Reforming China’s human rights regime:
Can business play a role?
(Working Paper)
Hong Kong Political Science Association Conference 2009
Hong Kong University of Science and Technology
Robert J. Hanlon
[email protected]
City University of Hong Kong
21 August 2009
Key Research Questions
1.
What impact does corruption and human rights have on
business?
2.
What is the political risk for businesses operating in China
with regards to human rights and corruption?
3.
To what extent can foreign MNCs influence the human rights
regime in the Mainland?
Methodology
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Qualitative vs. quantitative design
Research conducted between 2006-2009
Interviews in Hong Kong, Singapore, Guangzhou, Kunming,
Oxford and Paris.
25 in-depth interviews
6 Conferences and workshops (anecdotal)
TNCs, MNCs, SMEs, academics and NGOs
Why corruption and human rights?
•Interrelated
•Police and courts
•Environment
•Education
•Health
•Land grabbing
•Tofu projects
•Intellectual property
Corruption
“[T]he behaviour which deviates from the formal duties of a public
role because of private-regarding (personal, close family, private
clique) pecuniary or status gains; or violates rules against the
exercise of certain types of private-regarding influence. This
includes such behaviour as bribery (use of a reward to prevent the
judgement of a person in a position of trust); nepotism (bestowal of
patronage by reason of ascriptive relationship rather than merit);
and misappropriation (illegal appropriation of public resources for
private-regarding use” (Nye 1967, 284).
Human Rights
“Rights inherent to all human beings, whatever our nationality,
place of residence, sex, national or ethnic origin, colour, religion,
language, or any other status. We are all equally entitled to our
human rights without discrimination.
These rights are all
interrelated, interdependent and indivisible” (OHCHR 2008).
Corruption and Human Rights in China
Corruption
•Corruption is endemic and encroaching on virtually all professions
•“You must assume all officials are always corrupt” (HR Lawyer)
•Daily reports and increased punishments
•Culture of clientelism, patronage, nepotism
Human Rights
•Courts, Police, Media
•Tibet, Xinjiang, capital punishment, arbitrary detention and torture
•Major international campaigns with consistent media coverage
•Progress – rule of law, economic and social fronts
Business, Corruption and Human Rights
•Ethics and morals
•Culture
•Non-traditional risk management
•Significant challenge but no one talking
•Endemic for business: bribe to investigate
•Diverging definitions from business
What impact does corruption and
human rights have on business?
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Generally speaking, corruption and human rights have minimal impact
Bribery is a cost of doing business, while human rights are outside the sphere
of influence
Promoting anticorruption and compliance is highly linked to liability, while
interest in human rights is largely self-motivated
Personal risk to bribery
Corruption and human rights investigations are time consuming and
expensive
Lack of expertise on the issues from within companies
Courts and police generally have a negative impact on foreign business
Genuine personal concern for human rights by most respondents
Accountability and transparency
What is the political risk for businesses operating in
China with regards to human rights and corruption?
•Risk is high, but minimized through joint venture partnerships
•High risk of dealing with state officials
•Employees not understanding corruption
•Reputational risk is not the primary concern
•Risk of engaging in human rights programs
•Some interviewees related risk to their personal life
•Extreme risks included kidnapping, revolt and war
•Being blacklisted by the government
•Fair hearing in court
•Intermediary: Same speech since 1992
To what extent can foreign MNCs influence the
human rights regime in the Mainland?
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MNC have significant influence
International regulation and Best Practice
SMEs have little influence, size matters
Gap between local and central government influence
Some connections go to the highest level of government
Sensitive policy issues are untouchable
Company is at risk when too close to government: Coke and
Huiyuan Juice Group Ltd
MNCs can engage policy on corruption issues
MNCs have limited influence over the human rights regime
Private Sector Corruption
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Business to business bribe paying
Undermines fair competition and impacts rights
Highly illegal in Hong Kong and Mainland China
According to one whistleblower, common practice
Entrenched system of price-fixing and profiteering
Findings
1. The incentive for business to think short-term limits the capacity to think critically of
corruption and human rights issues
2. Corruption has a significant impact on foreign industry in China; however, most
companies avoid finding a sustainable solution and would rather pay the bribe
3. Foreign business relies heavily on joint venture partners especially to navigate the
Mainland’s legal system
4. Most SMEs would benefit from a strong legal system and enforcement, while larger firms
would not. Interestingly, the larger firms are the drivers of policy debate in the Mainland
5. Human rights in China is a non-issue for most companies interviewed, since there is no
support being driven down from the top of the company
6. Human rights is perceived to be highly political while corruption is criminal
7. Accountability and transparency are seen as major concerns, while both impact
corruption and human rights
8. Many see Hong Kong as a source of inspiration for the Mainland, while strongly
encouraging engagement with China’s government at all policy levels
9. Many industries lack tools to deal with corruption and anticipate non-traditional (nonfinancial) business risk
10. Gap between business policy and personal views
Reforming China’s human rights regime:
Can business play a role?
Business and corruption
Independent judiciary
Law enforcement
Good governance and best practices
Free flow of information
Accountability and transparency
Corporate Social Responsibility
Leadership