Report: Multinational Corporations in China Lag on Environmental Protection

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On December 7, Nanfang Weekend, a well-known Chinese newspaper, published a ranking of Fortune 500 companies' performance in China, revealing the poor records of the multinational corporations (MNCs) in tax payment, employee welfare, and environmental protection. Of the 70 companies with the highest scores, only 21 scored higher than 1 point, out of a total of 10 points, according to Xinhua News. Factors addressed in the survey included investment, business performance, social responsibility, contributions to the local community, and brand image in China.

In particular, the list highlighted issues of resource consumption and environmental pollution. According to the report, some MNCs have intentionally relocated polluting activities to China, where local governments often turn a blind eye to associated environmental destruction. Others misuse China's natural resources or fail to meet the rigorous health and environmental standards of their home countries when operating abroad. In April, the U.S.-based company Procter & Gamble was charged with false advertising of its SK-II anti-aging skin cream, including exaggerating its effectiveness and failing to inform Chinese consumers that the product contained the harmful alkaline compounds sodium hydroxide and Teflon.

Currently, a total of 101 Fortune 500 companies are reported to have operations in Beijing's Central Business District, and 45 (representing 9 different countries) have invested in more than 100 enterprises in the Tianjin Economic Technological Development Area. As these MNCs scale-up their investments, China appears to be paying more attention to monitoring their activities and operations. In March, for example, the government scrambled to adopt new food safety inspection standards after U.S.-based food retailers Heinz and KFC were found to be using the banned food colorant Sudan Red 1 in products sold at their Chinese outlets.