Are You Taking a CATNAP in China?

Thursday, April 3, 2008 7:07
Posted in category Uncategorized

While catching up on some reading this weekend, I came across a new anacronym in the book Natural Capitalism that I thought was pretty applicable to how some in China are operating… they are taking a CATNAP

Cheapest Available Technology Narrowly Avoiding Prosecution

With timing being everything, this anacronym is timely as last week during the showing of A Decent Factory. The movie, a documentary of an ethical audit at one of Nokia’s factories, catalyzed a discussion about global vs. local standards where some argued that the balance between moral obligations and profit had to be balanced.. and that while Denmark may have one standard, and China may have another, a firm may not necessarily feel compelled to do more than the minimum of either, much less implement a global standard.

Where this debate gets interesting, and where I will open it to comments, is that China’s regulatory and market conditions are changing very fast and that when they do it is almost always by taken a step towards global standards… not away.. and that firms investing in China need to begin looking at developing global standards rather than local +.

Areas that have seen changes in the last 12 months include labor, the environment, investment, and tax.. and as we have seen in many announcements, it was those firms who were banking on the minimum local standard rather than the global standard that were rushing to lawyers, accountants, and consultants (labor, environment, government relations) to make sure they were compliant, or figure out how much the cost to get compliant would be.

So, at this point, I will open the floor.

Should firms begin looking to implement global standards, codes of conduct, labor practices, etc? By doing so, is it actually more cost effective, or is the risk of over investment greater than getting compliant later

or

Should firms continue to leverage lawyers, accountants, and consultants to define the minimum and then develop the loopholes once the standard is raised?

and

will the primary catalyst for the rise of standard/ expectations be the government going forward? Or will it be consumers? labor market? Environmental NGOs? media?

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3 Responses to “Are You Taking a CATNAP in China?”

  1. Thomas Chow says:

    April 3rd, 2008 at 12:10 pm

    I like the second and third options. I think the standards can and should be defined both by policy makers (government types), but also pushed by NGOs and other organizations (public interest types). The idea of implementing global codes will likely (1) cost too much for companies to have ridiculously high standards in places where there are none, (2) impose a rather high bar on the rest of the market, and (3) may implement policies that are “higher” than local standards but still not compliant for some reason or other. At that point, I would have to ask myself, “why am I doing this again?”

  2. Jay Boyle says:

    April 5th, 2008 at 8:50 am

    Keep in mind that unfortunately while standards are set in Beijing they are implemented on the local level.

    This means that any local government that values investment over the environment is willing to look the other way when the rubber meets the road.

    Jay

  3. Ayyo Devuda says:

    May 30th, 2009 at 12:18 am

    As far as regulations go, I think another concept from Natural Capitalism is useful. If steep feebates are introduced, competitive pressure will lead companies into world standard waste and emission control.

    Ps: A feebate is a fee and a rebate put into one. The basic idea is that in any product or industry, the dirtier half will pay a fine which will become a rebate for the cleaner half of the sector. Even with shoddy implimentation, this would be a resounding success for all the good guys, imo.

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