The perception of textile and apparel business about corporate social responsibility in the context of international integration

Nội dung text: The perception of textile and apparel business about corporate social responsibility in the context of international integration

1. THE PERCEPTION OF TEXTILE AND APPAREL BUSINESS ABOUT CORPORATE SOCIAL RESPONSIBILITY IN THE CONTEXT OF INTERNATIONAL INTEGRATION Ph.D Nguyen Xuan Hung1 – Nguyen Hong Linh2 Abstract: The paper shows the perception of textile and apparel business about corporate social responsibility (CSR) by using primary and secondary data from qualitative combined with quantitative analysis methods. The results show that the business’s awareness has a great influence on social responsibility activities the in many ways. On that basis, the article proposes several recommendations for the Government of Vietnam as well as Vietnamese textile enterprises to well perform corporate social responsibilities. Keywords: The perception, corporate social responsibility (CSR), textile business. 1. INTRODUCTION Currently, accelerating economic growth is always associated with environmental, social, and community problems. Therefore, policies on social responsibility are formed. After the developed countries have been pioneering, the social responsibility activities are widespread in developing countries including Vietnam, especially in the trend of integration and fierce competition. It is obvious that businesses play an important role in connecting stakeholders and pioneering global trends such as corporate social responsibility (CSR). In terms of Vietnam, the textile and garment industry has been one of the key export industries for many years. The reason behind is that it gained manifold encouraging results such as creatingthe value of exports as well as ensuring consumer demand. Specifically, in the process of international economic integration, the signing of successful new–generation free trade agreements has created a great opportunity for Vietnam's textile and garment industry to penetrate new markets, develop new products and services, and fulfill the supply chain to meet the standards. Therefore, I chose the topic of the awareness of textile business about CSR. The structure of the article includes: Introduction; Part 2 provides a theoretical basis and background of the textile and garment industry; Part 3 presents the methodology and research results; The last part is conclusion and some recommendations. 2. THEORETICAL BASIS AND BACKGROUND OF THE TEXTILE AND GARMENT INDUSTRY 2.1. CSR theory CSR has been defined in various ways since the 1960s, each one with its own meaning and approach. Most of the initial definitions of CSR focus on what constitutes corporate social responsibility; why businesses should be socially responsible (Fitch, 1976). Carroll (1979) argued that CSR was a combination of economic, legal, ethical, and social expectations for businesses. In 2010, Wood identified CSR so far as being extended to all three levels of responsibility: institutions and economy, business and organizations, and the individual level. 1 School of Trade and International Economics, National Economics University. 2 International economic 59A–Excellent Educational Program, National Economics University. 58
2. In order to the most general assessment of CSR, businesses should identify CSR from the theoretical perspective of stakeholders. Freeman et al. (2008) divided stakeholders into internal and external. The stakeholders inside the business are the people who are most important to the company's business operations, while outside are the stakeholders likely to influence perceptions and attitudes of internal stakeholders. According to PhanThi Thu Hien (2019), CSR's benefits with enterprises are classified as monetary and non–monetary benefits. Monetary benefits are direct benefits measured in monetary terms. Non– monetary benefits are not measured directly in monetary terms but still affect the competitiveness and financial efficiency of enterprises. 2.2. Background of Vietnam textile and garment industry Experiencing the history of formation and development with many changes, up to now, the textile and garment industry is holding an important position in Vietnam's economy in terms of growth rate and export expansion ability of the industry. According to the Vietnam Textile and Apparel Association (VITAS) report on the performance of the textile and garment industry, by the end of 2019, the total export turnover of this sector reached 39 billion USD, decreasing 1 billion USD compared to the set target. Instead, the trade surplus reached the highest level ever with 17.7 billion USD. Compared to 1999, it increased by 22 times, from 17.5 billion USD to 39 billion USD. The labor scale in the textile and garment industry is overwhelming. The industry has created about 2.2 million jobs every year. However, the labor force in textile and garment enterprises is mainly unskilled workers; the level of awareness, understanding of laws and international standards is still limited. It is not a reason that textile enterprises do not guarantee workers' rights. Although the textile and garment industry has increasingly improved with modern technologies, the environment is more severely affected. The waste from this industry is more harmful and unintended impact on ecosystems and citizens' lives. This is also a matter of concern for Vietnamese enterprises. Thus, environmental protection policies and programs have also been implemented. Furthermore, the textile and garment industry currently faces challenges as the current domestic raw material is in short supply because it is mainly imported from China and supply chain management, construction in Vietnam have not been allocated more resources to improve. However, the culmination is the trade war between the US and China. Previously, Vietnam’s yarn exports to the US and China accounted for 3 billion USD and 2.4 billion USD respectively. Meanwhile, China has imported Vietnam's yarn at a very low price; however, the export enterprises cannot sell. Because the US has imposed high taxes on textile products of China, China required Vietnam to reduce export prices, making textile enterprises in difficult situations In conclusion, this is an overview of Vietnam's textile and garment industry, which is increasingly changing both in terms of quality and quantity. The production activities of the textile and garment industry interact with many stakeholders such as the environment, people, society, customers, etc., from which the effects of social responsibility will have impacts positively for the activities of Vietnamese textile enterprises. 3. RESEARCH METHODS AND RESULTS 3.1. Research methods The research mainly uses qualitative research methods that incorporate some content using quantitative research methods. Primary data sources areused, analyzed, compared from previous 59
3. scientific research, interviews with domestic and foreign experts, along with case studies on the perception of Vietnam National Textile and Garment Group (VINATEX) about CSR in 2019. Sample data are referenced from typical CSR studies both at home and abroad, social science and social institutions, influencers, and the importance of compliance corporate social responsibility, social responsibility experts as well as officials responsible for corporate CSR policies in typical Vietnamese enterprises and textile enterprises, officials of Government departments or major organizations related to Vietnam's textile and apparel industry such as Vietnam Textile and Apparel Association (VITAS) and non–governmental organizations related to environmental protection and human rights. 3.2. Research Results The research team made objective comments on the following issues: (i) Awareness on CSR of the Government, (ii) Awareness of enterprises and (iii) Awareness of textile enterprises. 3.2.1. Awareness on CSR of the Government Since 2005, party and government have had policies and awards to honour enterprises to well implement their social responsibilities, especially in the context of integration, the most typical is the "Corporate social responsibility towards sustainable development" award by the Vietnam Chamber of Commerce and Industry, the Ministry of Labor, War Invalids and Social Affairs, the Ministry of Industry and Trade together with the Leather and Footwear and Textile associations in order to encourage the Textile enterprises to participate in sustainable development. In the fourth quarter of 2010, VCCI (Vietnam Chamber of Commerce and Industry) established an Enterprise Council for Vietnam's sustainable development to contribute to improving competitiveness and sustainable development through the implementation of CSR. In addition, the renovation and open international economic integration of the Party and the State have brought impressive achievements in our country's socio–economic development, this has changed Vietnam's image in the international arena. One of Vietnam's challenges is the implementation of "Corporate Social Responsibility" related to some key issues in the field of labour and the environment, through the "Code of Conduct". It is noteworthy that in 2011, Vietnam implemented the first socio–economic development strategy for the period of 2011–2020 with the view "Fast development associated with sustainable development, sustainable development is the requirement throughout the Strategy” adopted at the 11th National Party Congress. From the perspective of management, the environmental policy mechanism of enterprises has been quite complete and met global criteria, such as to discharge sewage from textile activities to the environment, enterprises must handle 10 parameters such as COD, BOD, TSS The above results show that since the first years of accessing CSR, the Vietnamese Government always highly appreciates and pays attention to the implementation of CSR. It can be said that Vietnam has been doing very well. However, there still needs to be clearer regulations on investment technology criteria. In addition, to build programs to support enterprises in incident prevention planning, organize training courses, guide enterprises on how to identify dangerous chemicals, and be more strict in handling them. 3.2.2. Awareness of CSR of enterprises Research by Nguyen Thi Nhan and Tran Thi Hang (2016) shows that currently, small and medium enterprises account for over 95% of total enterprises in Vietnam but are not interested in CSR 60
4. implementation due to limited awareness and even distort the meaning of CSR of companies. In addition, enterprises are not fully aware, understand, approach, and apply CSR, even distort the meaning of CSR. Many enterprises just think that making charitable donations has fulfilled their social responsibilities without paying attention to working conditions, industrial waste treatment, ensuring product quality as committed, In fact, many companies seriously violated state regulations on labour management, environmental protection, interests of consumers, and the community. Many enterprises have not created a safe working environment for their employees and guaranteed benefits for their partners According to the sociological survey results, 46.8% of workers said that working conditions in fact still causes bad effects on their health, which is mainly due to the influence of dust (70.4%), microclimate (unpleasant heat 53,7%, high humidity 23,1%), noise (52.8%). From the above results, it is evident that the indifference of enterprises in ensuring labour safety at construction works, factories and enterprises. For exporting enterprises, especially in the period of FTA agreements, Pham Van Duc (2010) stated that corporate social responsibility has become one of the indispensable requirements for companies to access world markets, because in the context of globalization and international integration, if enterprises do not comply with corporate social responsibility, they will not be able to access to the world market. Many enterprises when implementing social responsibility have brought practical results in production and business. Typically, discharges of untreated wastewater seriously pollute the rivers and communities of Miwon Company, Hao Duong Leather Company, Viet Tri Paper Company, Hyundai Vinashin Company (Khanh Hoa), food production cases containing substances harmful to human health, such as soy sauce containing 3–MCPD causing cancer, noodles containing formol, food containing borax, melamine–containing milk. In addition, many enterprises violating the law on salaries, insurance regimes, labour safety issues are no longer a rare phenomenon, which has been causing annoyance to society. Phan Thi Thu Hien (2019), points out the difference in perceptions of large and medium–sized enterprises through research on the frequency of conceptual occurrences in small and medium enterprises and large enterprises. The results also show that large enterprises carry out more comprehensive CSR activities and that brings many benefits to businesses. 3.2.3. Awareness of textile enterprises According to Ms Nguyen Thi Tuyet Mai, General Secretary of Vietnam Textile and Garment Association, commented on the industry situation: “Textile and garment is the second industry causing water pollution. It is undeniable that the textile factory has to handle extremely difficult and expensive pollution, if unsatisfactory, people's lives and the environment will face the dangers from wastewater, chemicals, emissions ". Currently, VITAS (Vietnam Textile and Apparel Association) established an Environment Committee and participated strongly in the action program "Greening the textile and garment industry" with the cooperation and support of many international organizations such as United States Agency for International Development (USAID), German Agency for International Development (GIZ), World Wide Fund (WWF), World Bank – Water Program 2030 – WRG2030, Sustainable Textile Union. The association has contributed to orienting businesses towards green production, sustainability, environmental protection as an outstanding competitive criterion. This is also a positive affirmation to some local authorities that "textile and garment is a polluting industry". Moreover, according to the World Wide Fund (WWF), there were many projects to support textile enterprises financially to renovate technologies and reduce the impact of environmental pollution. In 61
5. particular, the sponsor's support and brands focused on level 1 and level 2 enterprises with large–scale investment and foreign–invested enterprises. A typical example is Hanosimex in recognizing textile enterprises about this issue. Hanosimex has built a social responsibility policy: "Compliance with social responsibility requirements is an obligation and a right of everyone – creating resources to develop the Company sustainably". Social responsibility policy is propagated to all employees so that everyone can understand the company's social policies and implement it together. Developing a documentation system includes processes and specific regulations according to 8 requirements of the social responsibility system. Special importance is required: health, safety, working time, salary requirements in which the Corporation has met the most difficult requirements as working time, rest, the salary, welfare policies for employees in accordance with the Labor Law. Hanosimex invests billions of VND to renovate workshops and equipment; upgrade facilities for eating and drinking, health care, sanitary facilities; purchase adequate labour protection equipment, fire and explosion prevention, so no accidents happened last time labour or fire incidents yearly. The assessment of CSR implementation is provided for in the Code of Conduct and standards such as SA8000, WRAP, ISO 14000, GRI. However, these standards are not agreements between governments or regulations of international conventions, so the binding is only between exporters, importers, or the enterprises themselves. However, these jobs are more mandatory or spontaneous than a voluntary job associated with business activities and corporate image. Besides, in 2019, the "green" fashion policies and programs are increasingly emerging and receiving a lot of responses. Typically show the collection entitled "Life in Motion" by Faslink Fashion Joint Stock Company. The collection brings new perspectives on the theme of "Green living, smart wear", as well as strongly spreading the message "protecting the environment from choosing clothing materials''. In addition, the company offers strategies to develop environmentally friendly fabric lines. Although it is a small action, it contributes greatly to affirm the proper awareness of CSR issues as well as the sustainable development of enterprises, especially in the current economic integration period. Significantly, one of the proud first successes of Vietnam in the process of integration is the accession to the World Trade Organization (WTO). Moreover, Vietnam has participated in 16 free trade agreements (FTAs) with over 50 trading partners; including 2 new–generation FTAs. Typically, the Trans–Pacific Partnership Agreement (TPP), the benefits to Vietnam's textile and garment industry are expressed in two main forms: tariffs and market access. Regarding tariffs, Vietnam can access big markets like the United States with tax rates lower or equal to 0. However, in addition to commitments on goods origin rules to enjoy preferential tariffs when exporting to countries members of the FTA, enterprises need to have very high commitments on labour and environment. These commitments are not easy to implement when 80% of Vietnamese textile enterprises are small and medium. Vietnam's textile and garment industry is still having to import a lot of raw materials and auxiliary materials from foreign countries for export production. Therefore, seizing opportunities and solving challenges to promote sustainable development is not only the Government's goal for Vietnam's textile and garment industry but also the common goal of many other stakeholders. By 2020, Vietnam has just successfully signed a free trade agreement – EVFTA – which becomes an opportunity but also a huge challenge for Vietnamese enterprises in general and the export textile enterprises in particular because of limited awareness about CSR and sustainable development. In fact, CSR awareness has long been formed through stakeholder theory. In general, for large enterprises, they see this issue in two directions deeply. However, there are many restrictions placed on 62
6. employees, the environment, society, Especially from small and medium enterprises that have not had any insight into this problem. Therefore, there is a gap in CSR awareness among companies in the same industry as well as other industries in Vietnam. This result has been drawn from previous studies, such as Pham Viet Thang (2018), Phan Thi Thu Hien (2019). 3.3. CASE STUDY: The perception of Vietnam National Textile and Garment Group (VINATEX) about CSR. 3.3.1. Introduction of VINATEX Vietnam National Textile Group and Garment Group (VINATEX) is a leading enterprise in the textile and apparel industry with the advantages of economic scale, wide distribution system, and complete production lines. Vietnam National Textile and Garment Group is divided into 6 units of functional and advisory boards. The equipment used by VINATEX is mainly provided by famous manufacturers in the world with high automation, which helps to better control quality, increase productivity, and improve working conditions for workers. Vietnam is currently in the process of international economic integration, VINATEX needs to have a strategy consistent with world regulations and CSR is one of those standards. VINATEX is leading in Vietnam's textile and apparel industry for the good implementation of this content. Therefore, the research team used VINATEX as evidence to see the impact of CSR on efficiency. 3.3.2. Awareness about CSR of VINATEX VINATEX's vision – mission is associated with the motto of sustainable development including: (1) To build value and customer satisfaction by turning Vietnam National Textile and Garment Group to be a premier textile and garment producer which can provide full package appeal solutions, fashionable, high quality and eco–friendly product to customers; (2) To obtain an effective production system by continually improving management, developing skillful labor force, discovering innovative techniques, and delivering dynamic and professional working environment. In order to deepen the vision – mission, the research team studied and synthesized activities related to CSR implementation of enterprises in VINATEX. Table 1: Summary of enterprises in VINATEX with practical CSR actions Name CSR practice May 10 To donate more than 20 billion VND to charity funds to implement social security Corporation programs; to take care of 24 Vietnamese Heroic mothers; 100% of officials and employees are paid social insurance, health insurance, given gifts on birthdays, weddings, standard helmets, visiting for help when facing difficulties Hung Yen To associate with Hanoi College of Textile – Garment and Fashion to open 2 training Garment courses to improve management skills for 280 team–level officials and send 48 officials Corporation to attend training courses organized by Vietnam National Textile and Garment Group. To actively participate in movements such as supporting funds with the amount of over VND 6.5 billion, caring for 2 Vietnamese Heroic Mothers, 63
7. Dap Cau To create jobs for more than 4,500 employees, with an average income of 8.7 million Garment VND/person/ month. Corporation To fully implement the types of social insurance, health insurance, unemployment joint–stock insurance, and many other regimes as prescribed by the State. company Hue Textile To invest in upgrading equipment at the Fiber Factory; To enhance production capacity to Garment 13,500 tons of Ne30 yarn/year; To replace old equipment, renovate and upgrade the Joint Stock warehouse space. Company To ensure regular employment for more than 5,300 thousand workers, with an average income of 6.52 million VND/person/month. To commend 18 collectives and 45 typical individuals in the movement of good labor and creative labor with the amount of more than VND 53 million. Viet Thang To coordinate well with local authorities to volunteer activities such as: Participating in Corporation the support programs for people with disabilities; Contributing to the program "gratitude net for Hoang Sa, Truong Sa". To improve conditions for employees to participate in social activities such as the Viet Thang mini–football tournament, participating in Southern sports festival, The Group has participated in activities for the community, making an important contribution to social security. In the situation of Covid–19, VINATEX has officially launched a product line of translated masks with fiber material and special technology that strictly meets the guidelines of the Ministry of Health on the technical requirements of epidemic masks for use in the community; presenting antibacterial masks to Central Lung Hospital and Viet Xo Friendship Hospital, Central Eye Hospital, National Hospital of Pediatrics and Hanoi Medical University. In terms of policies related to employees, especially, training policies, VINATEX has cooperated with 3 prestigious universities and training facilities to organize training courses, conferences, associations, specialized workshops to improve the professional capacity of officials with the number of more than 300 times/year. Regarding environmental protection policy, VINATEX and its members have focused on sustainable development, so they always prioritize the implementation of environmental issues in the production process such as applying ISO 9001, ISO 14000. Table 2: Amount of wastewater used and cost of wastewater treatment of VINATEX in 2019 Average costs of The amount of Wastewater Waste Wastewater Compared to 2018 wastewater in 2019 treatment Management reuse rate (%) (m3/year) technology Operations (%) (VND/m3) Industrial Water Industrial Water Mainly using 12.300 No water water Physical & Microbiology 693,869 456,110 16% off 6% off Source: VINATEX's annual report 2019 64
8. 4. CONCLUSION AND RECOMMENDATIONS Through analysis and evaluation, this study has found evidence of the impact of CSR on the operational efficiency of Vietnam's textile and garment industry. The results also determine the importance of CSR in the field of sustainable development, especially in the integration period and raising awareness of Vietnamese textile enterprises. After studying, analyzing, and evaluating, the research team realized that there is a gap between the perception of large enterprises and both small and medium enterprises on this issue. While large enterprises place great importance on CSR implementation, small and medium enterprises are often concerned with immediate benefits and are constrained by their competence and expertise. Thus, many Vietnamese businesses have failed to fulfill their social responsibilities, which have led to actions that go against sustainable development, infringing on the interests of stakeholders. Therefore, the textile industry needs a lot of effort to meet the requirements of the domestic and international community in recent years. In many cases, although enterprises are aware of the benefits and opportunities CSR can bring, they are still difficult to implement because of barriers. To assist Vietnamese textile and apparel enterprises in fulfilling their corporate social responsibility more effectively, especially overcoming challenging barriers, some recommendations are based on the proposed research results: On the government side: Completing legal documents to enhance the implementation of corporate social responsibility; Proposing solutions to raise the awareness of corporate social responsibility; Strengthening inspection activities, effective inspection; Actively researching supporting mechanisms and policies for enterprises; Carrying out cooperation activities with international organizations, signing free trade agreements. On the Vietnamese textile enterprise side: Raising awareness of corporate social responsibility; Establishing specialized research teams on CSR; Preserving and promoting the achieved achievements; Carrying out social responsibilities for environmental issues; Implementing social responsibilities to employees. Textile enterprises in the world such as NIKE, ZARA, UNIQLO, etc. have achieved remarkable success in implementing social responsibilities. Vietnam's textile and apparel industry can learn from these brands to build up an appropriate strategy. REFERENCES 1. Agyemang, O., Ansong, A. (2017). Corporate social responsibility and firm performance of Ghanaian SMEs: Mediating role of access to capital and firm reputation. Journal of Global Responsibility, 8(1), 47–62. 2. Beiting, C., Loannou, L. and Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35, 1–23. 3. Carroll (1979). A Three–Dimensional Conceptual Model of Corporate Performance. Academy of Management Review, 4(4). 4. Fitch (1976). The social responsibility of business is to increase its profits. New York Times Magazine, 32 (33), 122–126. 5. Freeman et al. (2008). Opportunity Platforms and Safety Nets: Corporate Citizenship and Reputational Risk. Business and Society Review, 105, 85–106. 65
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