Nearly 75 percent of the world's toys are made in China.	A hygiene supervision officer from the Chaohu Municipal Bureau of Public Health gives cement workers information about preventive measures against occupational diseases.	Masks are provided for workers in this dust-filled cement workshop in Anhui.

Social accountability is now an important aspect of the Chinese enterprise business agenda. In this age of economic globalization, competitive advances from hardware to software and technology to technological products bring with them corporate concepts and ethics that must also be accepted and embraced. It is a situation that requires Chinese enterprises to transform themselves from economic to social entities.

“Sweat shops” is the term used by many foreign media to describe Chinese manufacturing enterprises. In 1997, the Social Accountability 8000 (SA8000) certification was issued. It is the world’s first international standard defining ethical norms in enterprises. Its aim is to ensure that the products of manufacturers and their suppliers are produced without violating social accountabilities in the following three aspects: human rights; the rights and interests of laborers; and environment. To date, more than 50 transnational companies in China, including Carrefour, Avon and General Electric, have conducted SA 8000 inspections of their suppliers, and many have institutionalized labor and social accountability departments to handle related issues. Wal-Mart, the world’s largest retail chain, has set up labor supervision groups in cities in the manufacturing center of the Pearl River Delta. Since 1997, more than 8,000 enterprises in China’s eastern coast areas have undergone social accountability inspections by transnational companies. Those that failed to measure up were deprived of their supplier status. Should SA8000 certification be implemented, more than 50 percent of transnational companies and foreign enterprises in China would reexamine the credentials of Chinese suppliers and re-sign procurement agreements, according to an investigation by the US Chamber of Commerce.

Social accountability defaults are a serious problem among processing enterprises in the Pearl River Delta, according to a survey by Zhao Qiong, associate research fellow at the Research Institute of Modernization Development under the Guangdong Provincial Academy of Social Sciences. Many of these enterprises are labor-intensive. Their defaults occur in the fields of labor contracts, labor disputes, production safety, occupational health, social insurance and the rights and interests of women workers. They are at the root of the serious labor shortages in the Pearl River Delta. In Fujian Province alone, there are 60,000 vacancies on manufacturing production lines.

In the past, Chinese enterprises would complain about technical barriers imposed by foreign countries. Today, an increasing number acknowledges the social accountabilities of enterprises and accepts the relative standards and qualifications as the means to business development. The textile industry -- China’s largest exporting manufacturer and also a major defaulter of social accountability -- took the initiative last March and geared up for international practices by promulgating the CSC9000T (China Social Compliance 9000 for Textile & Apparel Industry). This is a social accountability management system for sustainable growth designed by the Chinese Textile Industry Association. It has been implemented on a trial basis in Zhangcha, the textile satellite town of Foshan City, Guangdong Province. The CSC9000T encompasses strict conditions regarding labor contracts, child labor, coercion/coerced labor, working hours, compensation and welfare, labor organizations and the rights of collective negotiation, discrimination, harassment and maltreatment, and occupational health and safety.

Earlier in 2006, the Chinese toy industry underwent a social accountability crisis when foreign purchasers made it clear that as from January 1, 2006 they would not place orders with toy makers that had not passed the ICTI (International Council of Toys Industry) Care Process certification, which has clear stipulations regarding the working hours and wages of workers. Some people consider the standard a technical trade barrier, but Guo Zhuocai, vice chairman of the Guangdong Toy Industry Association, regards it as a code of ethics for the trade and a new trend of social development. He believes that enterprises should not only produce profits for themselves and their shareholders, but also honor social obligations by enforcing business ethics, protecting the rights and interests of workers, conserving ecological environment and making appropriate contributions that will benefit society as a whole. Mr. Guo argues that the ICTI standard is not a technical barrier but a means by which enterprises can upgrade in order to meet the world trend of development. He warns that as the world’s toy market progresses and international competition intensifies, Chinese enterprises will be left behind unless they initiate innovation and gear up to world economy norms.

Many large Chinese enterprises, in common with their transnational counterparts, have begun to shoulder their social obligations. Shanghai-based Baosteel Group has promulgated its Environment Accountability Report, and the Ping An Insurance (Group) Company of China its Corporate Citizen Report. The China National Offshore Oil Corporation, State Development and Investment Corporation and China International Marine Containers (Group) have also included enterprise social accountability in their management targets.

China, however, is still a developing country with an underdeveloped market economy. Many of its enterprises are still struggling to establish a sound corporate governance system and are utterly ignorant of their social accountabilities. An Internet survey conducted in April 2006 shows that 34 percent of respondents believed that product safety was the most urgent social accountability of Chinese enterprises, 25 percent plumped for environmental protection, and only nine percent believed that a more philanthropic approach should be cultivated.

Given the Chinese situation, many transnational companies have entered China’s underdeveloped market environment by “adapting to characteristics of the Chinese market” or, in plain language, shelving or downplaying their social accountability. The 2006 Transnational Company China Report issued by the Transnational Company Research Center of the Research Institute under the Ministry of Commerce cited Chinese media criticism of 12 transnational companies, including Haagen Dazs and Kraft, that lowered their standard of accountability in 2005. Some companies went so far as to violate business ethics by engaging in commercial bribery, tax evasion, monopoly and lowering workers’ wages and product safety standards.

Most people believe that the role of the government is crucial to promoting the social accountability of enterprises. In its campaign to crack down on commercial bribery and improve the market environment, the Chinese government has made social accountability an important index in the evaluation of enterprises. Many Chinese enterprises are aware of the importance of social accountability for the healthy development of their business. Wang Licheng, chairman of the Board of Directors of the Huali Group, says, “Commercial bribery has become a malicious tumor hindering the healthy development of Chinese enterprises. If we compete through bribery, it will set a corrupt standard for our whole commercial society and ultimately none of us will win.”