Social credit will affect foreign firms in China

2019 ◽  
Keyword(s):  
Credit Scoring ◽  
Regulatory Compliance ◽  
Foreign Firms ◽  
Credit System ◽  
Content Type ◽  
Playing Field ◽  
Foreign Companies ◽  
Social Credit ◽  
Corporate Social ◽  
The Cost

Subject China's corporate social credit system. Significance The corporate social credit system (CSCS) is now at a decisive stage as the authorities ramp up implementation and expansion nationwide. All companies, including foreign enterprises, will have to participate. Impacts Foreign companies operating in China will have to provide more data for credit scoring. The information made publicly available on CSCS platforms will be useful in evaluating the trustworthiness of business partners in China. The CSCS may level the playing field for foreign firms, because it is based on objective regulatory compliance measures. The CSCS will increase the cost of non-compliance with laws and regulations.

The gamification of trust: the case of China’s “social credit”

2018 ◽  
Vol 36 (1) ◽  
pp. 93-107 ◽  
Author(s):  
Zahy Ramadan
Keyword(s):  
Conceptual Framework ◽  
Tax Evasion ◽  
Credit Rating ◽  
Rating System ◽  
Credit System ◽  
Content Type ◽  
Social Credit ◽  
Chinese Business ◽  
Area Of Interest ◽  
New Business

Purpose China is establishing a social credit rating system with the aim to score the trust level of citizens. The scores will be based on an integrated database that includes a vast range of information sources, rating aspects like professional conduct, corruption, type of products bought, peers’ own scores and tax evasion. While this form of gamification is expected to have dire consequences on brands and consumers alike, the literature in that particular area of interest remains non-existent. The paper aims to discuss these issues. Design/methodology/approach A conceptual framework is suggested that highlights early on the risks and implications on brands and companies operating in that particular upcoming landscape. Findings The gamification of trust that the social credit system focuses on presents potential risks on brand and consumer relationships. This in turn will affect brand sustainability vis-à-vis the expected drastic changes in the Chinese business landscape. This study suggests the strategies to follow which will be of high interest to companies, consumers, as well as to the Chinese authorities during and after implementation stage. Originality/value This paper is amongst the first to discuss the potential effects of the Chinese social credit rating system on brands. The conceptual framework fills a sizeable gap in the literature and pioneers the discussion on potential dilemmas brands will be faced with within this new business landscape.

Corporate social responsibility of mining industries

2015 ◽  
Vol 57 (5) ◽  
pp. 367-372 ◽  
Author(s):  
Deepankar Sharma ◽  
Priya Bhatnagar
Keyword(s):  
Corporate Social Responsibility ◽  
Community Development ◽  
Social Responsibility ◽  
Large Scale ◽  
Mining Industry ◽  
Developed Countries ◽  
Advanced Technology ◽  
Foreign Firms ◽  
Content Type ◽  
Corporate Social

Purpose – This paper aims to examine the community development approaches of large-scale mining companies, with particular reference to how they may engender community dependency. Design/methodology/approach – The paper begins with a review of corporate social responsibility (CSR) in the mining industry, corporate community initiatives and the problem of mining dependency at a national, regional and local levels. Findings – It outlines some of the reasons why less-developed countries (LDCs) experience under-development and detrimental effects as a result of their linkages with industrialized countries. LDCs are not able to take advantage of advanced technology and management skills due to being relatively poor in capital and skills, and foreign technologies compete unfairly with and destroy local production techniques, creating a pool of unemployable “marginalized” people. Holder’s of investments in LDCs demand annual returns for continued support – profits are taken out of the country or guaranteed by tax concessions. Unwillingness of foreign firms to train local people to take over management positions. Originality/value – This paper explores how the need to address sustainability issues has affected communities, and whether community development initiatives have been effective in contributing to more sustainable communities.

scholarly journals “Social Credit System”: historical prerequisites and doctrinal grounds of the phenomenon

2020 ◽  
pp. 72-88
Author(s):  
Roman Z. Rouvinsky ◽  
Alexey A. Tarasov
Keyword(s):  
Social Control ◽  
Credit Scoring ◽  
Social Institutions ◽  
Scoring Systems ◽  
Credit System ◽  
Russian Science ◽  
Republic Of China ◽  
Social Credit ◽  
History Of ◽  
New Perspective

This article is dedicated to identification and examination of doctrinal grounds and historical prerequisites of the" Social Credit System (trustworthiness)” – a project introduced in the People’s Republic of China in the early 2000s, and currently being “exported” from People’s Republic of China to other countries. In the course of this research, the author analyzed the specific Chinese sources and prerequisites for the creation of modern social rating and control system, as well as non-national sources mostly attributed to the history of Western European political legal thought and Western social institutions. Viewing "Social Credit System" as a technique for exercising social control and oversight, the authors discover its origins in J. Bentham’s project" Panopticon ", Taylor’s philosophy of management, Confucian and legalistic traditions of Imperial China, ideas and institutions of the era of Chinese cultural revolution, as well as U.S. credit scoring systems. This article is the first within Russian science to study the historical and doctrinal prerequisites of China’s "Social Credit System”, taking into account the works of foreign scholars dedicated to the history of its establishment.  A new perspective is given on the Confucian ideas the ideas of Fajia (Legalism) School, which are interpreted as complementary sources of the modern system of social control developed in PRC. The authors believe that China’s “Social Credit System” and the related techniques of control represent a so-called “bridge” that connects “Western” history of the development of social institutions with typically “Eastern” political and sociocultural tradition. In conclusion, attention is turned to the positive aspects, as well as “shadow” side of implementation of the mechanism of “Social Credit System”, “reverse” of this process and all accompanying problems thereof.

India's business and corporate climate blunts FDI plan

2016 ◽  
Keyword(s):  
Corporate Culture ◽  
Joint Ventures ◽  
Prime Minister ◽  
Business Environment ◽  
Foreign Firms ◽  
Land Acquisition ◽  
Due Diligence ◽  
Indian Market ◽  
Content Type ◽  
Foreign Companies

Subject India's corporate culture and its impact on government plans to attract foreign investment. Significance Prime Minister Narendra Modi's government has made attracting foreign direct investment (FDI) a key plank of its economic policy. Yet the record of foreign companies investing in India, whether through joint ventures or wholly owned subsidiaries, is mixed. Impacts Malfeasance and corruption are an ever-growing risk to joint ventures, underlining the need for foreign firms to invest in due diligence. Modi's pro-business rhetoric will far exceed actual government efforts to curb corporate corruption until his term ends in mid-2019. This will not help reduce foreign companies' potential exposure to long and expensive legal battles. Business environment constraints will impede efforts to attract foreign greenfield and brownfield investment, rather than portfolio capital. This will compound other difficulties of operating in the Indian market, such as land acquisition problems.

China will lift barriers to foreign financial firms

2017 ◽  
Keyword(s):  
Financial Market ◽  
Market Access ◽  
Foreign Firms ◽  
Shadow Banking ◽  
Content Type ◽  
Playing Field ◽  
Market Opening ◽  
Financial Firms ◽  
China Trade ◽  
Financial Liberalisation

Subject Potential loosening of restrictions of foreign investment in the financial sector. Significance Senior officials are among the authors of a report released last month that gives policy recommendations for financial market reform, advocating broader financial market access for foreign players and a freer exchange rate. If adopted, the reforms will give foreign financial firms more control over their Chinese subsidiaries and enable them to conduct business in areas that are currently off limits to foreign investors. Impacts Broader financial market access does not guarantee a level playing field; protectionism will persist in more subtle ways. Financial market opening will not cease after the central bank's reformist governor retires; his proteges remain in key positions. Financial tightening to fight corruption, curb debt and reform shadow banking will continue, despite liberalisation vis-a-vis foreign firms. China will use financial liberalisation as a bargaining chip in US-China trade talks.

Social mobility will fall for China’s disadvantaged

2019 ◽  
Keyword(s):  
Social Mobility ◽  
Urban Areas ◽  
Rural Poverty ◽  
Credit System ◽  
Absolute Poverty ◽  
Content Type ◽  
Social Credit ◽  
The Social ◽  
Wide Range ◽  
High Level

Subject Social mobility in China. Significance So far, the Communist Party leadership has only addressed the most extreme manifestations of inequality -- high-level corruption and rural poverty. It has not tackled a wide range of social, economic and institutional barriers to social mobility that affect hundreds of millions of people across the country. Impacts Members of China’s middle class are already approaching the limits of their upward mobility. The social credit system could evolve in a way that exacerbates the divide between the economically advantaged and disadvantaged. The campaign to eliminate absolute poverty will do little to address the problem of relative poverty in urban areas.

Can investing in corporate social responsibility lower a company's cost of capital?

2014 ◽  
Vol 31 (2) ◽  
pp. 202-222 ◽  
Author(s):  
Marcelo Cajias ◽  
Franz Fuerst ◽  
Sven Bienert
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cost Of Capital ◽  
Task Force ◽  
Equity Capital ◽  
Content Type ◽  
Starting Point ◽  
Corporate Social ◽  
The Cost ◽  
A Company

Purpose – This paper aims to investigate the effect of corporate social responsibility (CSR) ratings on the ex ante cost of capital of more than 2,300 listed US companies in a panel from 2003 to 2010. It examines whether financial markets value continuous investment in CSR activities through higher market capitalization and lower cost of capital. Design/methodology/approach – The measure of the cost of capital reflects the perceived riskiness of individual companies expressed in the unobserved internal rate of return that investors expect to hold a risky asset. Based on descriptive portfolio estimations, panel and quantile regressions, the authors model the cost of equity capital as a function of CSR strengths and concerns obtained from the KLD-database and accounting controls. Findings – The authors show that firms' CSR strategies differ significantly across industry sectors. Customer-orientated companies such as telecommunications and automobile outperform asset-driven sectors such as real estate or chemical companies. Furthermore, the authors find a 10-bp positive effect for one standard deviation of firms' intensive allocation of resources in sustainable activities. Research limitations/implications – Since the authors are interested in the effect environmental, social and governance activities have on the firm's perceived market valuation rate, the authors apply the Fama-French model because of its efficiency in explaining realized returns, rather than incorporating analyst's long-term growth forecasts into the proxy for the equity premium. Practical implications – Managers of companies with low or intermediate CSR scores may consider the financial benefits of improving their social and environmental performance. A good starting point is usually to draw up a company-wide CSR agenda, possibly guided by a dedicated CSR task force, mapping out the potential costs and benefits of such measures. In addition, by improving their CSR ratings, a company may get access to additional resources, ranging from the growing ethical investment industry to employees for whom CSR performance matters when choosing an employer. Originality/value – The authors expand the existing literature by considering firm's CSR level to be in relation to the overall CSR performance and decompose firm's CSR agenda into strengths and concerns rather than counting the number of activities a firm is involved in. The applied methodology allows a better understanding of firm's CSR agenda and its implication for capital markets and investors on both long and short investment terms.

Corporate investment in social responsibility versus dividends?

2012 ◽  
Vol 8 (2) ◽  
pp. 199-207 ◽  
Author(s):  
Michel T.J. Rakotomavo
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Design Methodology ◽  
Corporate Investment ◽  
Cash Flows ◽  
Cost Of Equity ◽  
Content Type ◽  
Corporate Social ◽  
The Cost ◽  
Practical Implications

PurposeThe paper aims to examine whether corporate investment in social responsibility takes away from expected dividends.Design/methodology/approachThe article builds two hypotheses that are tested empirically through the analysis of 17,670 US firm‐year observations covering the period 1991‐2007. The tests are conducted in both univariate and multivariate settings.FindingsThe evidence supports the hypothesis that mature firms tend to invest more in corporate social responsibility (CSR). Specifically, firms investing highly in CSR tend to be larger, more profitable, and with greater earned (rather than contributed) equity. The evidence also supports the hypothesis that CSR investment does not subtract from dividends. Instead, CSR effort and dividend tend to increase together. Thus, CSR investment tends to be effected by companies who can afford it, and it does not lower value by lowering investors' expected payout.Practical implicationsThese results imply that spending resources on CSR does not lower the cash flows paid out to investors. When combined with the finding that CSR lowers the cost of equity, they also mean that CSR increases the value of a company's stock.Originality/valueThis is the first study that explicitly links CSR to the dividend flow.

scholarly journals Sesame Credit in China’s Social Management System in the 2010s

2020 ◽  
Vol 7 (3 (27)) ◽  
pp. 79-86
Author(s):  
Dmitry I. Popov
Keyword(s):  
Management System ◽  
Large Scale ◽  
Credit Scoring ◽  
Information Resources ◽  
State System ◽  
Credit System ◽  
Social Credit ◽  
Chinese Company ◽  
And Control ◽  
Social Management

The article shows that the Chinese company Ant Financial is developing a social credit system named Sesame Credit going beyond the traditional credit scoring mechanism on this way. Sesame Credit aims to form “civilized behavior” of citizens as an instrument of social management and control. In the late of the 2010s some of Sesame Credit's technologies and information resources have been integrated into a large-scale state system of social credit which is still in its infancy.

Reform will improve foreign firms’ treatment in China

2020 ◽  
Keyword(s):  
Foreign Investment ◽  
Structural Changes ◽  
The United States ◽  
Foreign Firms ◽  
Foreign Investors ◽  
Content Type ◽  
Playing Field ◽  
Investment Law ◽  
The Law ◽  
Over Time

Subject Reform of China's foreign investment law. Significance The new Foreign Investment Law that took effect on January 1 is a response to a slowing economy and pressure from other governments, particularly the United States, to ‘level the playing field’ for foreign investors. Impacts There will not be a flood of new investment as a result of the law, but it will make a difference over time. Companies will have five years to prepare for structural changes as rules specific to foreign-invested companies disappear. The regulations contain few specifics on enforcement, indicating that Beijing is not yet ready to give teeth to the law.

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