Walmart – Civilizing the Chinese?

Your first reaction to reading this title may well be one of bafflement (what does Walmart have to do with civilizing anything?!), or if you happen to be Chinese, of likely indignation (how can a fifty year old American retail megastore contribute anything to our august, thousand year old civilization?!). But – as preposterous as it may seem – there is indeed a kernel of truth in this proposition. Let me explain.

The word “civilize” has its etymological roots in the French word “civilité”, which initially denoted the refined manners and decorum at French aristocratic courts. With repeated initiatives to – yes, “civilize” – the Chinese (as in their “no spitting on the street” campaign), the Chinese leadership is keen at molding the behavior of its citizens for the better. Recent outrage involving food manufacturers deliberately fortifying food with poisonous substances in order to cut costs, with employee unrest and even suicides (such as at Foxconn) in response to poor working conditions, as well as the omnipresent environmental pollution scandals, has the Chinese regime become increasingly edgy and aware that things need to change.

Enter Walmart.

Much as the Chinese regime, Walmart has seen itself confronted by a customer base ever more bent on better quality food, disgruntled employees (as with a high publicity class-action suit by female employees) and a questionable environmental record driven by aggressive rock bottom pricing on many of its throw-away products. So starting in 2004, Walmart’s then CEO Lee Scott proactively contacted environmentalist NGOs such as the Rocky Mountain Institute and the Environmental Defense Fund for assistance as to how to better manage its environmental track record.

What resulted is no less than remarkable. Wall-Mart has, since its entry to the Chinese market in 1996, become the leader in China as pertains to food quality, implementing rigorous food quality standards for its suppliers and launching an ambitious – and well received – organic food initiative. Moreover, the company has significantly reduced its packaging material volume and pressured its suppliers to cut energy consumption and pollution. The Chinese suppliers, while at first skeptical, are now keen to advertise their environmental objectives and successes. The Chinese shoppers, for their part, are delighted to get better quality food and organic produce, trusting a big company like Walmart more than smaller shops which are – in their eyes – more prone to cheat them and offer inferior quality products. And the Chinese regime is pleased to have such a potent partner in addressing these pressing problems and “civilizing” its companies and citizens. In sum, we have an excellent example of numerous stakeholders working in sync to achieve a win-win situation for all.

So all is good that ends well? Well, it may be too soon to bring out all the trumpets. While Walmart in China serves de facto as an extension of the Chinese government’s regulatory efforts and as a “civilizing” factor for its citizens, it is legitimate to question the long-term sustainability of such an in the end effect still purely instrumental objective. Nonetheless, there is reasonable hope that at least parts of it may be sustainable due to an interesting insight that the sociologist Norbert Elias outlined as part of any civilizing process. Therein, he posits that to become “civilized” entails individuals to restrain their drives and affects. In a first phase, this is achieved through a permanent outside authority and on pain of punishment. With time, however, in a second stage, there arises a moral code that is upheld by individuals even in absence of the threat of punishment, driven by people suffering from a bad conscience in light of failure to adhere to these mores. In the last phase, then, even such self-constraints dissipate, and individuals are intrinsically motivated in a very natural manner to adhere to the involved normative standards.

This is, in essence, what is beginning to occur in China in part with the help of Walmart (and also other parts of the world in other contexts), where social and environmental responsibility by corporations and individuals is becoming ever more part of the discussion, part of the regulatory and legal fabric and as well as public awareness in form of a normative “should”. Normative change, while it may initially have to be forced upon individuals and corporations, may in due time become second nature to them. We as a global civilization, as is apparent also in China, seem to be “primed” for a major normative paradigm change towards greater social and environmental responsibility. And, as we have seen, even a major multinational corporation such as Walmart can play a significant role in this “civilizing” process, if the necessary extrinsic motivation is there and a society is ready to reward such a change.

Manuel Heer Dawson

 For a fascinating and detailed account of Walmart’s social and environmental impact in China, read the “How Walmart is Changing China”, by Orville Schell in The Atlantic: http://tinyurl.com/bopuxsa

China’s Silver-Spoon Generation: How does it Impact China and the West?

In China the 90s generation is entering the employment market. During my visit in the last weeks in Hong Kong, in Guangdong Province and in Shanghai I met with many managers from manufacturing companies all complaining about the troubles they have with the generation’s representatives: They leave working places too often for smoking or playing e-games. They try to dodge work as much as possible. If another company offers just a minimally higher wage these employees suddenly change the company. In short, they are said not to be very productive and to lack loyalty vis-à-vis their employers.

I was quite surprised that exactly this issue was picked out in an article of the English-written Chinese paper “Global Times” when I read it for the first time. The article basically says that the 90s generation is unconventional, innovative, rebellious as well as self-centred. It is flexible and quick in learning. And, it is the first generation in which a really diversified set of values exist: everyone sees herself as different. This stands in strong contrast to the 70s and 80s generation of which each knew a quite homogenous set of values. The 90s generation is the 2^nd generation of rich. Because this generation’s elders became rich in the reform era its children have grown up with a silver spoon in mouth.

The silver spoon generation is still quite young. It is most likely too simple to reduce this generation to the actual troubling behaviour in companies. The question is how will this generation behave in some years when it has developed itself further? What implications does such a self-consciousness and value-diversified generation has to China and the rest of the world?

In the West we know e.g. the 68s generation. Although a comparison of China’s 90s generation to the 68s must be treated with caution there are some clear similarities: Both have grown up in economically prosperous surroundings; both are individualistic and differ themselves from the older generations through more open and more diverse values; they are creative and innovative; the older generations are rather negative to the ideas of these new generations.

Ideas of the 68s we may recognise e.g. in the IT industry. The ideal of openness underlying the internet and other computer-technologies is often brought in context with the Hippie or 68s generation. Early IT-cracks indeed often stayed together with Hippies (Steve Jobs e.g. lived for a certain time with Hippies in the USA, travelled to India in search for illumination, and even sometimes took LSD).

Today we know that although the older generations often were negative towards the youth of the 68s this generation had a big societal impact and also created some very successful and innovative entrepreneurs.

It is quite likely that China has the potential to boost its innovative power with its 90s generation. But, it is decisive that this young generation understands to bring in and develop their creative skills constructively in the next years. With these young people it is probably possible for China to leave its learn-by-heart mentality in education. For the rest and the West of the world this means that it has to envisage more innovations from China. The positive thing for the West and the rest is that they can profit of these innovations as consumer or user. But overall it is highly likely that global competition will become harder again. Therefore the West has to hold on the curiosity (at the functioning of the world) which was born once during Enlightenment. In this tradition it has to have the important and necessary courage to ask not only big but also unconventional questions.

Culturally the West is still very innovative and attractive, with a charisma also to other regions, including China. It will be interesting to see what influence the 90s generation will have on the cultural understanding and on political institutions of future China. This is even more difficult to prognosticate than the economic implications.

Claude Meier

Exploitation for Statistics

At this year’s conference of the Strategic Management Society, I had the distinct pleasure of meeting a former professor from mainland China. We soon engaged in a lively discussion about the various purposes of value creation for a firm. It turned out that she was a very adamant advocate of the view that a firm’s value creation should bring wellbeing to all individuals engaged in this value creation process. Indeed, she confirmed that this is a lack for many employees in China. Foxconn seems to be just the most famous example of innumerable unknown companies treating their employees in a similar fashion –or worse (for more information on this case, see also our book “Sustainable Success with Stakeholders – The Untapped Potential”, Chapter 7, P. 14.).

It is a biting irony that this tendency of employee exploitation is exacerbated by the Chinese government’s policy objective of creating employment for the Chinese population. The quantitative measure of raising the employability rate clearly matters more to the Chinese government than the quality of the conditions under which these employees will have to work under.

Taken by this outspoken critique of the celebrated success story that China is known for, I asked her if I could get some of her papers about specific cases of worker exploitation.

The answer was no.

She explained that she was not allowed to reveal her sources, because her interview partners are afraid of reprisals. Regrettably, however, without transparency of sources and methods, no paper will be accepted by a peer-reviewed journal. Therefore she refrained from writing a paper.

In stakeholder management we call stakeholders such as these employees “silent voices”. Let’s give these people a voice – also without a source!

Sybille Sachs