Corporate Social Responsibility (CSR)

We as citizens of the world need to have responsibilities. Throughout the years mankind has evolved in many ways. 10 million years ago when humans made their first tools out of stone, woods and bones was the first step for evolution. Then came fire the most wonderful thing. We could cook our foods with it and keep warm through the night. Just as we were on the right path, we decided to evolve faster and faster. The hunt for resources began growing. The more valuable resources the more power you have against other countries. Millions of wars out broke for power. One major resource was oil. The earliest known oil wells were drilled in China with bits attached to bamboo poles. Oil has been a resource that many fight for. Millions of years later we still use it; for our cars, generate electricity, industrial factories etc. We all know too much of something good is bad news. So we see in our daily lives. From a leap forward we are heading for disaster. How did this get so far that it could be the end of us? Simply being greedy. Always wanting more and never to stop and think of what sorts of affects our decisions have on the planet and humanity itself.

Therefore the CSR or corporate social responsibility was created. Also called corporate conscience, corporate citizenship or responsible business. It is a form of corporate self-regulation integrated into a business model. It is a policy where a business monitors and ensures its active compliance with the law, ethical standards and national or international norms. The CSR strategies basically encourage companies to have a positive impact on the environment and stakeholders including consumers, employees, investors, communities and others. A broader definition of CSR is according to the Business Dictionary defines CSR as "A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies express this citizenship (1) through their waste and pollution reduction processes, (2) by contributing educational and social programs and (3) by earning adequate returns on the employed resources."

So CSR can make a huge contribution towards sustainability.

Now the topic of this business case is related to China at the moment. If we look at the rising Chinese inbound tourism you might think more money for the businesses that profit from these Chinese tourists. But the moment we stop to think about the economical aspects and really see the other aspects that are affected by the growing tourism and consumers.

What would we see? I see more pollution and waste being done.

Other people see opportunities and feel the urge to act upon this growing trend. More money invested to build hotels, restaurants, attraction parks and shopping malls. Therefore we see less and less nature, because nature is just a nuance that keeps us from making more money. We don’t need nature. We are better without it. We are smart, but we also have the ability to be stupid. The reason we are here the reason there is life is because of nature and many other things. Everyday by thinking to boost ones economy means destroying everything that makes life. The dead truth is that money makes us blind. We are never happy with our fair share, we always need more and that is the problem of mankind. Back to the topic on tourism. CSR measures the tourism businesses comprise the responsible use of natural and cultural resource, minimization of pollution and waste, conservation of landscapes, biodiversity, fair and responsible treatment of employees, suppliers and guests, fair use of local products and services as well as involvement and cooperation with local communities so as to improve the quality of local people. As we can see CSR measure a whole lot of things, but do corporates really report these as it is? Or do they report it as to how the public wants it known? I guess they only know the truth. But the concept of CSR has become a central part of corporate strategies for the tourism industry, because they have strong relationships with local communities in which they operate. Therefore having a strong influence on the socio-economic development of regions. Tourism a set of activities aimed at attracting visitors to a region, receiving them and ultimately satisfying their needs. So, why sustainability in tourism? Well, everything with consuming and living has effects on the earth. Sustainability is a way to preserve ecosystems and biodiversity, limit growth and improve the quality of life of host populations. Basically, when being a tourist you too have to contribute to all of those things.

China has 2.7 million hotel rooms and counting. Some argue that although the economic growth of China has slowed down in the recent months there is no reason to stop building more hotels. Ones estimate is that China will have 9.1 million hotel rooms by 2039. Now this puts pressure immense pressure on the country improving their sustainability regarding carbon emissions, energy and especially water consumption.

Studies have shown that in general, China’s hotel consumes more water and energy per square meter and also per occupied room than other large countries. The difference being in personal reasons, owners prefer lavish displays in public areas and lobbies that use high amounts of energy and water. The tourism industry of China has many challenges such as silo approach, lack of understanding, knowing and doing gap, misperception of sustainability costs and bias of Chinese hotel owners. Some Chinese Hotel owners don’t view sustainability as a competency even though studies have shown that it is. The way to move forward would be if hotel companies provide owners with case studies, project life cycle, prepare for future legislation and firms can highlight the consumers seeking green hotels. That may be a way to stimulate the Chinese hotel industry to take sustainability into account for the better of their country and the rest of the world.

We have the power to use our business to solve social and environmental problems. A few reasons I have found why it is critical for an organization to work with CSR principles are that employees feel better about themselves if their company is socially responsible. Studies have shown that they tend to be more productive and loyal. Another reason is that some consumers expect better business practices. If it the product or service is for a good cause the consumer will go for an extra mile to buy it. It’s also a moral imperative. According to Michael Porter and Mark R. Kramer in the Harvard Business Review, “When a well-run business applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.” Personally, I think that companies who see these moral imperatives are seeing more than just money. They see the value of life and how they are affecting it. They choose not to turn their backs on society. They as corporates have responsibilities.  The importance to control the aspects in the CSR guidelines are extremely important, because it is not fair to make a report look like what the public wants to see. CSR cannot completely help save the world, but it can help people see what kind of influence the corporate has on the environment.

A few reasons why companies should embrace CSR is that it could be cost savings. If a company wants to start engaging in sustainability it needs to find a way to start cutting their costs. An example may be to use less packaging or plastic. Finding ways to be more efficient while being friendly to the environment. It shows a good image to public. The companies engaging in sustainability demonstrates that they are not only there to make profit, but to also show concern on social issues.

A business can grow with or without social responsibility, but doing good for others allows a business to reap rewards in many ways.

That is why I personally find CSR a helpful guideline for corporates to follow.

Resources

(2011, september 12). Retrieved from europeancitiesmarketing: http://www.europeancitiesmarketing.com/corporate-social-responsibility-and-tourism/

(2011). Retrieved from http://blog.movingworlds.org/5-reasons-your-business-should-be-socially-responsible/

(2012, february). Retrieved from forbes: http://www.forbes.com/sites/csr/2012/02/21/six-reasons-companies-should-embrace-csr/#307514244c03

(2015). Retrieved from movingworlds: http://blog.movingworlds.org/7-research-backed-reasons-your-business-needs-to-be-socially-responsible/

(2015, april). Retrieved from http://www.investopedia.com/ask/answers/041015/why-social-responsibility-important-business.asp

(2016, august). Retrieved from expainthatstuff: http://www.explainthatstuff.com/timeline.html

(2016). Retrieved from http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1012&context=chrreports

siteresource. (2005, june). Retrieved from http://siteresources.worldbank.org/INTEXPCOMNET/Resources/CSR_in_tourism_2005.pdf

Consumer Behaviour and Tourism

Travelling all around the world

Trade and Legal Risks

When the topic surrounding trade risk and legal risk arises, we can think of many. That depends on what country you are handling with. All countries have different political and economical situations. Not only politically and economically different, but also have several cultures and languages. Every country also has their own way of handling things. So, if you’re thinking of doing business with a country for example China. You might want to keep reading. We all know trade is a must in this world. Not all countries have the available resources they desire. Export increases a country’s economy and is highly beneficial. It can increase your sales. Export expands the demand on their product. Focusing on one concentrated area can be risky, because you are only depending on the consumers on the concentrated area. With increasing sales comes the increase of the profits. The reason may be because the order of international buyers are much more larger than local/domestic buyers. They order more to cut costs or get bulk discount pricing. Those are just a few benefits, but you could already tell that it is highly beneficial for a country when exporting. What about import? Does it have benefits too? According to the resources I found import does have a few benefits. It can reduce your costs. It is much cheaper to import products or services from another country than to get the resources from your local area. Secondly, you get good quality products because the manufacture selling will look at their reputation. My opinion on this is that getting “good quality” products is not always the case. Let us look at China. Have you ever ordered something from Alieexpress, Alibaba or any other Chinese online website? If yes, did the product meet your expectations? Was it as good as the product your local store sells for 10 times the price? Maybe yes or maybe no. So why is everything much more cheaper there than in foreign countries. Where the legit product comes from. First, and foremost, the Chinese domestic market doesn’t necessarily look at quality. They either go for the best product or the cheapest. The suppliers are not rewarded in any way or form to make the best quality product in China. It is simply a mindset of making money. Do I care for the environment and safety of others, and then I will have to spend more money on eco-friendly materials. If not, I will use cheap and dangerous materials to sell, sell and sell. It doesn’t harm me as long as I make money, right? Money makes people blind. In the end humanity will be its own destruction.

I would like to mention a few trading risk when trading with China. One thing to think about is; China is very different than what we foreigners are used to. The culture and language is also different. All those investors who are doing business with China have said that it is never an easy task. It takes years of improving and finally getting what you want. Easy said than done. But what makes Chinese manufactures so difficult to deal with? Again, in a fast growing country the expenses keep growing and you have to make a living to be able to support your family. Trending in China is the demand for cheap products. Foreign countries really target factories in China. In China the manufactures can make you product cheaper, which later on the company buying will sell it for more than it is actually worth. A risk that can arise is that you do not know whom you are dealing with precisely. One might say he is the boss, but in reality he isn’t. When closing the deal mostly you will se the boss and he is nothing fancy. He is just a normal guy with a t-shirt and pants. One factory can have many names. It’s all about games with Chinese manufactures. A funny story I heard was that a foreigner was doing business with China. He wanted to go visit the factory, if everything was good and clean like the factory owner said it was. He arrived and it was impressively clean. Satisfied with his visit he went off, but forgot his laptop. When he went to get it back. The name of the factory was changed and the workers dressed differently than before. So the set up was for the next buyer. When you order products from China it is cheapest, but you have to wait longer than if you would just order from a local company. Other risk that can arise is the product not being up to the standards you wanted or the product not coming at all. You spend a lot of money on these products, which you will not see after 3 or more months. It is scary when you think of it. The anxiety levels just keep building up. When you have a client that needs the products ordered now, what do you do? If you say no the client will find another seller and you will lose sales there.

Something else to think about is the cheapest isn’t always the best and the most expensive isn’t always the best either. So you really have to make a plan when you want to do business and this doesn’t apply for in China only. You have to do your research on the seller and products and if that is really what you are looking to buy for your business. You don’t necessarily have to become one of the Chinese, but you have to understand their way of living. The big culture and language gap doesn’t make things any easier. So having a contact person in China. Who knows China very well can minimize that gap. They can be your informative when you need something done. When you are millions of miles away and time difference is an issue. It makes your life much easier when you have someone in China to look after your orders. When it comes to legal risk well lets say that there are, but I don’t think the factories keep that in mind. When you have a unique product or service it is always wise and advices to register your product at China’s trademark office but also Chinese customs. 

That way you can insure that no manufacture will make the “same” product as you. The reason I am putting the exclamation points are because China is known to make similar product. Throughout history we have seen Chinese trying to invent brilliant products, but sadly failed at being successful. So, what they have noticed because they are intelligent people is that products that are trending are selling very well. What do they see? OPPORTUNITIES! Yes, they started the revolution of imitating things. Masters of imitations. Dolce & Banana from the famous brand Dolce & Gabbana, Sunbucks from Starbucks, Pizza huh from pizza hut, Kicker from kitkat and so on it goes. The reason they keep the same concept but tweak the name and products a little bit is so they don’t get in trouble with the legal law and copyright issue. They’ve mastered it to be honest, because look at us. Some of us are willing to pay a fraction of the price for a counterfeit product than to spend a whole 5 years salary on the real deal.

If you are thinking about doing business with China or any other country. Make sure you do sufficient research in what kind of market you are getting yourself into. Keep on track of your supplier. Find more and don’t be bound to one only, because in the end you could compare which is good and which is bad. Make connections abroad so that you have someone else who does understand the culture and language handle some things for you that you are unable to handle. Also make sure that if you spend a whole lot of money on something it better be your moneys worth!

 Here are the sources I have used to build up my arguments surrounding the trade and legal risks topic:

Sources

(n.d.). Retrieved from benefitof: http://benefitof.net/benefits-of-importing/

(n.d.). Retrieved from justsomething: http://justsomething.co/31-hilariously-cheap-chinese-imitations-that-will-make-you-cringe-4-is-the-worst-ever/

(2016). Retrieved from exporthelp: http://www.exporthelp.co.za/modules/1_considering_exporting/benefits.html

(2016). Retrieved from economywatch: http://www.economywatch.com/international-trade/risks.html

(2016). Retrieved from austrade: https://www.austrade.gov.au/Australian/Export/Export-markets/Countries/China/Doing-business/Minimising-risks

E-commerce

I hope you're ready for a interesting topic today!

Before we start let's ask ourselves what  E-commerce is. Found the answer? No problem, I have it here for you. That's a short term for Electronic Commerce, which is a trading or facilitation of trading services or products using computer networks such as the Internet or social networks. One of the world's most fastest growing E-commerce company is Alibaba Group Holding Limited. 

Source:http://projects.wsj.com/alibaba/.

Alibaba provides C2C, B2C and B2B sale services via web portals. The company was founded by Jack Ma in 1999 in Hangzhou. Here's an explanation by Jack Ma himself of how the name Alibaba came about:

Jack Ma giving presentation.

Picture from Forbes "The richest people in tech".

"One day I was in San Francisco in a coffee shop, and I was thinking Alibaba is a good name. And then a waitress came, and I said, "Do you know about Alibaba?" And she said yes. I said, "What do you know about?", and she said, "Open Sesame". And I said, "Yes, this is the name!" Then I went on to the street and found 30 people and asked them, "Do you know Alibaba?" People from India, people from Germany, people from Tokyo and China … they all knew about Alibaba. Alibaba – open sesame. Alibaba is a kind, smart business person, and he helped the village. So … easy to spell, and globally known. Alibaba opens sesame for small- to medium-sized companies. We also registered the name "Alimama", in case someone wants to marry us!"

Since launching, Alibaba has quickly become successful in the Chinese Market, but also internationally. In 2003 they launched Taobao, the largest online shopping marketplace for consumers in China (> 8 million users registered). It didn't take long for them to also release Alimama, China’s largest online advertising exchange platform, and Alipay, China’s leading online payment service. Now the initial reason that Alibaba was created was to simply facilitate a 24 hour meeting platform for suppliers and buyers from all over the world. Many have criticised said that you can't have a global company out of China, and yet there was Alibaba to prove them wrong. Other companies saw potential in the Chinese market and quickly acted. In 2002 Ebay entered the Chinese market and as any company they expected to instantly create large revenues. They eventually withdrew from China, one of the reason being was their lack of cultural understanding. Ever heard of The Great Firewall? Yup! Ebay didn't see that coming when they entered China. The strategies they used were successful for in many countries, except for China. After Ebay left in 2006, Taobao quickly grew because they understood the importance of relationships in the Chinese culture. Also always putting the needs customers first. Here are some other reasons Ebay failed:

• Trading of secondhand goods were not common in China.
• Merchants unhappy with commission. (Ebay did charge and Taobao doesn't).
• Ebay staff did not speak Chinese and had no cultural understandings whatsoever.
• US servers, which in China caused website to be slow/blocked.

With every success you encounter some challenges. When Alibaba started it has almost no competitors. Nowadays the Chinese market is changing and the demand on things being more digitalised is severely increasing. Alibaba has now some local competitors such as Jingdong and Tencent Holdings Ltd. That doesn't mean that Alibaba isn't successful anymore.

Alibaba has many of purposes and is trying to reach each one of it. From trying to help sellers and traders connect from around the world to providing basic services and products to villages who have little access to employment, products or services. So, in general, Alibaba has created jobs providing trade platform, stimulate employees to volunteer in social activities and spending their annual revenue on environmental awareness. Of course there are many more. Here I just mentioned a few.

Is Alibaba unique to other competitors? Hm, yes maybe depending on which level. Let us compare Alibaba to Amazon.

• Both are top e-commerce company in own country. (only similarity I found)
• Alibaba sells ads whereas Amazon sells products.
• Both companies focus on providing products at lower prices.
• Amazon operates on managed marketplace. (owns massive distribution centres, sells its own brand etc)
• Alibaba operates on a open marketplace.

As a summary of this entire article I think Alibaba has a huge created a huge platform for sellers and traders. Some with business experience and some with non. Jack Ma has showed the world that from many failure something can still be created. I think if Alibaba wants to step foot outside China they will face a lot of criticism from consumers that are not Chinese. Outsiders still value quality and in foreigners their eyes products manufactured in China don't really meets quality for them. Also another thing to think about is other competitors outside China. Just like Alibaba is the leading in the Chinese market another e-commerce could be leading in another country. When people have been trusting one seller for a long time it will most likely be hard to trust one from another part of the world in my few. If Alibaba wants to step outside China they must make research of the worlds beyond the great wall.

Please feel free to post your comment and share this article!

Thank you for reading.

~Chayenne W.

References

(n.d.). Retrieved from projects.wsj: http://projects.wsj.com/alibaba/

(n.d.). Retrieved from https://service.alibaba.com/buyer/faq_detail/10632016.htm

(n.d.). Retrieved from http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/digital-media/11101238/What-is-Alibaba-in-60-seconds.html

(n.d.). Retrieved from https://www.entrepreneur.com/article/275969

(2014, september). Retrieved from forbes: http://www.forbes.com/sites/forbesleadershipforum/2014/09/22/alibaba-vs-amazon-who-will-win-the-global-e-commerce-war/#7bf5c2fa202c

(2015, june). Retrieved from quora: https://www.quora.com/How-did-Alibaba-become-so-successful

(2015, october). Retrieved from advancedmanagement: http://advancedmanagement.net/content/gnw2015-why-did-ebay-fail-china

(2016, september). Retrieved from wikipedia: https://en.wikipedia.org/wiki/Alibaba_Group