challenges for the foreign company

CSR Asia's Weekly journal (www.csr-asia.com) is a fascinating read, and I highly recommend it (even if you are not in Asia). Although some of the news may not be that interesting many of the analysis and articles are. Recently there was a piece about South Korean businesses operating in a special industrial zone just across the border into North Korea.

Although the examples are quite extreme they do show many of the typical problems companies have when operating in another country. In these cases they found they had to have 2 security guards, since it was normal practice to need 1 to check up on the other. They found the employees don't like training videos, but since they read the newspapers on walls, the company puts the training in newspapers and puts them on the wall! These are 'cultural issues'.

There are also extreme examples of choosing between local and imported materials/people. In this case there is no water or electricity (it all comes from South Korea) and very little food. Thus the companies have to import goods, whereas traditionally foreign companies find it cheaper to buy goods locally, and it also helps stimulate the local economy -there is not much choice in North Korea though.

Companies are setting up there because there are so many unemployed workers that salaries are low and taxes and land even cheaper; is this exploitation? Are companies able to help the economy through their investments, by creating jobs and brining in health resources (for example) for the workers? Normally its good CSR to pay taxes and this is of huge benefit to local economies (benefit of globalisation), but what about in this case, where the government of North Korea is so bad, most of the country survives on food handouts from the UN, where China and South Korea provide almost all the utilities and where the few state owned companies that are operating do so by using forced workers (prison populations). North Korea is interesting since so little is known of it. Although people might argue that a lack of freedom in the press in China is hindering its development (in terms of CSR, having NGOs or media criticising companies), in North Korea there is total censorship... in fact noone will ever know what most of the foreign companies setting up there are doing with their labour practices etc. (maybe thats a reason to set up there, since foreign NGOs cannot get in to criticise them?)

This throws up many conundrums for the 'responsible leader' -aiming to contribute towards the local economy of one of the world's poorest countries is admirable; although indirectly supporting such an oppressive regime is normally not supported by Multinationals (for example, most of them have withdrawn from Myanmar/Burma because of this). Where there are such extreme cultural differences, how can you manage your company with the same values and policies as elsewhere? How much do you adapt to local conditions (how much will that cost)?