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Multinationals Need to Rebuild Corporate Image as Business Models
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by Xinhua Zhao Yin


McDonald's has approved a pay raise for more than 95 percent of its employees in China, a move that may redeem the fastfood giant's reputation in the wake of being accused of underpaying its staff.


The payment adjustment, the first ever initiated by the hamburger king since it came to China 17 years ago, was launched on Saturday, the company sources said.


The move was in response to extensive public outcries that the company, along with KFC and Pizza Hut, has been underpaying their part-time staff in the southern city of Guangzhou by up to 40 percent below the local statutory minimum wage of nearly US$1 an hour, he said.


The beneficiaries, mainly part-time workers in about 75 percent of McDonald's outlets across the country, will see their basic payment raised by 12 to 65 percent.


The salary incident was a result of the development of China's social supervision system and the growth of people's consciousness of social injustice, said Wang Lingyi, professor with Shanghai Academy of Social Sciences, pointing out that "many foreign firms are forced to rebuild corporate image".


"Just depending on PR activities to build up corporate image is no longer adequate in China, where the legal system is being updated and industrial criteria are catching up with the world's level," he said.


Peng Xizhe, professor of social sciences with Shanghai-based Fudan University, said that "transnational companies were once considered business examples, but many have been found of attempting to test the limit of Chinese laws and ethical principles,"


German engineering powerhouse Siemens, under investigations over bribery and corruption allegations in Europe and the United States, sacked 20 employees in its China branch last year, saying they had been found to be related to things the company "doesn't want to accept."


Following a report released by a German magazine last week saying that about half of Siemens' business in China was tainted by bribery, Peter Loescher made his first visit to China after being appointed Siemens' new CEO.


In addition, about 90 foreign-invested companies, including KFC, Pepsi and Carlsburg, have been found of violating Chinese rules on waste discharge since 2004, a recent report by the Institute of Public and Environment Affairs said.


An on-line survey shows that more than 73 percent of the interviewed were strongly against foreign companies which moved polluting industries to China. Another 82.5 percent of netizens blamed those who forged deficit statistics to avoid tax paying in China, the survey conducted by Ipsos between June to July said.


More than 280,000 foreign-funded companies have registered in China by the end of June this year, bringing in a total investment of US$180 million, government figures show.


At the same time, Chinese public are paying more attention to whether these multinational companies are performing in accordance with laws and commercial ethics and realize due social responsibilities, Prof. Wang said.


Mere public relations strategies won't work, and big multinationals need to rebuild their lost role of business models in China, just as they used to do in their home countries, he said.


(Xinhua News Agency September 4, 2007)

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