consulates overseas to monitor overseas risks and issue information to businesses in a timely way. In 2012, 87 risk alerts were sounded, which enabled businesses concerned to take measures, step up prevention and circumvent the risks.

Second, toughening up overseas security management, promulgating security management regulations for overseas branches and personnel of Chinese companies and other documents, spelling out duties and tasks of overseas security management, and setting up a review system for businesses and high-risk countries to avoid blind venturing.

Third, guiding businesses in raising risk prevention and control standards, issuing security management guidelines for overseas branches and personnel of Chinese companies, supervising corporate efforts to set up and improve overseas security management system to enhance risk prevention and control ability. Several Opinions on the Cultural Development of Overseas Chinese Companies and the Guidelines on Personnel Management for Overseas Branches of Chinese Companies were issued to guide overseas Chinese businesses in strengthening cultural development, fulfilling social responsibility, and establishing a good image, regulate overseas operation and effectively counter risks.

Fourth, boosting information network development, improving outward investment cooperation information service system, constructing databases for overseas engineering projects and personnel, which are accessible to local commerce authorities and economic and commercial outposts abroad based on their mandates, and provide effective guarantee for appropriately handling overseas security emergencies.

Fifth, upgrading government public services, and issuing country-wise outward investment cooperation guidance and investment barrier reports to enable companies to steer clear of investment risks. Overseas security training sessions are organized to step up business awareness of risk control. Talks are held for striking bilateral investment treaties. By far, China has concluded bilateral investment treaties with 130 countries to protect lawful rights and interests of Chinese companies overseas.

Sixth, appropriately handling overseas emergencies. In 2002 MOFCOM collaborated with the Ministry of Foreign Affairs, among others, in successfully dealing with 20 plus major overseas security incidents, including kidnapping in Sudan and hostage-taking in Egypt, as well as several major overseas labour disputes.

Above is the work we have done in six areas. On environment risk side, the Guidelines we are launching today provide environment-wise guidance and alert to business. I just returned from a trip to Zimbabwe. Once, I came across a Chinese business in Zimbabwe, which intended to start a project last year. It started preparations before passing local environmental test and came under questioning by local media. Since the site was a wasteland, the company, lacking knowledge of local law, took it for granted that building a trade center would involve no environmental issues. After doing its homework, the company lost no time in communicating with local environment authorities and started construction after receiving a go-ahead. My recent trip found that the project had already been completed. It was rapidly built and magnificent.

The Guidelines provides Chinese companies with very important suggestions on environmental protection, including one stating that Chinese companies should win the support of local environment authorities through timely communication and exchange. Otherwise, their overseas business may run into difficulties. Thank you.

CNTV Mr. Yao, you have introduced good practices of Chinese companies fulfilling their CSR. Since your ministry is in charge of outward investment, could you share with us what other social responsibilities Chinese companies can shoulder to meet the needs of local people in addition to job creation? What other suggestions can MOFCOM offer on this front?

Yao Jian: Today’s press conference highlights environmental protection by Chinese companies in their outward investment cooperation. This is the core of the Guidelines. Chinese government agencies, including MOFCOM and the Ministry of Environmental Protection, and industrial organizations such as CHINCA have become more and more aware of the new environmental changes that Chinese companies are facing during overseas expansion and the urgent need of solutions. We all know that during the past 30 years of reform and opening up, the Chinese economy has been interwoven into the process of global integration rapidly, which has brought economic growth and better life for the Chinese people. One of the most important changes in international economic cooperation is that it is not only goods that are exported, but also labor service, capital, technology and even culture. Against such a backdrop, how Chinese companies can fulfill their social responsibilities has come to the foreground. Yet over the years, Chinese companies have made tremendous efforts to honor their commitments to social responsibilities and environmental protection. You asked me how to strengthen such efforts. I think that in addition to the Guidelines, we should work on the following four aspects.

First, we should further improve laws and regulations in China, including those related to product quality, outward investment cooperation administration and environmental protection. We may upgrade the initiatives and guidance launched before to laws and regulations. By improving the national legal framework, we can strengthen the environmental protection in China and in countries that Chinese companies have business presence.

Second, we should let industrial association play a bigger role. As an important bridge between the government and businesses, industrial associations have done a lot of work to encourage overseas Chinese companies’ CSR fulfillment. We should improve the industrial associations both at home and in countries where Chinese companies are doing business. Over the years, MOFCOM has constantly supported and guided the establishment of associations and chambers of commerce in major destination countries for Chinese investment. Industrial associations can provide assistance and play a guiding role in supervising Chinese companies’ CSR fulfillment, strengthening industrial self-discipline, preventing vicious competition, and smoothing relations with local people, community, government, religious groups in some special countries and trade union.

Third, we should further improve administration standards for Chinese companies doing business overseas. Chinese companies overseas should acquire a good knowledge of and abide by local laws and regulations, particularly those related to trade union, labor, taxation, environmental protection, etc. They should manage and employ workers, use land and protect environment according to local regulations on employment and environment. Chinese government agencies should formulate administration standards, such as the Guidelines on Environmental Protection for Chinese Companies Investing and Operating Abroad released today, and consider the performance of protecting environment and fulfilling social responsibilities as a part of overseas investment performance evaluation to summarize lessons and experience in overseas investment and development.

Fourth, businesses should fulfill CSR. It is the businesses that fulfill social responsibilities in overseas development. Therefore, we should further enhance the inherent impetus of businesses to fulfill social responsibilities and encourage them to regard CSR as an important tool to improve core competitiveness and soft power. The fact is many large companies, public or private, are paying increasing attention to the environment and social responsibilities in their overseas development. They have worked out plans, released annual CSR reports, allocated funds and organized training sessions. The companies have invested heavily in these aspects and they will keep doing so.

If we follow the abovementioned four aspects, I believe that as overseas investment cooperation grows, Chinese companies will enjoy higher reputation, more soft power and better relations with local communities, government and religious groups.

Inter Press Service Mr. Chi, CHINCA has done a lot of work to promote CSR fulfillment by the companies. What are the new plans of your chamber?

Chi Changhai： Given the importance of CSR, CHINCA will continue with this long-term mission respecting the wishes of industries and businesses. We will work on the following aspects in the near future. First, we will organize training on the Social Responsibility Guidelines for Chinese Overseas Contracting Business to enable more CEOs and relevant personnel to have a full understanding and knowledge of CSR. Second, we will continue to conduct evaluation on CSR fulfillment. We will hire professional CSR evaluation agencies to help us here and encourage companies to score new progress. Third, we will publicize businesses that have well fulfilled social responsibilities at home and abroad so that they can be reciprocated with better social environment and more projects. Fourth, we also hope that government authorities can value and use the results of the performance evaluation by giving more development opportunities to those businesses that are active in CSR fulfillment.

International Business Daily： Director-General Chen Lin, would you please introduce what has been done by MOFCOM, aside from the Guidelines, to build the outward investment cooperation service system in recent years?

Chen Lin Lin：You may have noticed that while we are presenting the Guidelines, we keep mentioning that MOFCOM will build an outward investment cooperation service system. In recent years, as Chinese companies are challenged by lack of information, experience and talent at the initial stage of “Going Global”, MOFCOM, after seeking advice from relevant ministries, has been building and improving the outward investment cooperation system. We have been releasing Guide for Outward Investment in Other Countries and Regions since 2009, covering 165 countries and region. The guide was drafted by commercial counselor’s offices and polished by the experts from CAITEC and CIPA to make it more authoritative. We have been revising the guide on a yearly basis to keep it abreast with the time. While revising it, we are making it more targeted according to the features of outward investment development, covering areas such as the prevention and control of risks.

As the guide is intended for Chinese investors, especially small and medium enterprises, we are making it more accessible. The guide provides information on investment climate and some issues worth noticing, which are of great help to businesses. Companies have free access to the guide online or through the 10,000 discs we release every year, and attending training courses, among other opportunities. Through the Guidelines, businesses will learn how to deal with government and local communities, which is extremely useful. We also released the Guidelines on Staff Management of Overseas Chinese Companies (Organizations) and the Opinions on Cultural Development of Overseas Chinese Companies, which help companies integrate with the host country at an expedited pace. In addition, we coordinate through bilateral joint committees on trade and economy to address difficulties and problems faced by Chinese investors.

The training programs we organized on comprehensive business for going global, multinationals managers, overseas risk prevention and controlling and other themes are important links of our service system. We have opened an online outward investment cooperation information service system, which, to put it simply, can help companies learn the information of investment, projects and labor affairs of the country by a click. We are building and improving our outward investment cooperation service system through these services. Thank you.

CCTV-news： This may be irrelevant to today’s conference but I came here braving smog this morning. The detected PM 2.5 stood at 452 at 9:10, meaning heavy pollution. I have a question for Ministry of Environmental Protection and CHINCA. Are the environmental protection standards followed by Chinese companies in other countries stricter and higher that those in China? How compulsory is the Guidelines that you said is released for the first time? If overseas Chinese companies fail to meet the standards set by the Guidelines, will they face more severe punishment by host countries?

Bie Tao： My understanding of overseas companies following environmental standards can be summed up into two phrases, “Go Global, Turn Local”. My major is law and I know that according to the basic principle of the international law, as long as companies are registered in other countries, they are corporate citizens of that country and shall abide by local laws and regulations. Regarding the standards, different countries are different stories. Mr. Yao mentioned in the beginning that China is exporting capital to both developed and developing countries, which are very different from each other. Generally speaking, developed countries have stricter environmental standards than developing countries. Similar cases can be found in China, too. We have one set of environmental standards, but when it comes to enforcement, more strictness can be sensed in the southeastern and coastal regions, which is why some companies begin to shift business to central and western China now. The strictness of environmental standards is a general concept but one basic principle is “to do as Romans do”.

With regard to the compulsoriness of the Guidelines, companies that have investment cooperation overseas should observe local laws and regulations of the host country in accordance with the basic principle of the international law. We have no right to force a company registered in another country to follow Chinese domestic laws and regulations. The Guidelines are supposed to provide guidance, which makes it very unique. But it is just the encouragement and guidance that reflects our government’s commitment to urging Chinese overseas investors to behave as a committed corporate citizen.

The document requires companies to learn and obey the laws, regulations and standards of the host countries. Some countries may have stricter or less strict standards compared to China. No matter what, we must protect the responsible image of Chinese enterprises and discourage them from taking advantage of others. In the early days of China’s opening up, we imported equipment no longer used by other countries and now as we are“going global”, we will also seek common development with local communities.

Chi Changhai: I agree with DDG Bie Tao. Different countries have different laws, regulations and standards for environmental protection. Chinese enterprises running the projects must obey local laws and regulations. Law enforcement in many countries is very strict. Companies cannot afford to violate local laws and regulations and should improve themselves and meet relevant standards.

Chen Lin: The previous two speakers have already covered the subject very well. Now I will briefly introduce to you the drafting procedures of the Guidelines to help you better understand it.
It is not because of the smog that we began to pay attention to the environmental protection issue of overseas Chinese companies. The drafting procedures actually started more than a year ago,. As we have reiterated, enterprises must obey local laws and we cannot enact a domestic law and require them to follow it in foreign countries. The second article of the Guidelines “Voluntary Compliance of Enterprises” defines the scope of application, and is newly included based on the discussions between MOFCOM and MEP. It also shows the legal status of the Guidelines. Third, I have mentioned that some countries’ environmental protection standards are lower than China. Those countries with higher standards, to be honest, are all developed countries where Chinese enterprises will strictly follow the rules. Yet in some developing countries where standards are lower or even do not exist, Chinese companies built some small mines and oil refineries, without making any investment in environmental protection, not to mention an environmental commitment. In this sense, the Guidelines show a clear direction for Chinese companies operating abroad on environmental protection awareness. If they want to achieve long-term and sustainable development in other countries, they have to pay attention to environmental protection. The Guidelines also provide suggestions for improvements. Thanks.

Reporters from Phoenix TV: You have mentioned that enterprises have different responsibilities in different countries. Are there any legal measures that the Ministry of Environmental Protection can take to ensure environmental compliance of domestic enterprises? In addition, transparency is a principle for environmental protection in all countries. Now people are all concerned about the reply of the Ministry of Environmental Protection to the disclosure of soil pollution data. As a government official, what is your view? Do you think that the people will genuinely get the right to know after this conference? Thank you.

Bie Tao: Due to my job responsibility, I can only take the first question. Yet I encourage you to continue to pay attention to the second question.

On measures we have taken to ensure environmental compliance of business, Director General Yao has mentioned in the opening remarks that the report of the 18th CPC Congress has given priority to ecological progress and environmental protection. That shows environmental protection has drawn the greatest attention ever from the ruling party. A fully-functioning society ruled by law and a sound legal system on the environment requires well-established legislation and strict enforcement. We have been moving fast in legislation. In 1979 China enacted the Law on Environmental Protection. In 1989 we made the first amendment and now we are making the second. Multiple amendments have been made to the Law on the Prevention and Control of Atmospheric Pollution and the Water Law. Now China has raised the target of building the most stringent environmental management system. All these efforts have contributed to the building of an environmental institutional framework.

We always strive to enhance enforcement while stepping up legislation, yet enforcement still faces serious challenges because of two reasons: First, administrative and judicial agencies are still weak in environmental law enforcement; Second, legal entities, including individuals and enterprises, still lack law compliance awareness. There is still a long way ahead before we can build a fully-fledged society ruled by law. We are advancing public education and information disclosure, hoping to shift the pressure of information disclosure to companies. We are also coordinating and encouraging judicial intervention in environmental enforcement. Meanwhile we are working with relevant agencies to improve economic policies, and encourage legal compliance of businesses through market mechanisms on credit, taxation and insurance. At the same time administrative agencies will exhaust every possible means to enhance administrative enforcement, including organizing special operations and special checks to expose illegal business activities and impose strict punishment under the existing legal framework. The recent crackdown on illegal pollutant discharge to underground water is a good example.

Reporter from The Beijing News: I have a question for DDG Bie Tao. If Chinese companies operating overseas are punished by local authorities for environmental issues, will their headquarters receive punishment from China too?

Bie Tao: The Guidelines are a guiding document in terms of legal status. If domestic enterprises are punished abroad because of law infringement, the news will come home through many ways. If the enterprises get punished, they should report to the headquarters. The Guidelines have specific articles requiring enterprises to learn and obey local rules and regulations to avoid environmental risks. If they are punished for law violation, they should report to and contact the headquarters in China.

Director Yao has mentioned performance evaluation. If the headquarters is aware of the serious law infringement of its branches or subsidiaries that damages the company’s image and economic interests, it will make response through the performance evaluation and accountability system. In that case the competent authorities will also urge it to pay more attention to and improve its image.

Yao Jian: Today MOFCOM and MEP jointly issued the Guidelines on Environmental Protection for Chinese Companies Investing and Operating Abroad. This shows that the Chinese government lays great emphasis on environmental protection of Chinese enterprises as they go global, and provides further guidance and regulation on their international business operation. Of course, the implementation of these measures needs the support of media as well as the joint effort of enterprises and industrial associations. The implementation of the Guidelines by overseas Chinese companies will definitely generate positive results for the enhancement of environmental awareness and the advancement of environmental protection activities both at home and abroad.

This is the end of the press conference. Thank you all.

(All information published on this website is authentic in Chinese. English is provided for reference only.)