Anyone who has visited Beijing recently will notice a striking change in the city’s streets: a bike-sharing trend which is transforming this city famous for teeth-grinding gridlock into a far more mobile place, and is helping to improve the environment and residents’ physical fitness in the process. It is also raising some interesting questions about supply chains, a topic which may not at first glance seem integral to bike sharing. Yet unlike their “sharing economy” peers in the ride-hailing industry, China’s bike-sharing companies provide both the software and hardware for this new craze. Painted day-glo orange, sunflower yellow or cerulean blue, their bikes are churned out by the thousands and deposited in huge clusters at key sites around the country’s sprawling cities, for residents to hop on and pedal away.
But how responsibly are these companies managing this process? Our comprehensive examination of global supply chain responsibility, No more excuses: responsible supply chains in a globalised world, suggests that companies are being complacent when it comes to managing their supply chains, and the burgeoning bike-sharing industry in China should be wary of following suit. Historically, China does not have a particularly strong reputation for supply chain transparency. Its stewardship of the environment is notoriously poor. Foxconn, which manufactures Apple’s iPhone and other next-generation gadgets in massive Chinese factory towns, was struck by a string of suicides in 2010, attributable to poor working conditions.
Yet China may also be cleaning up its act faster than other places. According to our survey, two-thirds of firms in China reported an increased focus on supply chain responsibility compared to five years ago, versus a global average of 53% (in addition to China, the survey also looked at Germany, Hong Kong, Italy, Japan, Singapore, South Korea and the US). Only 17% of companies in China said it was a higher priority five years ago, the lowest share among all markets.
Numerous factors could explain China’s transformation—its government’s enhanced emphasis on social well-being versus the former growth-at-all-costs model, greater scrutiny by Western clients commissioning Chinese suppliers or the demands of China’s own rapidly-maturing consumer base. Globally, survey respondents named “company culture” as the top determinant of their firms’ approach to responsible supply chains—a term that has as many definitions as there are companies, and can be fiendishly hard to pin down.
Regardless of impetus, however, a few things unite most companies at the forefront of supply chain responsibility. The first is a clear sense of the bottom-line benefits. “Materiality”, or the extent to which a given social or environmental issue carries financial risk or opportunity, is top-of-mind for executives in this space. The second is engagement by senior leaders, particularly those who hail from parts of the firm other than corporate social responsibility, marketing, public relations or legal departments. In our survey, the latter job function was most heavily associated with a reduced emphasis on responsible supply chains now versus five years ago, while the opposite was true of companies who granted ultimate oversight of supply chains to executives from general management, operations, finance or risk departments.
Clearly, most companies are still not doing enough, despite the 79% of respondents who said that their companies address issues in their supply chains “well” or “very well”. In today’s hyperconnected world, there are no more excuses to claiming ignorance over a supplier’s misdeeds—data is now a ubiquitous commodity, and monitoring has never been easier. This applies to makers of everything from the most high-tech piece of computing kit, to the simplest and most unassuming bicycle.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
