When it comes to foreign companies denying locals basic information about what they’re up to Chinese firms are frequently fingered as the worst of a bad bunch. However a new study out yesterday challenges that assumption.
The briefing by the international transparency scheme for the oil, gas & mining industries, EITI, sets out how much information Chinese companies have published about their operations in EITI member countries around the world.
The results are encouraging and indicate an ability and willingness for Chinese firms to act transparently where disclosure is the law or the commercial norm and, at times, to go beyond the minimum requirements.
Key findings from the EITI briefing include:
- At least 90 Chinese companies are involved in EITI reporting globally, including some of the world’s biggest oil and mining names such as China National Petroleum Corporation, China National Offshore Oil Corporation and China Nonferrous Metal Mining.
- Chinese firms disclose information about the payments they make to host governments as much as non-Chinese firms. In the limited cases where Chinese companies were reluctant to report, they were in the good (or not so good) company of businesses from countries such as Australia, Canada and the US that were also dragging their feet.
- Information disclosure by Chinese firms doesn’t stop at financial payments. Indeed, Chinese companies in DRC, Mongolia and Nigeria made declarations about their ownership and control, known as beneficial ownership, while firms working in Afghanistan published their oil production contracts.
- Chinese firms are involved in EITI ‘Multi-Stakeholder Groups’ – the national committees that oversee implementation – in at least six countries, which in itself goes beyond the minimal requirements.
The findings of the report mirror those of an earlier study by Global Witness and Beijing-based consultancy SynTao which examined the extent to which Chinese companies were publishing details of their payments to foreign governments either through EITI or in line with stock exchange reporting rules.
Both studies reflect China’s increased awareness of risks faced in overseas operations and point to the role disclosure rules can play in building a more stable investment environment for companies. Research by Global Witness and other groups has shown how questions over hidden payments can damage the reputation of Chinese companies, at a time when many are seeking greater recognition on the international stage as a basis for forging joint ventures, getting listed or gaining access to new resources. Meanwhile there is growing awareness that transparency of payments made by companies to governments can help prevent corruption and associated conflict.
Given the new evidence of widespread disclosure of financial, beneficial ownership and contractual information under EITI by Chinese companies, the time seems right for leading firms to engage with and support the scheme at a more institutional level. An immediate step would be for industry leaders in China to make a public commitment to the scheme and the principles it enshrines – something that would also go some way towards reassuring doubters that Chinese companies are committed to operating as responsible players on the global stage.
Lizzie Parsons is Senior Advisor at Global Witness. Follow her on Twitter at @GW_China