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P 052306Z DEC 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 2760
RUEHC/DEPT OF LABOR WASHDC PRIORITY
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHSH/AMCONSUL SHENYANG 7253
RUEHGH/AMCONSUL SHANGHAI 6571
RUEHCN/AMCONSUL CHENGDU 7598
RUEHGZ/AMCONSUL GUANGZHOU 1960
RUEHIN/AIT TAIPEI 6131
RUEHHK/AMCONSUL HONG KONG 8554
RUEHGV/USMISSION GENEVA 1482

UNCLAS SECTION 01 OF 02 BEIJING 024312 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT PASS USTR FOR KARESH, A. ROSENBERG, MCCARTIN 
LABOR FOR ILAB 
TREAS FOR OASIA/ISA-CUSHMAN 
USDOC FOR 4420/ITA/MAC/MCQUEEN 
GENEVA FOR CHAMBERLIN 
 
E.O. 12958: N/A 
TAGS: ELAB EINV PGOV CH
SUBJECT:  CORPORATE SOCIAL RESPONSIBILITY WITH CHINESE 
CHARACTERISTICS 
 
¶1.  (SBU)  Laboff met with the China National Textile 
and Apparel Council (CNTAC), a quasi-government body, 
to discuss "CSC-9000T," the code of conduct CNTAC is 
trying to establish for China's textile and apparel 
industry.  CSC-9000T is intended to cover the entire 
supply chain, not just export-oriented factories.  It 
is based on Chinese law and will focus on training for 
Chinese companies to improve compliance.  CSC-9000T 
will not involve accreditation or third-party 
monitoring.  Corporate Social Responsibility (CSR) 
executives from several American companies told Laboff 
that CSC-9000T is in line with the trend in the CSR 
community away from monitoring and toward capacity 
building.  However, some of these executives doubt 
whether CSC-9000T will have sufficient credibility to 
be useful to buyers if it does not have accreditation 
or third-party monitoring, or deal with 
internationally recognized labor standards, including 
the freedom of association and collective bargaining 
rights.  Others said CSC-9000T's biggest challenge 
will simply be to show that its capacity building 
program can noticeably improve factory conditions 
across China's enormous apparel industry, a big task 
for a small and inexperienced organization.  CNTAC 
said it would welcome USG assistance. End summary. 
 
¶2.  (U)  Laboff visited CNTAC on 16 October 2006 to 
discuss CSC-9000T, its code of conduct for garment 
manufacturers and their supply chains.  CNTAC Vice- 
President Sun Ruizhe said CNTAC's goal is to develop a 
robust, voluntary code for the industry, based on 
Chinese laws and regulations, which will not involve 
accreditation or invasive audits.  CSC-9000T will 
apply to the entire supply chain, not just major 
exporters.  Chinese companies are already working with 
their suppliers to set up the Responsible Supply Chain 
Association (RSCA) to work with CSC-9000T.  CNTAC got 
help from the ILO, the Fair Labor Association (FLA), 
United Nations Industrial Development Organization, 
the EU, and several well-known brands in designing and 
promoting its code and training programs, and intends 
to remain engaged with these partners as it refines 
its program. Sun said CNTAC would welcome assistance 
from the United States Government as well. 
 
¶3.  (U)  CSC-9000T is currently being implemented on a 
pilot basis in 10 factories to demonstrate 
feasibility.  CNTAC hopes to expand the program to 100 
large manufacturers and then 1000 small- and medium- 
sized factories over the next three years. Reflecting 
Chinese law, the CSC-9000T code focuses predominately 
on working conditions, and makes virtually no 
reference to freedom of association or collective 
bargaining rights. 
 
¶4.  (U)  Impetus for the development of CSC-9000T 
comes from both the Chinese Government and Chinese 
industry.  Implementation of the program is included 
in China's 11th five-year plan.  CNTAC itself is a 
government-supervised industry association (the 
successor to the Ministry of Textiles) and receives 
budgetary support from the Central Government. 
However, CNTAC intends for CSC-9000T to be self- 
funding, through training program fees. Sun said the 
Chinese Government recognizes that CSR is a "business 
issue".  At the same time CNTAC also wants to reduce 
the burden on Chinese suppliers who now must contend 
with multiple codes of conduct and auditing 
requirements from various buyers.  Sun said Chinese 
suppliers are unhappy with existing codes and auditing 
programs because they do not provide solutions to the 
problems they uncover, and because they do not afford 
any real protection to a brand's or supplier's 
reputation. 
 
 
BEIJING 00024312  002 OF 002 
 
 
¶5.  (SBU) Western buyers have varying views of CSC- 
9000T.  CSR executives from Disney and Hewlett Packard 
(HP) told Laboff that CSC-9000T is probably the first 
of several standardized codes of conduct the 
Government will attempt to promote for various 
industries.  Disney and HP consider the industry-wide 
code a positive approach that could help bring order, 
better compliance and better cooperation on CSR among 
China's many suppliers.  Disney believes that without 
accreditation or some from of third-party monitoring, 
most buyers will probably not view CSC-9000T as an 
acceptable  substitute for their own codes.  Disney 
and HP both also said that CSC-9000T does not address 
labor-management relations, and that buyers were still 
looking for "parallel mechanisms" to prevent and 
settle labor disputes in suppliers' factories.  (The 
HP executive noted that in the city of Shenzhen, the 
local labor bureau told her that dispute settlement 
was a company responsibility because government 
agencies did not have the resources to do anything.) 
A CSR executive from Nike told Laboff that third-party 
monitoring is not as important as bringing about 
changes in the factory.  An Adidas executive agreed 
and noted that CSC-9000T took its lead from the Fair 
Labor Association and some of the big buyers who are 
moving away from monitoring and toward capacity 
building. Adidas said CSC-9000T's biggest challenge 
will be to find enough qualified staff to carry out 
effective capacity building for its subscribers. CSC- 
9000T may just be too small and too shallow to make a 
difference, he said.  As for credibility with the 
labor rights community, the Adidas executive added 
that CSC-9000T?s reliance on Chinese law rather than 
internationally recognized labor standards, will 
probably be a bigger obstacle than the lack of third- 
party monitoring. 
 
RANDT