What happens when businesses are driven not just by maximizing profits for their shareholders, but also by benefiting the wider community and environment in which they operate? Sparks fly. Amazing feats are achieved in local communities, factories, businesses, and even nations.

The past quarter of a century has seen Western businesses investing heavily in China, all striving to adapt their business models to this huge market, while bringing capital, technology and management know-how to the country.

By Stephanie Yan

Corporate social responsibility, or CSR for short, has a lot of synonyms. It is sometimes called "corporate stewardship", "corporate citizenship", "corporate governance", "business ethics", "corporate community involvement" or "social entrepreneurship".

Whatever term one prefers, business executives have overwhelmingly made it a major consideration in their corporate decisions, according to William Valentino, who cited a January 2005 survey that sampled the opinions of 130 CEOs across the globe.

By Raymond Zhou

Across industries, we have seen companies that achieved success in China while others failed. To cite some examples:

FMCG: In the fast moving consumer goods (FMCG) sector, Procter & Gamble (P&G) is widely regarded as one of the most successful foreign companies in China. Its hair care and cosmetics products, among others, are leaders in these respective spaces.

Growing with China, the Bayer way

With Greater China now among the fastest-growing markets in the world, Bayer has stepped up its involvement here. Continuing its successful strategy of investing in tandem with the development of the host country, the company offers solutions to China's needs in healthcare, nutrition and high-tech materials. Bayer is committed to sustainable development in China, and so pays equal attention to economic, ecological and social issues.

Bayer is a group of research-oriented companies doing business across a wide range of industries worldwide. Its major divisions include Bayer HealthCare, Bayer MaterialScience and Bayer CropScience. A focus on innovation and development form the basis for a current portfolio of some 5,000 products.

By Zhou Li and Alexander Wan

The key to being competitive

Wan: Since China's entry into the World Trade Organization in December 2001, many of the barriers to operating directly and efficiently in Chinese markets have fallen. As a consequence, competition has heated up in China for MNCs, not only among themselves but also with local Chinese companies. In this kind of frenetic marketplace full of opportunities, what is the key to being competitive?

Parrett: With great opportunities, you invariably get great competition. That's part of the level playing field that is rapidly emerging in China. That's why the fundamentals really count. From my trips to China and meetings with government officials and businesses, it is clear to me that both Chinese companies and foreign corporations - big and small - must focus on three things if they are to compete successfully: brand, supply chain management, and people.

Developing brand eminence and presence is more than just a label and an advertisement. In China, building a brand is, above all, an issue of delivering the product or service that Chinese consumers expect at the level they need or better. And doing that consistently, and in a quality way that enhances your reputation among consumers and business leaders. Businesses operating in China need to focus more on building their brands, especially in terms of consistency.

Supply chain management supports the brand quality by getting the right components or solutions in place in a timely fashion. In a fast growing market like China, supply chain management means an ability to be flexible, to anticipate shifts in market demands whether you are suddenly producing more laptops than desktops or having the right number of specialists to handle a surge in IPOs. Businesses need the right structure - a flexible structure - to serve a market like China. This is going to be a challenge for many Chinese companies.

Last, and perhaps most importantly, it's a matter of intellectual capital - the right people. There is no doubt a war for talent in China, but what cannot be forgotten is the growing importance of the need not just to find but to keep the right people. Turnover is as high as 40 per cent in some sectors - creating enormous challenges for companies and forcing new ways of managing people.

As a recent Deloitte Research study entitled It's 2008: Do you Know Where Your Talent is? suggests, this will continue to be a significant challenge, not only in China, but also in large parts of Europe and North America.

Wan: You have alluded to the importance of intellectual capital several times. What is unique to China?

Parrett: This is a subject I am addressing on a panel at the Fortune Global Forum on China and the New Asian Century. It is clear that new demographic realities will shortly affect workforce markets in China and around the world. And the potential for a shortage of talented workers is serious. That's why the intellectual capital strategy of corporations has to shift.

In the 1990s, we were told to fight "the war for talent." Tomorrow's battlefield will be very different. The focus will be on more than just acquiring and retaining talent. In China, while companies struggle with the recruitment war, they simultaneously must address retention issues and more. Companies will need to focus internally on identifying potential talent and then finding the appropriate ways to develop it, deploy it and help connect it with the other parts of the organization. In sum, companies will need to stretch their employees, give them new and unexpected opportunities and make sure that doing a job equates with learning all the time.

As a result of the need to retain the right people, what seems to be emerging in China is a whole new system of rewards that reach beyond basic compensation.

Growing in importance will be rewards such as work-life balance, training and development, new assignment opportunities and new ways of recognizing a job well done. In addition, multinationals, both Chinese and foreign, will need to provide Chinese workers with opportunities to develop their global skills sets by working abroad.

These types of benefits and rewards are especially new to China's workforce and employers, but they also represent new horizons to be explored with workforces everywhere.