Thesis Sustainable Purchasing in China - Kevin Prémel

SKEMA BUSINESS SCHOOL
MASTER OF SCIENCE IN INTERNATIONAL BUSINESS,

PARIS & SUZHOU CAMPUSES
LAST NAME:
Prmel
GIVEN NAME:
Kevin
NATIONALITY:
French
SUSTAINABLE PURCHASING IN CHINA
ACADEMIC YEAR 2013-2014
Sustainable Purchasing in China 2013-2014

Sustainable Purchasing in China
Abstract
Purpose : This paper summarizes the best practices of sustainable purchasing and its benefits.
It also analyzes the readiness of enterprises in China for sustainable issues. Finally the
research presents the tools for implementing sustainable purchasing in China and the
possibility to propose sustainable products to consumers at higher prices.
Design & methodology : The paper adopts an analysis of academic articles and quantitative
data. The 2 online surveys have been answered by 55 purchasing managers who deal with
China and also by 59 Chinese citizens.
Findings : The quantitative data expressed results that go beyond theories, a better knowledge
of sustainability in China, and the readiness to increase the price on both sides of the
purchaser : supplier and client.
Originality/value : From a normative approach and a practical case study to the proposal of
another solution to implement sustainable purchasing in China, this paper highlights the
important role of the Purchaser as a link between suppliers and customers.
Research limitations : The sample sizes: it studies only a small part of Chinese purchasers
and Chinese citizens compared to the total population.
Key words : Sustainable Purchasing China, Green Supply Chain, Corporate Social
Responsibility
Supervisor : Catherine Taupiac

2

Preface
This study was undertaken between September 2013 and August 2014 as part of my
2nd year of Master of Science in International Business in Suzhou (China) campus at SKEMA
Business School.
I would like to take the opportunity to thank my tutor Catherine Taupiac, Program
Director of the Master Supply Chain Management & Purchasing at SKEMA Business School
on the Campus Sophia Antipolis in France for her advice in conducting my thesis and her
strong encouragement to accomplish my research.
I would also like to thank M. Denis Boissin, Campus Academic Director, Sustainable
Development Professor, Program Director of the Master International Business at SKEMA
Business School in the Suzhou campus in China for his ideas and thoughts regarding
sustainable matters and his course on methodology to conduct the thesis.
I would also like to thank all the practitioners who helped me throughout the research study of
my subject, SKEMA Business Schools Alumni in China, other practioners in Purchasing,
Walmarts purchaser and sourcing managers at Walmart Shenzhen Global Sourcing and all
the respondents of my online questionnaire, purchasing practioners and Chinese citizens.

Table of Contents
Executive Summary
p.6
Glossary
p.7
List of Tables & Figures
p.9
Introduction
p.10
Literature Review
p.14
I) Sustainable Purchasing : Can Sustainable Purchasing Lead to Better Performance ?

1) Tools of sustainable purchasing
a) Definition
b) Methods
2) Stakeholders
3) Measurement
4) Benefits
5) Conclusion
p.14
p.14
p.14
p.15
p.25
p.31
p.35
p.37
II) Economic Development in China : Can Development be sustainable in China?

1) Introduction
2) China, the factory of the world : responsibilities
3) Internal factors
a) Positive aspects
b) Negative aspects
4) External factors
5) Conclusion
p.39
p.39
p.39
p.40
p.40
p.45
p.47
p.49
III) Sustainable Purchasing in China : Implementation and results

1) The foreign influence
2) Walmart Case
a) Implementation
b) Results
3) Conclusion
p.51
p.51
p.52
p.53
p.56
p.57
Methodology
p.59
1) Sustainable Purchasing Study

i) Demography
ii) Sustainability
p.59
p.59
p.59
2) Environment Study in China

i) Demography
ii) Personal features
iii) Knowledge and action
p.60
p.60
p.61
p.61
Findings & Discussion
p.62
p.62
4

a) Results
i) Demography
ii) Sustainability
b) Discussion
p.62
p.62
p.65
p.68

a) Results
i) Demography
b) Discussion
i) Demography
p.70
p.70
p.70
p.70
p.71
p.73
p.73
p.73
p.73
Conclusions and recommendations
p.75
References
p.78
Appendix
p.92
Appendix A : Sustainable Purchasing in China Online Questionnaire
p.92
Appendix B : Comparison tables
p.98
Appendix C : Environment Study in China Online Questionnaire
p.100

Executive Summary
The concept of Green Supply Chain Management (GSCM) has seen numerous
worldwide practical implementations in global corporations and in China. Different policies
can be established by purchasers to achieve better tangible and intangible results in corporate
supply chains while being mindful of the environment.
The Chinese context provides opportunities for the application of sustainable purchasing
solutions driven by local incentives and stakeholder pressure, but also exhibits cultural
barriers in the process. The implementation of such practices will become feasible through the
education of decision makers as to the importance to conduct sustainable actions following
consumer concerns and desire for more socially & environmentally-friendly products and
with safety in mind. Cooperation within industry and with NGOs is a solution to be
considered.
Purchasing managers are intermediaries between suppliers and customers to educate and push
for the implementation of sustainable actions. As customers are ready to pay for
sustainability, purchasing entities have the financial incentive to introduce some proenvironmental tools, and this is especially the case for small and medium enterprises (SMEs)
which lack of financial resources to adopt green processes.

Glossary
BSR
Business for Social Responsibility
CCC
China Compulsory Certificate
CCICED
China Council for International Cooperation on Environment and Development
CDP
Carbon Disclosure Project
CSR
Corporate Social Responsibility
CTI
China Training Initiative
EHS
Environment, Health and Safety
EMS
Environment Management System
EPA
Environmental Protection Agency
EP&L
Environmental Profit & Loss
FDI
Foreign Direct Investment
GHG
Greenhouse Gas
GRI
Global Report Initiative
GSCM
Green Supply Chain Management
IISD
International Institute for Sustainable Development
IPE
Institute of Public and Environment Affairs
ISO
International Organization for Standardization
LCA
Life Cycle Analysis
LMI
Logistics Management Institute
LEED
Leadership in Energy & Environmental Design
MEP
Ministry of Environmental Protection
MNC
Multi-National Companies
OECD
Organisation for Economic Development and Cooperation
NGO
Non-governmental organization
REACH
Registration, Evaluation, Authorization and Restriction of Chemical substances

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RFI
Request For Information
RFQ
Request For Quotation
RoHS
Restriction of Hazardous Substances
SCC
Supply Chain Council
SCOR
Supply Chain Operations Reference
SHE
Security, Health & Ethics
SCM
Supply Chain Management
SME
Small and Medium Enterprises
SSCM
Sustainable Supply Chain Management
UNGC
United Nations Global compact
WEEE
Waste Electrical and Electronic Equipment
WRI
World Resource Institute

List of Tables & Figures
Figure 1 : UNGC 6 steps model (UNGC-BSR Report 2010)
p.15
Figure 2: IKEA Sustainable Product Scorecard (IKEA Report 2011)
p.18
Figure 3 : GHG Protocol Scopes (GHG Protocol)
p.23
Figure 4 : Stakeholders influence (CCICED Report 2011)
p.29
Figure 5 : PUMAs EP&L 2010
p.34
Figure 6 : Walmarts Sustainability Index Questions 2009
p.54
Table 1 : GreenSCOR Environmental Metrics 1 (SCC 2010)
p.32
p.33
Table 3 : Q2 and Q10 Working experience
p.63
Table 4 : Q3 Job position
p.63
Table 5 : Q6 Companys size
p.64
Table 6 : Q7 and Q8 Working and sourcing sectors
p.64
Table 7 : Q12 Green supplier price
p.65
Table 8 : Q13 and Q14 Certifications and standards
p.66
Tableau 9 : Q15 and Q16 Sustainable policies
p.67
Table 10 : Q18 GSCM advantages
p.67
Tableau 11 : Q4 Pollution concern
p.71
Tableau 12 : Q10 Overseas product consumption
p.72

Introduction
Following Deng Xiaopings opening of China in 1978 the country experienced an
economic renaissance; the Middle Kingdom took back its position as a world leader with the
2nd position (in terms of GDP) and a record 2-digit economic growth. Indeed China was the
world leader 200 years ago when the United-States was just becoming a country
However this remarkable position and growth has been due to the central governments
willingness to impose its power to the expense of the countrys natural wealth and
environment with the help of Foreign Direct Investment (FDI). Two figures are significant to
illustrate this, 67% of the electricity in 2012 is made out of coal representing half of the world
production (Reuters 2014) and 50% of the exports are made by foreign companies (Financial
Times 2012). Coal is one of the most harmful energy sources to the environment that
contributes greatly to air pollution and global warming. This shows two important matters.
First, China faces a huge problem of pollution management and secondly foreigners and
foreign investment are linked to the countrys growth.
China has already taken actions to counter pollution and to manage its energy production, in
2008 the country was already the worlds largest producer of clean technology and in 2011
the first investor in clean energy (OECD Report 2012).
Other figures show that 40% of what is exported has first been imported from overseas as
material to be manufactured (Koopman and Wang 2008), therefore the supply chain has an
important role in the Chinese trade balance, where sustainable decisions can be taken, where
the application of international regulations toward goods has come into effect (Jeppesen and
Hansen, 2004). Competition and legislation (internal and external) have forced Chinese
suppliers to be responsible for their goods (Sarkis et al. 2011) and therefore to learn and study
the new environmental trends with their foreign and domestic customers but also with their
competitor who can establish among themselves benchmarking on new regulations with the
Chinese governments approval.
Today China is in real need of a change regarding pollution. The scandals are numerous in
every aspect of Corporate Social Responsibility (CSR), and in all types of pollution. From the
infantile milk poisoning (Nestle, Cadbury and Starbucks were affected too in 2008)
(CCICED, BBC 2011), to the Foxconn (Apple supplier) labor issues (Forbes 2011, BBC
10

2013), the recent records of air pollution (NY Times 2013), the water issues (Greenpeace,
Chinadialogue 2014), and other international problems with cases of cutaneous allergies (Le
Figaro 2012) and toys issues (Mattel) (Bloomberg 2013). China and its purchasing agents
have to be careful of what they are doing and stop focusing only on low cost products.
Of course there have been issues in developed countries such as the dirty food-processing
plant in the USA, the mad cow disease in Europe, toxic rice in Japan but steps have been
taken and regulations implemented. The origins of modern pollution find their roots the
European industrial revolution in the 19th century which started the Greenhouse Gas (GHG)
emissions, but the right to pollute must come to a halt today even including developing
countries, or countries like China, with sustainable development becoming everyones
concern . On a worldwide scale there is an urgent need for change. Since the 1980s humanity
has been living beyond its capacity, and by the year 2050 we will be using twice the planets
sustainable capacity in terms of natural resources and CO2 filtration.
Therefore, since 2006, Chinese corporate law requires companies to implement social
responsibility (Lin 2010). Since that date, CSR has become an aspect which must be taken
into account by every Chinese company. Not only for complying with environmental issues
but also as necessary for Chinese companies to compete internationally said the Chinese
deputy minister of commerce (Kolk et al. 2008). In the same vein firms see their stakeholders
as part of an environment which must be taken into consideration to gain respectability and
that in turn will generate revenues (Berman et al., 1999).
CSR is defined by Carroll (1979) in 4 parts and in order of importance :
1) Economic responsibilities of business, it must be productive and protable and meet the
consumer needs of society ;
2) Legal responsibilities of business, economic responsibilities are approached within the
connes of written law ;
3) Ethical responsibilities of business, unwritten codes, norms and values implicitly derived
from society ;
4) Discretionary responsibilities of business, philanthropic in nature and guided by a rms
attempt to make some desirable contribution not required by economics, law, or ethics to
maintaining or improving the welfare of society. (Wang and Dou 2012)
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In this subject we will focus on the application of environmental concerns in Supply Chain
Management (SCM) decisions, where the parallel between them already exist as described by
Lamming and Hampson in 1996 such as waste reduction correlated with lean process.
Moreover, we know that most of the consequences on environment and society come from the
supply chain as said in the UN Global Compact Report of 2010. On the green-house gas
(GHG) side, it has been proven that 50% to 90% of emissions and expenses come from the
supply chain and purchasing activities (Trucost Report, 2012; Carbon Disclosure Project CDP
Report 2011). Therefore changes have to be taken from the SCM side to manage pollution
and cut costs.
Since 1997 the proposal of international standards such as ISO14000 created a trend of green
manufacturing implementation (Dong 2011). Further among in this thesis we will study this
importance in the Chinese context more precisely.
CSR has to be implemented through internal policy in every company, in this study we focus
on the supply chain and more precisely sustainable purchasing, and the behavior to be adopted
toward suppliers.
Sustainable Purchasing is a part of the sustainable supply chain; by sustainable we mean
meeting the needs of current generations without compromising the ability of future
generations to meet their own needs (UN Brundtland Commission, 1987). When applied to
the supply chain we speak of Sustainable Supply Chain Management (SSCM) which
encompasses 3 elements : the society, the environment and the economy (Spreckley, 1981) or
the 3P as People, Planet & Profit (Elkington, 1994) which take into account the full cost or
impact of a companys business.
The matter we will try to study today is how China can solve the issues it faces with
environmental pollution through implementation of sustainable policies in the purchasing
department of companies on its territory. Furthermore we will study the feasibility of
implementing such policy and what the potential benefits are, both tangible and intangible
ones. Finally we will consider other solutions, from the two perspectives of the purchasers
relations, known as the suppliers and the customers. Thus, the questions we will try to answer
are :
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I) Can Sustainable Purchasing Lead to Better Performance ?
II) Can Development be sustainable in China?
III) Is it possible and profitable to implement sustainable purchasing policy in China? What
are the other solutions ?
To do this we will look at the existing theories on sustainable purchasing methods and results,
then the possibility of a sustainable China and finally the application of sustainable
purchasing in China.
Later on we will describe and analyze the results of a quantitative study on a sample of
professional purchaser who work in/with China and on a sample of Chinese consumers in
order to support our subject of research.
Finally we will conclude with the differences found between the theory and the quantitative
findings and discuss on possible future solutions or outcomes.
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Literature review
I.
Sustainable Purchasing : Can Sustainable Purchasing Lead to Better

Performance ?
1) Tools of sustainable purchasing
a) Definition
Purchasing is defined as the sourcing of a companys products & services necessary
for operational requirements while paying attention to the quantity requested, the level of
quality, the specifications and when applicable the pre-determined budget. All of this while
ensuring the best possible purchasing price and profitable costs of usage (Laurent, 1995). The
purchasing department is considered as a strategic activity within a company accounting for
up to 80/90% of company turnover depending on business sector, from 50% to 90% in retail
or OEM, and from only 10% to 40% in services (Kluge 1996 ; Bolognini 2006). Moreover the
savings generated by purchasing activities enable higher sales margins through a leverage
effect (Tompkins Report 2010).
Sustainable purchasing has been defined by the Sustainable Purchasing Leadership

Council as buying less and buying better, this can be easily linked to lean manufacturing. But
in our case we will focus on buying with a green consciousness to achieve a goal of better
tangible and intangible benefits both for the environment and for the company.
Sustainable Purchasing is a part of the sustainable supply chain, therefore we will study the
different elements comprising the Green Supply Chain Management (GSCM).
GSCM is the process using environmentally-friendly inputs and transforming these inputs
into outputs that can be reclaimed and re-used at the end of their lifecycle thus, creating a
sustainable supply chain (Pallavi, 2011).
This definition shows the importance of the purchasers role in greening the companys
activity. He is the one that decides with the project manager the selection of inputs and
therefore which supplier can reliably deliver a quality product using appropriate production
methods. Moreover life cycle analysis (LCA) is also taken into account by thinking of the
14

disposal and recycling of the product. Therefore better thinking about the design of the
product has to be taken in account, and we can refer to this as eco-design.
GSCM is also defined as improving the performance of the process and products according to
the requirements of the environmental regulations (Hsu & Hu, 2008).
The purchasing department should participate in all activities of supply chain management
and should more concretely purchase reused, recycled materials so as to reduce the use of
resources as much as possible (Carter and Carter 1998), or minimize waste (energy,
emissions, and chemical/hazardous, solid wastes) along the supply chain (Hervani et al.
2005). Moreover green purchasing focuses on value by considering the total cost in the
process of eliminating waste (Martha & Pat 2010).
The areas of the GSCM are : Product design, production, material purchase, packaging,
warehousing, logistics and reverse logistics.
b) Methods
The UN Global Compact (UNGC)

developed a practical guide in 2010 on how
to implement an Environment Management
System (EMS) in the supply chain to
achieve sustainability. It designed 6 steps
for companies to follow :
- Commit;
- Assess;
- Define;
- Implement;
- Measure and
- Communicate.
Figure 1 : UNGC 6 steps model
(UNGC-BSR Report 2010)
We chose this model because it has been developed by an advisory group of 33 global
companies' top managers from Purchasing and CSR departments from all over the world.
15

Their valuable thoughts on sustainable supply chain are fed by their corporate experience to
build practical recommendations of GSCM implementation.
We attempted to gather and detail fully those actions with concrete examples of the other
methodologies designed by researchers, private companies, academic institutions, state bodies
and specialized journals (MHI, Greenbiz, Walmart, IKEA, IISD, CSA, CDP, WBCSD,)
that have been trying to address. Those steps have to abide by 3 principles to achieve success :
governance, transparency and engagement.
The 6 steps will be detailed below according to the UNGC and with the addition of external
sources in an attempt to fully describe the practices of GSCM to be implemented.
1st Step : Commit
Identify all the environmental costs in the supply chain by developing the business case of the
firm. To achieve such goal, the Life Cycle Analysis (LCA) is a good way to proceed, by
looking at a product from its conception (raw material), to processing, manufacturing,
assembly, operations and retail, and finally until disposal, through the whole supply chain,
therefore from cradle to grave. We can push the LCA even further from cradle to cradle with
the re-use product at the end of life using the reverse logistics method.
General Electrics used such a methodology to figure out which products and which suppliers
may be the best target to go after for the biggest environmental impact (Wharton University,
2012).
Through the supply chain analysis and the Total Cost Model of LCA, purchasing managers
will be able to notice the GHG emissions associated with the companys SC activity.
The first result of such analytical approach will be to :

a. manage the business risks such as minimizing hazards and protecting reputation;
b. realize efficiencies like reducing costs and increasing productivity;
c. create sustainable products (eco-design or eco-concept) by meeting customers demands
with business partners and promoting innovation.
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a. Therefore by highlighting the business drivers the firm will be able to set the expectations
for sustainability in the supply chain, such as the code of conduct given to suppliers. IKEA
built its own code of conduct in 2000 to be followed by its 2000 suppliers with rules on
working conditions and environmental impacts (IISD). Beyond labor rights and
environmental concerns, anti-corruption can be added to a code of conduct.
Another important matter is to sustain commitment from mid-level managers (Li, 2011) as it
is key to successful implementation of EMS practices (Carter et al., 1998), and to build
strategic awareness about climate change (CDP 2011).
b. Internal environmental management is a key to improving corporate performance (Carter et

al., 1998). Guidelines for buyers on best practices per commodity can be set up. The
companys footprint can be based on the analysis of energy use and its origin (electricity
made with coal), carbon emission (CDP), water use and water pollution, land use, air
pollution and waste. And to integrate all those elements in each part of the supply chain
(LCA). LOral developed and implemented technologies to recycle water used in its Suzhou
(China) factory in 2012 for possible 80% recycling of the water used.
c. The eco-design practice is the first step of LCA improvement. It has been proven that about
80 percent of products impacts on the environment can be reduced from their conception
(Buyukozkan and Cifci, 2012). This practice is used by Puma today who find out that 57% of
its environmental impact comes from its tier 4 suppliers. A tier 4 supplier for a company is
the 4th level of subcontracting for a company, meaning that the direct supplier for a company
is tier 1. The supplier of this supplier is tier 2 for the company and etc So the more the level
increases, the more transparency is blurred and control is difficult for the primary purchasing
entity.
There are two kinds of eco-design (Laosirihongthong et al. 2013) : product-related design and
packaging-related design. The example of bio-mimicry conception is a contemporary
tendency in designing product, by looking for inspiration in imitating nature to create
sustainable goods.
The eco-concept, or product stewardship conducted by IKEA in its Sustainable Product
Scorecard prevents its purchasers from sourcing from unsustainable suppliers (IKEA
Sustainability Report 2011) based on 11 criteria :
17
Figure 2: IKEA Sustainable Product Scorecard (IKEA Report 2011)
This tool helps IKEA to improve their product with a view to higher sustainability and then
reduces the risk of working with unsustainable suppliers, such as sourcing wood from FSC
managed resources.
2nd Step : Assess
It consists of determining the objectives based on a companys earlier study. First, the
company will have to map its supply chain based on the major products and services, and then
look for the flow of materials and the associated information. By doing so it will be easier to
see where the risks of bad behavior are in terms of labor rights, environment and corruption
issues (GRI measures). Then opportunities from the risk analysis can be developed, like
getting a better understanding of its supply chain ; building better relations with suppliers ;
complying with existing rules related to ethics and environment.
Another supply chain map is created by making an inventory of suppliers. An easy way to
process might to start by focusing on top suppliers, by applying the well-known 80/20 rule.
The giant retailer Walmart has used this strategy since 2008 by working with his top 200
suppliers in China to develop the best practices that could then be applied to everybody
(Wharton University, 2012).
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3rd Step : Define
This step is significant because it defines the relationship to be set up with suppliers to meet
expectations. It can be done using different approaches, from soft (low engagement) to strong
(deep engagement) methods. The Business for Social Responsibility set up 4 different tools
by increasing level of involvement :
- Setting Expectations and communicating them code of conduct, emission reductions
targets;
- Monitoring & Audits through self-assessment by suppliers, driving performance
improvement;
- Remediation & Capability Building by training, collecting resources and setting
corrective actions;
- Partnership by providing support.
Good communications with suppliers by having early involvement in the design stage, to
choose the best inputs, materials and manufacturing process that create both environmental
and economic benefits for the supplier and cost savings for the purchasing entity. Close
cooperation of suppliers and buyers would promote the successful completion of green
purchasing activities (Hou, 2007). Collaboration-based activities can include training on
environmental information-sharing and joint research (Laosirihongthong et al. 2013). This
collaboration is achieved by engaging suppliers in the greening process of the supply chain,
by setting up environmental guidelines and innovative approaches. If the collaboration is
already well-established and that the purchasing entity has strong power with suppliers, they
can be involved altogether in working meetings where operations people and R&D people
share their experiences of technical problems and try to solve them (Wharton University,
2012).
A more advanced way of working with suppliers is to ask from them the adoption of
environmental systems such as ISO 14001 (Laosirihongthong et al. 2013).
Also directives have to be set up for sourcing new suppliers. As during the steps of RFI
(Request For Information) and RFQ (Request For Quotation), the question of concern for the
environmental can be added. This will be best represented by labels and certifications.
19

This communication approach can be conducted in two ways, depending on the relationship
already established : either by cooperation, either by monitoring (Vachon, 2003) :
-
Cooperation is a problem-solving approach to share know-how and experience with

suppliers and/or customers ;
Monitoring involves controlling and evaluating, with the setting of standards,

compliance with existing regulations, using audits or questionnaires.
The cooperation approach can be adopted when the supplier is newly-added to the suppliers
panel of the purchasing entity, when it is not a primary business partner, or when the
purchasing company does not represent enough revenue for the supplier. Therefore the
cooperation is adopted with suppliers for environmental objectives, environmental audits for
suppliers internal management, and suppliers ISO14000 certification (Zsidisin and Hendrick
1998).
The monitoring approach can be viewed as more authoritarian by the supplier : when the
purchasers position has a heavier weight in the suppliers balance sheet, then he knows that
the supplier will easily comply with his recommendations. Or when the supplier represents a
large part of the company production, then the purchasing entity is also accountable for its
working methods. A third case is when a purchasing entity invests in a small supplier to create
long-term common benefits.
Moreover the purchasing entity can ask to its supplier to extend their Environmental
Management System (EMS) program to their own suppliers. IBM put in place this cascade
program within its supply chain. BASF created the 1+3 Program in China, which asks
suppliers to engage three of their own business partners in the program so that BASFs efforts
can spread more rapidly. As it has been proven that most of the GHG emissions generated by
a company come from suppliers and indirect suppliers, these cascade actions will produce
positive results and avoid indirect risks. The incident of Rana Plaza in Bangladesh that
happened in 2013 is an explicit example of the subcontracting activity by suppliers to get ever
low cost products for well-known international brands without any transparency and ethical
mindset.
To illustrate the differences between cooperation and monitoring we use the example of
Bristol-Myers Squibb, IBM and Xerox that have encouraged (cooperation mode) their
Chinese suppliers to develop EMS in compliance with ISO 14001, while Ford, GM and
Toyota have required (monitoring) their Chinese suppliers to be certified with ISO 14001
(GEMI, 2001).
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A constructive approach to engage with suppliers is to devise an incentive system for
encouraging suppliers in achieving the pro-environmental goals. The UNGC advise giving a
bonus like increasing business, providing recognition and awards, or even sharing costs for
sustainability improvements. We could also think of call for bids based on the best-greenapproach for a project.
4th step : Implement
This step determines the roles and responsibilities of the companys people involved in the
process. Moreover it triggers collaboration within the industry and builds up a partnership
with multiple stakeholders.
Senior managements personal commitment to ethics is an essential part of what drives
organizations toward proactive, socially-responsible performance (Weaver et al. 1999).
Murray added in 2000 that purchasers must take, and be given, the responsibility and
resources for educating suppliers and demonstrate on-going commitment to achieve an
effective environmental performance. Business for Social Responsibility (BSR) China
Training Initiative (CTI) provides practical training to factory managers with more than 1
million workers and has developed tools to enhance managers abilities and their commitment
to improve working conditions. The CTI links the purchasers expectations and the suppliers
needs with tools and resources to deliver CSR in companies (UNGC 2010).
Inter-organizational collaboration is even more important for managing the internal and
external coordination and cooperation to have the system successfully implemented
throughout whole supply chains (Zhu et al., 2010).
As the purchasing activity that has an oversight and guidance role within every department of
a company as regards all-expense-related matters, the sustainability function has to be
integrated across departments for allow for better monitoring of the entire company. That is
why sustainability goes hand in hand with supply chain, with the purchaser being responsible
for its integration in the company (Institute for Supply Management). To achieve this,
purchasing managers need to reconsider their sourcing activities and engage with current
suppliers on environmental issues and green behavior.
Another aspect of implementation creates a context for collaboration within the firms
industry. Groups of knowledge-sharing about successful actions can be beneficial for
participants; however it could be also more constructive by generating new ideas for
21

processing. This approach will also embed the standardization of work to fight against
inconsistencies among companies, but also inefficient tools.
Existing industrial collaborations can be seen in consumer goods companies (AIM-Progress)
for toy manufacturers (ICTI-Care) We also find ones dedicated to the supply chain :
Beyond Monitoring Working Group for sustainable supply chains developed by BSR; TFS
(Together For Sustainability) that is a chemical initiative for sustainable supply chains,
Better Work Buyers Forum for improving labor conditions through purchasing policies.
5th Step : Measure
It involves reporting in a transparent manner the achievements that have been made and to
communicate them. This is the only way to prove that efforts have not been made in vain and
that concrete tangible outcomes are achieved. Therefore a tracking system on performance of
the goals has to be implemented, not only on suppliers performance, but also on purchasing
managers.
Measurements can be based on Environment, Health and Safety (EHS) performance but it has
to be coupled with economic performance, to point out how much has been saved, how many
new markets developed
Moreover intangible benefits based on perceptions can also be measured through external
players involved in perception-based ratings such as KLD, DJSI, FTSE, Domini, EIRIS,
IRRC, Innovest, Fortunewhich are more important for company profitability than the
performance based measures (Griffin and Mahon 1997; Wu 2006).
Likewise, certifications and label accreditation are a good proof of a companys achievement.
In the field of collaboration and measurement, Ecovadis developed an online platform with a
database showing CSR management of more than 1000 suppliers across 90 countries. This
tool has been used by several thousand companies since 2008 all around the globe, among
them 100 multinational companies, to monitor and assess suppliers social and environmental
performance on a collaborative basis.
For the carbon footprint measurement tools, the Greenhouse Gas Protocol (GHG Protocol)
has set up a reporting standard to make a companys GHG inventory, the contemporary one as
of May 2013. It helps companies build accounting systems for their GHG emissions that can
22

be used for cost savings and transparency. The emissions have been divided into 3 groups or
scopes from their source as shows the table below :
Figure 3 : GHG Protocol Scopes (GHG Protocol)
Scope 1 emissions are direct GHG emissions from the companys owned entities;
Scope 2 emissions are indirect GHG emissions from purchased energy (electricity, heating,
steam);
Scope 3 emissions are indirect GHG emissions from related activities of the company
(business travel, outsourced activities,).
These different scopes are used by the United States Environmental Protection Agency (EPA)
and the Carbon Disclosure Project (CDP) to base their research and calculation of GHG
emissions and on how to reduce them. Numerous global companies use these tools today,
over 60 purchasing organizations work with CDP on how to improve their supply chain such
as Walmart, Nestl and LOral by notably administering a questionnaire to their suppliers.
Puma launched the Environmental Profit & Loss (EP&L) in 2010, a concrete measuring tool
of environmental impact on a company, across its whole supply chain converted into
monetary value. It permits them to identify what areas are the more harmful to the
environment, therefore where to pursue efforts, but also highlight risks and give transparency
to the company, and finally shows the effect of green policies. Kering also built up its own
EP&L in 2012. It has been developed as a decision making tool to fully understand where
decisions can be taken in order to generate the most savings and profits.
23

Specific to the apparel and footwear industry, the Higg Index has been developed as a
sustainability assessment tool to evaluate and measure the environmental performance of
factories, brands and products across their supply chain.
In addition, a Trucost report in 2013 enables companies to estimate in monetary terms the
financial risk from unpriced natural capital inputs to production, across business sectors at
a regional level.
6th Step : Communicate
The last step of the UNGC recommendations is communication, to communicate on progress

and see which goals have been attained, what did not work and why, to determine both
internal and external future improvements. A common way to share with stakeholders is
through sustainability reports to show transparency in the supply chain for better forthcoming
analysis of business partners and industry cooperation. Another important aspect is to
feedback results to suppliers, so they can figure out where they are against other suppliers and
what will be their next areas for development.
Finally, applying for sustainable awards, for better recognition of company effort among
stakeholders (The Guardian Sustainable Business Awards; the International Green Awards
and the Sustainable Business Awards).
To conclude we can show a concrete example on the successful implementation of a

green sustainable value chain in the retail industry with the case of a South African
supermarket chain. Woolworths applied its own method of measure, control and achievement
to become a green brand through a set of actions : proposing sustainable products, natural
refrigeration of its trucks (carbon low, noise free), using chicken cooking oil for biofuel, CO2
gas for in-store refrigerator powering (less pollution emission than other gases), reusable
boxes for logistics, grey water recycling and storage, natural lighting (automatic adaptation
with daylight, reduction of 40-50% consumption of electricity), and to communicate with
customers on their actions and to provide soft education of actions at home.
To support the purchasing managers role in the company as a key player for
implementing sustainable goals, we would like to point out the theories of early studies. They
have highlighted the important role of the purchasing manager in his relationship between the
24

companys technical managers and the manufacturing suppliers in a concurrent engineering
approach.
In a situation of design to outsourcing manufacture, purchasing managers also need technical
backgrounds and sustainable approach, in counseling and understanding manner within its
company and mostly by communicating with the R&D department and the potential suppliers
in early product development (Guy and Dale 1993). The purchaser will undoubtedly get
successful results in multi-disciplinary teams; this can be done by co-locating personnel in
project teams, by having purchasing manager and technical manager physically working
together in the same office space, for an improved link between technical manager and
suppliers (Mendez and Pearson 1994).
There is a need for more decision-making involvement of purchasing managers, for value
analysis of purchased items and for quality requirements (here green requirements) for
materials and products sourcing (Ellram and Pearson 1993).
We should mention some limitations of the UNGC model developed above, for its
creation and capability of enforcement for big organizations, only groups who have
tremendous pressure on their suppliers and have capacities to invest in R&D or environmental
measures for future returns on investment. However it is not applicable in the case of small
purchasing entities and SMEs who are numerous in the Chinese business (representing 60%
of the countrys GDP, 70% of exports) in 2012 and dont see the interest of investing their
small margins in environmental matters (IPE and WRI 2010, GOV.cn 2012, Greenbiz 2013).
2) Stakeholders
The stakeholders are defined as groups who will influence organizational adoption of GSCM
and other environmental practices (Zhu et al. 2005).
Moreover we can add the definition of corporate sustainable development (CSD) which is a
business strategy that attempts to meet the needs of organizational stakeholders without
compromising the resources and interests of the local community (Dyllick and Hockerts
2002).
We identify 6 stakeholders groups: Customers, Local Community, Employees, Suppliers,

Government and Competitors.
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- Customers
They are very sensitive to the reputation of a brand and to the quality of its products. Carter
and Ellram (1998) described customers as having a direct impact on firms' environmental
purchasing activities. With the recent scandals of labour conditions in China and the related
quality of its export products, the Asian superpower has to take actions. Moreover green
barriers to international trade are rising with the on-going recognition of green consumption in
western countries. Even the Chinese consumers, especially younger consumers are developing
an environmental awareness and are starting to prefer green products (Lo and Leung, 2000).
Good communication has also to be created with the customer (in a B2B approach). The sales
manager who is in contact with the purchasing manager will have to establish such a
relationship by asking its customer if they want or need (due to external factors) an ecofriendly approach of the product they ask for. The purchasing department will have to propose
and sometimes educate its sales manager who will then do the same with his client regarding
eco-friendly methods. Communication between business managers and environmental
professionals and NGOs (who represent customers) is also important in the successful
business and environment relationship (Aspan, 2000). Such professionals can be represented
by WWF and Greenpeace who work with IKEA, or the Environmental Defense Fund which
works with Walmart (both for free) for the implementation of green supply chain in the way
they source suppliers.
Another important rising purchasing factor among customers is the eco-label in B2C and the
certifications in B2B. Passing those standards prove to your customers the extent to which
you care about the environment, even if it implies a supplementary investment to obtain
accreditation.
Other methods in GSCM that can be well perceived by the customer and profitable for the
supplier are the product collection and recycling through reverse logistics, as it is largely done
today with glass bottles in a closed-loop system (The Coca-Cola Company), or in the
electronic appliances industry (Dell, Fuji Xerox).
Moreover the community stakeholders often do not distinguish between an organizations
environmental practice and the practices of its suppliers (Rao, 2002; Sarkis, 2006); therefore a
purchasing entity will have to be careful of its subcontractors actions locally.
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- Local communities
It is the first direct group affected by the decisions of neighbouring companies, in terms of
employment, employee treatment, pollution In China, Carrefour and Walmart prefer
working with local suppliers and hiring local staff to prove their involvement.
These groups are called ethnic minority businesses, under-represented suppliers
(Worthington, 2012) with low power but strong influence on a companys awareness if
considered as important for local tastes and preferences.
Moreover the local community can also be seen to this extent as the local government who
could help or reward companies that provides benefits to its citizens (Li, 2011).
Even the Chinese local community tends to be more sensitive to environmental and labour
issues, as it has been reported by a group of NGOs on Apples manufacturing behaviours
(Forbes, 2011).
- Employees
It is said that employees who are involved with their manager to work on environmental
issues see their performance increasing (Homburg and Stock, 2004; Zhou et al., 2008). So
companies have to pay attention to this human factor by respecting labour rights, local
culture, commitment, and training for self-improvement and understanding of environmental
issues. Moreover top management employees are the one to take the most care of because
they will influence and implement the companys intention to the bottom line through the
work of their teams (Wang & Dou, 2012). Without internal company action, it will be hard to
develop and maintain CSR (Wang & Dou, 2012; Sturdivant and Ginter, 1977). Even Zhu et
al. (2004) said that internal environmental management is the first step of GSCM practice.
This is especially true when we face cases of Chinese managers who perceive CSR as
negative, certainly due to a lack of training (Lam, 2011).
- Suppliers
As it has already been well shown in the implementation steps of GSCM, suppliers are the
key stakeholders in SCM to work with to build the best relationship for future negotiations or
collaboration on environmental practices. The proof of their involvement will be to obtain
certifications in EHS matters, such as ISO 9001 for quality, ISO 14001 for environment,
OHSAS 18001 for health and safety, SA8000 for labour conditions in the supply chain as is
recommended by numerous academic authors (Zsidisin and Hendrick, 1998; GEMI, 2001;
27

Zhu et al. 2001; Vachon, 2003). But also in resource preservation, like FSC for wood
management, whom IKEA has been a lot coopering with.
Because pollution mostly comes from suppliers, the risk related to the lack of control and
transparency may hurt the companys public image when issues arise. Therefore there is an
need for collaboration to improve performance, this can be done through well thought RFI but
also by building codes of conduct.
Therefore suppliers will have a lot of external pressures mostly from clients (purchasing
entities) and from the government, and will probably become resistant to such changes (Lee et
al., 2012). To avoid this, purchasing groups try to build synergies with their suppliers audit
for standardization and to avoid redundancy, as it has been done by retailers in the UK
(Sedex).
There will be fewer pressures from final customers because suppliers are most of the time less
visible to the public eye (into B2B approach and not B2C), so this customers pressure will be
transmitted by the purchasing entities. However the purchasing groups will not know with
which suppliers they are really working with due to subcontracting activities of suppliers (tier
3 to tier 4).
Building confident and sustainable relationships for transparency and then managing risk is an
important matter. A remarkable example of transparency is provided by Puma who publicly
share its supplier list on its website as well as its supplier reports.
- Governments
The government has powerful influence over company policy through the adoption and
enforcement of taxes, laws but also pro-environmentalism (Weaver et al., 1999; Wu, 2006;
Zhu et al., 2004). It can be seen at two levels, from global policies to local community
pressure, and relationships with strong local industries.
In the USA such actions have been taken with the Environmental Protection Agency (EPA),
established in 1970 with an actual annual budget of more than USD 8 billion, its mission is to
write and enforce regulations on the environment and public health. EPAs actions also cover
directives for green public procurement among US federal states. In addition the country
created a certification recognised for sustainable buildings : Leadership in Energy &
Environmental Design (LEED) developed by the U.S. Green Business Council.
28

In Europe, to reduce environmental impact, the European community built directives for
green products and specifications such as the Waste Electrical and Electronic Equipment
(WEEE), the Restriction of Hazardous Substances (RoHS) both from 2003, and organic
farming (2007). These laws require manufacturers to meet standards in terms of harmful
material forbidden from use (RoHS), recycling dangerous products (WEEE) and regulating
bio products (eco label), as well as for quality with the European conformity marking CE
(since 1993).
Therefore manufacturing countries like China have to comply with those requirements if they
want to pursue export markets (Lu 2013).
However in China a local RoHS with an associated label has been in place since 2007, a
domestic CE or UL with the China Compulsory Certificate CCC label (2002). In the spirit of
the EPA, China has had its own, the Ministry of Environmental Protection or MEP (former
SEPA) since 1998 which has been advocating green public procurement since 2007, with its
own environmental performance label, the China Environmental Labeling, since 1993.
Supply chain professionals have to pay attention to these different rules and standards if they
want to avoid legal sanctions and pay the related fines. A proactive way is to collaborate with
local government representatives to be aware of future regulations, but also to get advice on
how to implement effective policies.
- Competitors
The influence of competitors (Zheng, 2007) can be taken as a threat or as an opportunity to
evolve toward green procurement. A company can either follow the path of collaboration
(Sedex, Better Work Buyers Forum, TFS), or to replicate others action (Kerings EP&L
after Puma built one. NB: Puma is a subsidy of Kering group so the EP&L was easier to
duplicate). Through these two ways of collaboration or knowledge integration, companies can
create competitive advantage (Walton et al., 1998; Vachon, 2003).
The best technological example of green competitive advantage is seen in the automobile
industry with manufacturers such as Honda and Toyota who by pioneering R&D on a low
carbon emission car forced competitors (such as Ford and GM) to follow their path for the
race to the green car.
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- Investors
Investors are the last group of stakeholders to be taken into consideration here. With the
development of Social Responsibility Investment (SRI) (Oshika et al. 2012) companies can be
chosen for their green or ethical policies. Numerous sustainability indices exist for investors
(KLD, DJSI, FTSE, Domini, EIRIS, IRRC, Innovest, Fortune) but also awards (The Guardian
Sustainable Business Awards, International Green Awards, the Sustainable Business Awards)
and lists of sustainable mutual funds (USSIF, Bloombergs ESG) which testify to the concern
of investors toward the environment, and going green is therefore a convincing argument for
companies to attract investments. Standards and certifications are another proof for banks and
investors that companies are really investing in sustainability (Chinadialogue 2011).
This represents positive news for start-ups and SMEs who bet on sustainability but who lack
funds (Shi 2013).
Moreover companies can also self-invest in green projects to generate revenues. General
Electrics annual spending plan of USD 1.5 billion since the 2000s on green research has
generated revenues of USD 10,1 billion.
To sum up, the relationships between suppliers and their influence, we can refer to the table
below developed by the China Council for International Cooperation on Environment and
Development (CCICED) :
Figure 4 : Stakeholders influence (CCICED Report 2011)
30

To conclude this part we can illustrate the relationship between stakeholders
understood by Fuji Xerox China when the Japanese company joined its customers, suppliers
and internal management for collaborative teamwork. In 2006 the company started an ethical
procurement program by allowing its customers concerns regarding labour and environment
issues to influence the manufacturing process, but also to reduce risk from supplier nonconformity and to improve the quality of its product and manufacturing. Firstly it organized
ethical procurement study sessions with its 9 key suppliers executives and 50 other
important suppliers with executives and factory presidents, and Fuji Xerox Shenzhen
executives, in the form of a 5 days meeting in Shenzhen (China). It successfully resulted in
the launching of the ethical procurement program.
3) Measurement
The GreenSCOR model was developed by the Logistics Management Institute (LMI) in 2003
based on the research of R. Cash and T. Wilkerson. By refunding the existing Supply Chain
Operations Reference (SCOR) built by the Supply Chain Council (SCC) in including
environmental processes, metrics and best practices. The SCC is an international non-profit
organization created in 1996; today it has more than 700 members with a focus on improving
supply chain performance. SCC merged with APICS (American Production and Inventory
Control Society) a not for profit international education organization in 2014. SCC developed
the SCOR model as an analytical tool for analysing, comparing, and improving an
organizations supply chain. The SCOR tool provides among other usages metrics for
measuring the logistics process of a company.
The model is designed in 6 steps that can be liked with the LCA and the UNGC report shown
above : Plan, Source, Make, Deliver, Return and Enable.
However in this part we will focus on the metrics developed by the GreenSCOR model to see
how we can measure pro-environmental activities in the supply chain as well as the carbon
footprint.
31

The SCC gave examples of existing metrics :
SCOR process
Environmental Metrics
Plan
Compliance costs
Emissions cost per unit
Source
% of orders receives with correct packaging
% of suppliers with current EMS system
Make
Energy costs as a percentage of production costs
Waste produced as percentage of product produced
Deliver
Fuel costs as percentage of delivery costs
% of carriers meeting environmental criteria
Return
Products returned as percentage of products delivered
Return products disposed of vs. remanufactured
Enable
Facility energy costs as percentage of total costs
Down time due to non-compliance issues
The GreenSCOR model also highlights the companys carbon footprint, which is a good
metric showing a companys impact on environment. And because from half to all of the
emissions come from the supply chain (Baldock, Trucost, 2012; Accenture 2012; CDP2011),
the carbon footprint is a significant indicator of a companys harm to the environment.
Moreover firms and customers are sensitive to reducing carbon emissions throughout the
supply chain (Hoffman, 2007) with a survey of global companies showing that 56% of them
recognize that consumers are becoming more receptive to low-carbon products and services
(CDP Report 2013). Consumers sensitivity might be explained notably because the planet
earth can longer naturally filter out all the carbon dioxide emitted (Earthday).
The proposed metrics for environmental footprint by the SCC using the GreenSCOR model
are :
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Metric
Carbon Emissions
Units
Basis
This is the unit of measure currently used for GHG emissions and is a
Tons CO2
measure of the climate impact from CO2 and other global warming air
Equivalent
emissions.
This would include emissions of major air pollutants (COx, NOx, SOx,
Air Pollutant Emissions Tons or kg Volatile Organics (VOC) and Particulate). These are the major emissions
that EPA tracks.
Liquid Waste
Generated
This includes liquid waste that is either disposed of or released to open

Tons or kg water or sewer systems (these emissions are generally listed on water
emissions permits).
Solid Waste Generated

% Recycled waste
Tons or kg The total solid waste generated by the process.

Per cent
The per cent of the solid and liquid waste that is recycled.
Another effective metric system is the Sustainability Balanced Scorecard (SBSC) used to
evaluate the performance of sustainability (environmental, social and economic) activities
(Oshika et al., 2012). It is built on finance, customers, internal business processes, learning
and growth perspectives.
33

Finally we can rely on the recent creation of the EP&L by Puma in 2010 which translates
water use, GHGs emissions, land use and waste in financial terms to value their importance in
the companys balance sheet. This method was initiated by the Triple Bottom Line accounting
in 1987 by John Elkington who provided a framework for measuring and reporting corporate
performance against economic, social and environmental benchmarks (Christopher, 2011).
The Pumas EP&L below impressively shows that the major figures come from the last
suppliers tier :
Figure 5 : PUMAs EP&L 2010
34

4) Benefits
Pallavi (2010) said that GSCM can improve SCM in terms of procurement, transportation,
inventory management and production. Moreover as seen previously, the implementation of
GSCM shows similarities with the Total Quality Management method resulting in :
- Cost savings, notably in energy consumption (Klassen and McLaughlin 1996 ; Sinkin et al.
2008), so reducing an organizations environmental footprint and improving economic
performance (Green et al., 2012). In 2012 the CDP reported USD 13.7 billion savings
resulting from the decrease in emissions of supplier activities;
- Sustainable risk management by avoiding hazards and complying with existing laws
(Amemba et al., 2013);
- Creation of standards, improved product environmental quality (Molina-Azorin, 2009);
- Product differentiation that creates competitive advantage in new markets (Walton et al.,
1998);
- Improvement of a companys public image (Stock, 1992).
The benefits of cooperation with suppliers create organizational capabilities for better
productivity (Geffen and Rothenberg, 2000; Vachon, 2003), improved financial performance
(Carter et al., 2000), increased delivery performance, provide a strategic resource that is
difficult for competitors to replicate (Vachon, 2003) and greater product quality (Gavaghan et
al.,1998). Monitoring activities with supplies minimize managerial and environmental risk
and assure a continuous supply (Vachon, 2003).
Cooperation with customers is positively associated with both environmental and economic
performance (Green et al., 2012).
Reverse logistics, which is a part of GSCM through cooperation between customers and
suppliers, has been broadly accepted and used by large companies Dell, HP, IBM, Motorola,
Sony, Panasonic, NEC, Fujitsu, and Toshiba (Zhu and Sarkis, 2006) as a profitable activity
for domestic appliance goods (Srivastava, 2005).
We also find benefits on the supplier side : SME suppliers perceive that green procurement
helps improve the relational efficiency with their buyers and achieve better business
performance (Lee et al., 2012).
35

Customer perception attributes greater value to a green company (Zacharia et al., 2009),
coupled with the increase of investors sensitivity to ethical investments with the rise of
specialized indexes. Moreover studies showed that perception has a greater financial influence
than actual performance (Griffin and Mahon, 1997; Wu, 2006).
Employee job satisfaction is also improved by having stronger involvement of managers with
their team toward environmental projects, and this can lead to better work performance
(Homburg and Stock, 2004 ; Zhou et al., 2008).
A successful example of the benefits derived from GSCM has been demonstrated by FedEx
who developed its own methods of energy savings and material recycling revenues, achieving
savings of USD 320 million in 2012 (CDP report, 2013). Moreover the company advanced
the study of its internal functioning and of its sector so far that it created a consulting branch
to advice other logistics companies on environmental matters! Beyond the savings, the selfassessment generated additional revenues through the consulting service.
Surprisingly a LCA at Tropicana for the orange juice product cycle showed that the greatest
carbon emissions did not come from transportation as it was first thought but from
agricultural inputs like the use of fertilizer (Deloitte, 2009).
These two examples show that green procurement has to be seen as a business value driver
and not as a cost centre (Wilkerson, 2005), like the sustainable value chain developed by
Woolworths.
To summarize, the benefits created by green procurement policies are both financial and nonfinancial (Zhu et al., 2008; Zacharia et al., 2009), generating costs savings, improving job
satisfaction; increasing operational performance and especially on the delivery, flexibility,
and environmental performance metrics (Vachon, 2003). Environmental cooperation with
customers improves quality performance; environmental cooperation with suppliers is more
likely to yield better operational performance. Environmental cooperation with suppliers is
related to a shift in the allocation of environmental investments from management systems to
pollution prevention; environmental monitoring does not affect operational performance with
the same consistency.
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5) Conclusion
We tried in this part to answer the primary research question of knowing if sustainable
purchasing lead to better performance. With all the practical examples expressed showing
companies in different industries (automotive, retail, home appliances, F&B,), in different
places as the USA, Europe and China, implementing different tools of sustainable purchasing
(emission reduction, green accounting, LCA, cooperation with suppliers, product ecodesign,) we noticed remarkable positive results.
These results can be segmented into 3 distinct parts :

- Intangibles, regarding the perception associated to GSCM, but also risk management and
stakeholder relationships ;
- Savings, calculated through GreenSCOR, EP&L, Scorecards they can represent
impressive amounts related to cutting costs in energy, in waste management, and in insurance
(FedEx saved USD 320 Million in 2012 by conducting such policies to completion, CDP
report 2013) ;
- Tangibles, it is the least represented part but will probably be the most important one in the
future regarding its potential, from the standpoint of product eco-concept that generates
competitive advantage (GE accounted revenues of USD 10 billion in sales of environmental
products, TIME 2007).
GSCM has to overcome its traditional vision of cost avoidance to the emergence of value
creation (LMI ; Pallavi, 2010) with the help of drivers from governments (regulations) and to
promote transparency measures, performance measurement, and innovation.
Jonathan Maxwell, CEO of Sustainable Development Capital Limited, pointed out that "this
isn't about trying to sell morality into the boardroom, it's about providing the ability for
businesses to make better decisions to reduce costs, improve productivity, support growth and
take longer-term decisions". Introducing a more sustainable way of doing business through
supply chain "stands a good chance in the boardroom", by focusing on the "resourceefficiency agenda" which is another word for Total Quality Management (TheGuardian
2013).
37

A point that can be further researched is the difference of performance achieved between
purchasing entities and suppliers, as expressed by the CDP Report of 2013.
38

II.
Economic Development in China : Can Development be sustainable in

China?
1) Introduction
From the opening of the country in the 1980s, China faced an outstanding fast growing
development of its economy at the expense of natural resources with overutilization and large
diverse hazardous emissions. The Cultural Revolution also had a strong importance because it
denied pre-existing moral traditions build by Confucianism and build up polluting industries
across the vast territory.
Before the opening China had followed a model of a planned economy dictated by the
government. Afterwards the model followed rules of a capitalist market economy with the
directions of the government. This rapid transition of the economy and the society enforced
the lack of collective and personal awareness that have resulted in many corporate frauds and
wrong doings (Ip, 2009).
A consciousness toward pollution issues, pro-environmental policies and ethical labor rights
has arisen however among Chinese consumers (Lo and Leung, 2000) with the help of many
Chinese NGOs that point out harmful behavior as Friends of Nature, Institute of Public and
Environmental Affairs, Green Beagle, Envirofriends, and Green Stone Environmental Action
Network to mention just a few
But more than internal issues, importing countries of Chinese goods tend also to ask for the
accountability of those purchases, toward risks related to consumption but also concerning the
manufacturing process and the materials used. Indeed from 1997 to 1999 there were USD 20
Billion of commodities rejected for environmental reasons (Xinhua News Agency, 2001).
The China Council for International Cooperation on Environment and Development
(CCICED) stated in its report of 2011 that development has to be sustainable, if not then the
country will face risks of green barriers to international trade.
2) China, the factory of the world : responsibilities

China has been the world largest exporter since 2010 with 10% of the worlds total exports
(IPE and WRI, 2010) and ranks 2nd in the world in terms of economic results (CIA World
39

Factbook), this position can be linked to all the FDI that China receives especially through
Joint Ventures (JV) or direct companies (WOFE). Indeed 50% of the exports are made by
foreign companies (Financial Times 2012), therefore responsibilities of behaviors can be
divided. This also shows that the Chinese economy is deeply integrated in the global
economy, especially when it became a WTO member at the end of 2001. More and more
importing countries require that Chinese firms comply with international rules and standards
regarding labor rights, environmental responsibilities, intellectual property rights and anticorruption (Ip, 2011).
Common responsibilities have to be taken between purchasers and the manufacturer regarding
quality, security and health (SHE : Security, Health & Ethics) for local employees and for
pollution, but also for consumers abroad as to the safety of the products and the growing
demand of sustainable products.
3) Internal factors
a) Positive aspects
GSCM is not very wide spread in China, even if there are pressures from the
government, competitors and clients (Liu & al. 2012). However, a growing number of
Chinese companies have embraced CSR and are taking social responsibility on board in
recent years (Wang & Dou 2012). And sustainability reports seem to be increasing in stateowned enterprises (Kolk et al. 2008). Therefore some companies have a CSR policy, but we
do not know if they put it in practice. Actually, it seems to be applied just for the influence on
the companys reputation and branding received from CSR policies (Birkin et al. 2009, Kolk
et al. 2008).
Recently we have seen campaigns promoting CSR in China, and the development of humanbased and virtue-based business models made up by local businesses. This would tend to
show a growing concern about business ethics in China (Ip, 2011).
In response to those environmental concerns the Chinese government has reacted positively to
the urgent need for laws, by implementing rigorous environmental regulations and tax
incentives since the beginning of the 2000s (Lam 2011; CCICED 2011) :
40

- cleaner product promotion (2002),
- government procurement (2003),
- prevention and control of environmental pollution by solid wastes (2004),
- promotion of circular economy (2005),
- labeling products (2006),
- imposition of export tariffs on high-polluting industries (2011).
Thanks to its single-party political system, the Chinese government can carry out
environmental reforms and directives to their completion with the help of the National
Development and reform Commission, the Ministry of Finance, and the Ministry of
Environmental Protection (IPE and WRI, 2010).
The targets set for 11th Five-Year Plan (2005-2010) had mostly been achieved, with a
reduction of national energy consumption per unit of GDP by 19.1%, and with a drop of total
national emissions of sulfur dioxide by 14.29% and national emissions of chemicals by
14.25% (CCICED, 2011).
The last China 12th Five-Year-Plan (2011-2015) accentuates its policies on environmental
concerns through the development of seven Strategic Emerging Industries and with the aid
of tax breaks and beneficial procurement policies: biotechnology; new energy; high-end
equipment manufacturing; energy conservation and environmental protection; clean-energy
vehicles; new materials and next-generation information technologies (Chinadialogue, 2011).
On the other hand fees are raised on polluting industries such as steel, cement and mineral
extraction (IPE and WRI, 2010), and between 2003 and 2008 the MEP stopped 30 major
projects all across the territory accounting for almost CNY 118 Billion (EUR 14.5 Billion)
(Chinadialogue, 2013).
Even if there are no environmental taxes in China (Deloitte, 2013), it could appear after 2015
and the 13th Five-year Plan with a marketplace establishment for emissions trading
(Ecosystem Marketplace). Moreover there are many examples of incentives for green actions;
indeed, there is a reduced corporate income tax of 15% (against a normal rate of 20%) to
enterprises in renewable energy (KPMG, 2013). And there is also a policy to decrease sectors
41

which are too harmful for the environment. For example, in 2007 the tax on wooden
chopsticks was increased in order to protect forests (NY Times, 2011).
We can also find recommended purchases of environmental protection and conservation
equipment from the Regulations of the PRC on the Implementation of the Enterprise Income
Tax Law of 2007. Furthermore some materials listed in an official catalogue are exempted to
90% of the related income; however this list is really narrow with 4 types of material (Hogan
Lovells 2008).
Moreover a new environmental protection law which might take effect in 2015 will give
power to environmental protection officers to seize equipment that is harmful to the
environment (hazardous wastes). It will also enable them to increase fines with the goal of
slowly eliminating polluters, and in addition to allowing them to take into custody individuals
alleged to be responsible for pollution, or for faking statistics and also for failing to constitute
environmental impact evaluations. This shows how important it has become for companies to
comply with existing environmental rules but also to invest and collaborate with legal and
specialized institutions.
As a part of GSCM, the circular economy is already in study today in China; it has been tested
in 7 industrial sectors and implemented in 13 industrial parks, in 10 out of 21 eco-cities and
eco-provinces (Ecocity Notes, 2012). Eco-cities and eco-provinces are a strong positive
examples of the governments will to support practical green actions because they integrate
the circular economy in industries through the citys urbanism conception with
environmentally friendly buildings and local communities. To push these actions the Chinese
Government temporarily exempted business taxes for income earned by qualified energysaving service companies (PKF, 2013).
Regarding the last step of LCA, known as recycling activities we notice that they are already
well implemented naturally in China. People in the street store all sorts of materials (PET
bottles, aluminum cans, wood, steel, styrofoam) and then re-sell it at the weight price to
recycling companies. Therefore the reverse logistics is already in place. Studies have shown
that the majority of the worlds reverse logistics manufacturing will be carried out in Asia
within the next decades (Hu and Hsu, 2010). An example of this is the utilization of wastes as
42

production inputs or energy-efficient processing exempted of VAT (after demand) since 2008
(China Briefing 2011).
However, ethically speaking we can see the limits of this activity, it is mostly conducted by
poor or retired peoples, who are in need of an extra income. Even if it might help them, this
could be seen as a parallel economy with no control or regulation regarding SHE issues. We
dont know if they work in safe conditions and they dont have any guarantee regarding the
price and the quantity that recycling companies buy from them.
Moreover, the ultimate use of these different materials retrieved is unclear concerning the way
they will be used. We know that they are mostly used for burning to create thermal energy,
and only a few seem to be properly recycled and re-injected in the supply chain as raw
material.
This field of business (waste management) has actually become quite developed in the private
sector in China with multinational organizations and developed countries exporting their
rubbish to this Asian country. The closed loop system is therefore already in place but China
does not have a sufficient infrastructure to recycle the end-of-life products properly (Puckett
and Smith, 2002) and other organic wastes. However the 2008 Circular Economy Promotion
Law stated a 100% VAT refund upon collection for electricity and heat produced with the use
of organic waste types detailed a circular and also for industrial oils produced with the use of
recycled waste mineral oils.
Nevertheless we also notice that more and more companies in China integrating
environmental concerns and the government is making producers responsible for financing
the activities of treatment and recovery of waste (Li 2011). For examples, among Chinese
companies engaged in recycling used products we can cite Esquel in the textile industry,
Lenovo and ZTE in the IT industry and Lee & Man Paper in the paper industry (CITI Report
2014).
In 2006, the Shenzhen Stock Exchange published Social Responsibility Guidelines for Listed
Companies to improve the awareness of big private Chinese organizations regarding
environmental concerns. Another example is the SEPA which in 2008 enacted the
Environmental Disclosure Act to force private companies to publish their compliance report
with respect to environmental regulatory requirements. Therefore a list could be formed to
reveal which organisations have to take corrective actions thanks to the help of environmental
43

agencies. And yet another example is the State-Owned Assets Supervision and Administration
Commission (SASAC) which in 2008 required that all central state-owned enterprises to
publish corporate social reports by 2012 and to fulfil CSR policies (SASAC, GRI, Wang &
Dou 2012).
To improve lack of companies environmental performance, government agencies created the
Green Credit Program. Finally, there have been directives for local government to purchase
from energy efficient suppliers (IPE and WRI 2010).
More than the governments influence, Chinese NGO or watchdogs groups have had
a strong influence on companies moving toward GSCM practice and much more so that than
western NGO reporting on Chinese behaviours (Forbes, 2011).
One of the most influential Chinese NGOs is the Institute of Public and Environment Affairs
(IPE) which was developed in partnership with the American Natural Resources Defense
Council (NRDC) and the Corporate Information Transparency Index (CITI) in 2014 based on
previous IPEs work with websites of datas screening. It has denounced polluting Chinese
companies on water (2006) and air (2007) issues in more than 300 cities, and has done work
to raise awareness on almost 100,000 bad suppliers, that are Tier 2 or Tier 3 suppliers of
Multi-National Companies (MNCs). Their aim is to have these polluters take corrective
actions if they dont want to lose their main clients. This has been successful for about 600 of
them.
This survey was made possible by the Green Choice Alliance (GCA), a consortium of
Chinese environmental experts and NGOs (they were 47 in 2013), who pushed MNCs to
screen their suppliers environmental performance.
The IPE recommends using third party auditing agencies for better results on analyzing
existing operations transparently with proved corrective actions advices rather than internal or
non-recognized agencies. The latter probably would not have discovered unethical behavior
such as over working hours in factories of the company KYE in 2006 (Forbes, 2011).
Regarding religious factors, studies have attested the relationship between an

individuals commitment to religion and his or her responsiveness to follow an ethical
morality, or CSR rules.
44

Consequently the closer people are to their religious beliefs, the more they tend to support the
implementation of CSR in companies (Ibrahim et al., 2008).
When we apply this to the Chinese context and to its religio-philosophical traditions we can
understand better what is happening today. Buddhism, Taoism and Confucianism constitute
this mix of religion, thinking and traditions of China.
Even if a 2012 study showed that only 14% of Chinese citizen claim to be religious, and about
almost 50% are atheists; 30% are non-religious (WIN/Gallup poll, 2012).
But Confucianism is not seen as a religion; it is rather a cultural mind-set that passed through
the Cultural Revolution and its eradication of religions (He, 2003) and can be put in the case
of atheism. The Chinese are characterized as "not religious people" but "extremely
superstitious" (Fang, 1999).
For Confucianism it is defined by familyism and paternalism values linked to nationalism
roots, which matches with the Chinese State of power and nationalism (Rozmann 2002). It
seems to be more compatible with acceptance of green policies than Western thinking (Tu,
1997).
All arguments stated above confirm the Chinese governments will to improve the societys
functioning and notably though supply chain. This policy falls in the concept of Corporate
Sustainable Development depicted by Chow & Chen in 2012 following the 3P rule, known as
People, Profit and Planet. This concept praises the improvement of the society by promoting
healthier societies (eco-cities), by promoting an economy which offers efficient products and
services (standards and labels) and final by promoting the ecology (targets and actions to
reduce emissions and harmful habits).
b) Negative aspects
Conversely it is said that Chinese governments regulations are easy to bypass. Local
authorities tolerate discrepancies with tacit agreements, and in addition the fees seem to be too
low to be feared (Lam 2011, Chinadialogue 2014).
Moreover the environmental protection law initiated in 2001 will only come into effect in
2015, giving only the right to 300 selected NGOs to bring public interests lawsuits.
45

SEPA became MEP in 2008, with more power and a more substantial budget. However it has
not been very active since then and has let environmentally-harmful projects pass through its
role of scanning (Chinadialogue 2014).
Another criticism from the CCICED Annual General Meeting of 2011 is that large and
medium size companies have better capabilities of implementing GSCM and this is especially
true for state owned companies, compared to SME with small operating margin to invest (IPE
and WRI 2010).
Studies have revealed a different view of what has been illustrated above, Chinese managers
feel no more liability regarding legal and ethical responsibility than western countries. They
are more profit oriented (Wang & Dou 2012). Another study carried out by the Global Supply
Chain Council in 2009 shows that 38% companies surveyed in China lack awareness about
key environmental issues. Thus, even if companies tend to have a CSR policy, managers do
not feel concerned due to a bad perception of CSR activities. This current lack of awareness
could be countered by training managers to encourage the successful implementation of
GSCM in companies (Lam 2011).
Even for national recognition like the Corporate citizenship awards granted by the Chinese
Government, it is said to be influenced by the relationship created between companies and the
Chinese Government, rather than actual proofs of CSR performances in China (Lam 2011).
Important cultural factors of corruption are perceived in Chinese business as a major

risk in the SCM (SEDEX 2014). Transparency International ranked China 80th out of 177
countries in its Corruption Perception Index of 2013. A study of the recognized Beijing
Tsinghua University states that 16% of Chinas GDP is lost to fraud and corruption each year,
compared to 4% in the USA. Other studies have shown that almost 70% of companies are
affected by various forms of fraud such as corruption and bribery in China notably due to the
increase of outsourcing activities (Kroll Report 2013/14).
There is the habit in western organizations of margin retrocession from the supplier to the
purchasing company at the end of fiscal year, which can be easily done in China. Here we
speak more about the relationship between purchasing managers and factory owners or
sometimes with middlemen. A specific cultural aspect of forging business relations is
guanxi, a mix between business and friendship, the act of sharing a meal and alcohol
46

together to build relationship. It is also the occasion to obtain information from the other party
and to negotiate the personal interest in doing business together. What can be seen or used to
be seen as natural business manner for Chinese is definitely not for westerner and for
international laws and Chinese laws today. In fact it is stipulated in the US Foreign Corrupt
Practices Act that outlaws corruption abroad; the Chinese Constitution Art. 41 that protects
informers and the Chinese Criminal Law (Chap. VIII and in Chap III Sect. 3 Art. 163 and
164) that prohibits corruption.
More than unethical behaviour, such trends or practices can harm GSCM by lowering the
quality of the products and their environmental compliance and result in higher prices than
usual (up to 30%), fake audits and thereby hide bad practices, labour rights, and use of
unknown subcontractors. These activities lead to the production of dangerous toys and the
contamination of infant milk (Deloitte Report 2010, KPMG Report 2012). Even if
government officials and top managers have been arrested and executed (Faure 2002, KPMG
2012), and if Chinese purchasing managers and foreigners have been arrested, many scandals
still exist like the Bo Xilai case in 2013 (TheGuardian 2013), or anti-commercial manners
with the GSK crisis in 2013 (IBT 2014).
Most companies have a strong idea about CSR policy and claim to have adopted it. Indeed in
the retail industry we can notice that many Chinese companies have become philanthropic but
having no actions for product responsibility (Kolk et al. 2008). If there is a policy it is only to
serve as a risk management, to reduce costs or to follow existing laws to develop a good
image vis--vis the Government.
Finally we can add that one of the major problems for foreign investors when operating in
China is the "lack of strategic business planning" (Lang, 1998). Chinese in business are more
short-term orientated with a "weak understanding of planning" (ibid.). Their inability to
forecast makes managers unable to think about the long-range future of their company and
therefore the planning and implementation of GSCM practices.
4) External factors
Labels and certifications built up by the major consuming countries of Chinese

products just as CE, UL, ISO, WEEE, REACH, LEED have forced the manufacturing
47

country to comply with requirements for better products in terms of quality and of
environmental respect.
In reality this foreign influence pushed local Chinese government agencies to help companies
pass the global environmental system standard ISO14001 certification by procuring training
and alleging the certification fee (Li 2011, Zhu et al. 2005).
As part of the Global Eco labeling network there are official institutions to attribute
certifications such as the CEC (China Environmental United Certification Center), the CQC
(China Quality Certification Center) and the CNAS (China National Accreditation Service for
Conformity Assessment). We can also add all the private companies : AFAQ, Bureau Veritas,
Tv Sd, SGS, and public ones like English UKAS.
However, at time we can doubt of suppliers truthfulness regarding their certifications,
especially when it has been granted by an unknown agency or even if it has been granted by
trusted ones. Are they still valid and were they given rightfully (Chinadialogue 2011) ?
MNCs that have a domestic CSR policy tend to apply it in China too. Therefore these Chinese
businesses with parent companies abroad will most likely have to meet the parent companys
requirements, with regard to GSCM. This is also the case of suppliers working with IBM,
Dell, HP, Sharp, Sony, Samsung, Motorola, Ricoh, Shanghai GM and Walmart (CCICED
2011).
However the foreign influence in China is not always true and not systematic. In the retail
industry Wal Mart applies its international green policy in China, but not as much as
Carrefour which is pursuing more efforts in its other markets. Their Chinese competitors seem
to have little or no interest in becoming green businesses.
The American leader in the retail industry, Walmart, decided to no longer buy from Chinese
suppliers who have poor environmental records (IPE and WRI 2010). Moreover, it is
combatting corruption in China by firing more Walmart employees than at any time in the
firms history (Wharton University, 2012), as Carrefour did with some of its purchasing
managers in 2007 (Financial Times 2007). This is certainly due to the direct impact on
customers and therefore on sales that the foreign retailers need to build and maintain their
local image.
48

In 2012 the LOral group came with a Sustainability commitment guide that gives advice on
sustainable consumption in China with large achievements goals showing its global
commitment to sustainability. Carter and Ellram (1998) describe customers as having a direct
impact on firms' environmental purchasing activities.
5) Conclusion
All of the previous statements depict China as a very confusing country to follow with
opposite actions and grey areas for unethical behavior, with ineffective enforcement of law
and not always successful campaigns to fight corruption, pollution and poor working
conditions (Chinadialogue 2013, Supplychains 2014).
Although the Chinese Government has taken impressive measures and in particular by
investing massively in green energies, it also recently invested in coal factories, because they
are more profitable and because there is an urgent need for energy for the country compared
to green energies that are less productive (BBC 2011, IBT 2014).
We have seen some cases of factories closing or stopping their activities briefly for the
Olympic Games of Beijing in 2008 and for Shanghai Expo in 2010, but it was a way to show
a biased image to the international community (TheGuardian 2008, NY Times 2008, Ibid
2009).
Some even say that the promotion of GSCM policies and other corporate environmental
practices by the government has the sole goal to protect its existing exports and to raise the
countrys attractiveness for foreign investments (Li 2011, CCICED 2011).
The Chinese customers, the final purchasers, are the group which represents the future of the
Chinese economy and the transition from a positive trade balance scheme to a big increase in
domestic consumption. Yet, these consumers are also hard to depict between the Confucian
and the money oriented people. They hesitate between moral ethics and personal profit. Lin
(1977) already considers the Chinese as a nation of people with a very low level of
consciousness of what a society is due to egotistical behaviour and material values.
Furthermore, seeking quick and easy money leads to corruption but also to gambling,
smuggling, cheating and counterfeiting - another serious problem which has yet to be solved
in spite of recent efforts made by the central government (Faure, 2002).
49

A combination of a Confucian mind and CSR policies will help Chinese firms increase
international recognition and then improve their competitiveness (Salen 2008).
Thus, the biggest obstacles to improving environmental performance are the lack of social
determination noticed in China (IPE and WRI, 2010). This lack of skills, knowledge and
investments is preventing effective completion of sustainable development within Chinese
companies (Birkin et al., 2009; Lam, 2011). Only a strong internal will of top managers can
effectively conduct a GSCM policy with frequent training of the employees (Liu & al., 2012).
A study showed that 75% of the businesses want a government explicit initiative to promote
sustainable development and corporate social responsibility through public procurement
(CCICED, 2011).
The challenges to improve the environmental performance are mainly to :

-
reduce the green investment payback period,
to increase financial incentives for buyers,
to face cost increases in labor and material,
ease the access to loans for SMEs and
deal with intense local and international competition
(IPE and WRI, 2010).
A proposed solution could come from the large multinational purchasing entities help to
invest in SMEs for their improvement in environmental performance (Lee et al., 2012), with
good coordination between local NGOs and CSR officers (Forbes, 2011).
To conclude then, we can say that development can be sustainable in China. It is well
underway and on the right track. The willingness to implement can be seen on the part of
official authorities, but there remains a need for enforcement and for education on
sustainability (Chinadialogue, 2013).
The Chinese governments desire to turn its economy from production for export to
production for internal consumption is evident. The choices available to customers and their
responsiveness to such changes and notably through increased prices for green products, is in
line with price increases that is already occurring through price inflation and a growing
important middle class society with increasing western preferences.
50

III.
Sustainable Purchasing in China : Implementation and results

1) The foreign influence
Due to insufficient law enforcement and a lack of education (Lam, 2011;

Chinadialogue, 2013), the GSCM will come from the foreigners present in China who through
MNCs already have a CSR policy and put it in place locally. This can be done building strong
collaboration or monitoring with their Chinese suppliers or with the JVs through supply
chains.
The Ministry of Environmental Protection (MEP) built up cooperation in 2012 and 2013 with
large MNCs present in China like Veolia Environment regarding recycling and waste
management, or with DuPont for chemical and soil pollution. Other notable examples of
cooperation are with country representatives such as the Governor of California for their high
advancement on environmental protection and the Environment Minister of Denmark for
sustainable development (through CCICED). Continuing the list we could mention the
partnership named the China Corporate Social Responsibility Monitoring and Evaluation
System created by the Ministry of Commerce and the Kingdom of the Netherlands to pursue
and acquire existing ideas and practices from abroad to be applied locally in China.
Another inspirational source could come from the UK Department for International
Development regarding public procurement, as advised by the International Institute for
Sustainable Development (IISD).
The Carbon Disclosure Project (CDP) and its supply chain department have been requested by
the Chinese Ministry of Finance to provide critical support of the countrys work on green
procurement. Future ongoing collaboration is expected to catalyze more sustainable
government and business practice (CDP Report 2013).
On the private side we can also point out actions by The Sustainability Consortium (TSC) that
embodies almost 100 MNCs as members, which gives global tools to implement sustainable
policies throughout the SC by analyzing the LCA of whole organizations. In 2013 it organized
the first China forum on supply chain sustainability with Nanjing University in Beijing where
the Managing Director of TSC China, Weidong Zhou, presented their action plan to improve
economic performance through sustainability to local companies : Our first phase will focus
51

on working with manufacturers to help them understand their sustainability hotspots and find
cost-effective ways to make the appropriate improvements. We will do this through training
programs, seminars, management tools and other activities. We are initially targeting four
product categories to pilot this project: toys, electronics, general merchandise, as well as
clothing, footwear and textiles, said M. Zhou. The second phase will focus on retail and
consumption. We will identify tactics to help companies carry out cost-effective initiatives to
improve sustainability and encourage more businesses to make sustainable choices. (TSC,
Syntao, 2013).
Other main influential inspiration comes from MNCs and their willingness to implement their
green policy on a global scale (Wei, 2006) and via the supply chain (Jeppesen and Hansen,
2004). One particularly relevant example comes from the American retailer Walmart.
2) Walmart Case
Walmart is as an example of a foreign company implementing GSCM in China whose

commitment to green policy is acknowledged globally and in the USA. It has the desire to be
the world first green brand and has recently showed one of the most aggressive campaigns for
green supply chain initiatives (GreenSCM, 2014).
Walmart sources 70% of its products from China among 20,000 suppliers (Reuters, 2012; Lu,
2013). In 2004 it became the 6th largest export market of the country (Donaldson, 2013).
The company set up a goal to increase the sustainability of its supply chain placing China as
the center of its plans to fund research focused on sustainable business and supply chains, as
well as to increase the standards of its sourcing and product design (Greenbiz, 2012).
Unfortunately, in 2007 a team formed at Walmart to address the sustainability of all the
20,000 Chinese suppliers failed in its mission (Plambeck and Denend, 2011). We will show
here below what actually was successful in Walmarts actions.
52

a) Implementation
We will follow the 8 steps of Walmarts green implementation in its supply chain highlighted
by two academics of Stanford, Plambeck E. and Denend L. in the Supply Chain Management
Review of 2011.
i) Identify Goals, Metrics and New technologies :

In its research for improvement, Walmart surrounded itself with advisers, a Sustainable
Value Network made up of NGOs, academics, suppliers, eco-friendly competitors and
policymakers (Greenbiz, 2012).
At the Beijing Sustainability Summit of 2008, the Walmart Vice Chairman (now CEO) Mike
Duke declared that the company would improve the energy efficiency of its top 200 Chinabased suppliers by 20 percent by 2012 with the help of the recognized American NGO
Environmental Defense Fund (EDF). The NGO is also aiding Walmart to achieve its goal of
decreasing its GHG emissions by 20 million metric tons (from 2010 to 2015).
Walmart also decided to ask the non-profit organization BSR (Business for Social
Responsibility) to assist them in launching their first supply chain energy-efficiency efforts in
China (Greenbiz, 2010).
Firstly in 2009 Walmart decided to build, in partnership with The Sustainability Consortium,
a sustainability index to be used by its buyers to evaluate and to choose properly the
companys suppliers and their associated products (Bloomberg, 2014). Based on 15 questions
and covering more than 100 product categories (Reuters, 2012) it is used as a self-assessment
rating system covering 4 areas :
1) energy and climate,
2) natural resources,
3) material efficiency, and
4) people and community.
53
Figure 6 : Walmarts Sustainability Index Questions 2009
The companys buyers are now evaluated on their sourcing decisions using the sustainability
index and also on the progress made by the suppliers they are responsible for (GreenSCM,
2014).
At the final stage the index will also be accessible by the customers for transparency and selfinterest regarding daily purchases (Quinn, 2009).
54

The Walmarts Foundation helped the launching of TSC in China with a grant of USD 2
Million to expand the evaluation of Chinese suppliers on their sustainability performance (PR
Newswire, 2012).
The Foundation also helped the integration of the Nanjing University in the process with its
initiation of the Sustainable Supply Chain Capacity Building Program. The objective is to
improve industrial performance through direct training or partnerships with other
organizations. In one-day training courses Chinese companies would learn how to use TSCs
measurement and reporting system to improve their environmental performance (Syntao,
2014).
ii) Certify Environmentally Sustainable products and material :

The fishery sourcing is certified to 90% by the Marine Stewardship Council (MSC) including
seafood retailed in China, and more and more sources come from regulated farm-raised fish.
Wood purchasing is sustainably managed with the FSC and PEFC accreditation. As explained
before, the retailer goes deeper than RoHS and REACH compliance for chemical related
product by the creation of its own measure known as the WERCS.
iii) Providing Network partner assistance to suppliers :

By focusing on its top 200 Chinese suppliers, Walmart has helped its business partners with
the participation of BSR which gives them training to find easy improvement opportunities or
low hanging fruit, and most of the time with low payback periods from 6 months to 2 years
(Greenbiz, 2010; Ibid., 2011).
iv) Committing to larger volumes of environmentally sustainable products :

This policy will enable suppliers to invest safely with provided sales from Walmart to cover
their payback period. Environmental friendly investments by suppliers have therefore been
made possible to fulfil Walmarts sustainable sourcing goals.
v) Cutting out middlemen :

The American retailer decided to engage directly its buyers with commodities that will be
sold in shops without being processed. This policy has been applied in China by dealing
directly with 1 million farmers, more than simply cutting costs of trading companies, Walmart
certifies that this method will provide better prices for the farmers and help them to improve
55

their standards and labels requirements. In collaboration with the University of California and
the Chinese Center for Agricultural Policy, the retailer has developed an income assessment
and has announced its goal to increase the Chinese farmers income by 10% by 2015.
vi) Restructuring the buyers role :
Purchasers are now specialised in on of 4 areas : merchandising (buying), product
development, sourcing, or planning/execution, with a shift across product categories to
stimulate the role of suppliers of co-managing the procurement of traditional products with
purchasers in a long-term business relationship.
vii) Consolidating direct suppliers :

More than having a logical benefit of leveraging costs; it also enables suppliers to get more
involved in their environmental performance. Externally, having Walmart as a direct or
indirect client increases the reputation and can have long term benefits. There is even a
dedicated page in the professional B2B website Alibaba self-called Walmart approved
factories inventorying 1,357 products among 85 suppliers in China Mainland (Alibaba,
2014).
viii) Licensing environmental innovations :

Walmart encourages its suppliers to constantly innovate regarding the environment. It
organizes non-competitive work groups of top suppliers to stimulate their interest in common
issues to find possible solutions, from an LCA analysis with EDF giving practical
recommendations and finally monitoring changes.
b) Results
One of the first logical benefits gained from Walmarts GSC policy is cost reductions, due to
improved energy efficiency, but also from new sources of revenues like reselling plastic to its
packaging suppliers, assuring the sourcing and supply with its sustainable index and building
its reputation (recognition from the Chinese government) (Plambeck and Denend, 2011).
Today 70% of the products purchased at Walmart have been evaluated by the sustainability
index from 500 Chinese suppliers who provided data and information to the index (Greenbiz,
56

2012), and 195 of the first 200 factories have improved their energy efficiency by 20 percent
by mid-2012 (PR Newswire, 2012). The sustainability index also helped the company to
rebuild its image in China with respect to local communities and labor groups (Reuters,
2012). Eventually TSC will spread the use of the index to the whole country, generating
future improvements in other sectors (Greenbiz, 2012).
The American retailer is convinced that the self-evaluation of its suppliers regarding their
products environmental costs improve production efficiency and decrease the products cost
(Worldwatch Institute, 2013), therefore the group is able to offer more affordable and
sustainable consumer goods in China (Greenbiz, 2012).
Even though LCA can be found to be time consuming and costly, it has surprisingly showed
that soap has a big responsibility for GHG emission and therefore this information has
enabled manufacturers to react appropriately.
However results are not so perfect, Greenpeace depicts the giant Walmarts supply
chain as being still far from clean (Reuters, 2012). The self-assessment method of the
sustainability index is also questioned because it has not been audited. Moreover the
companys total carbon footprint is still expanding (Plambeck and Denend, 2011).
It is said by A. Huston from EDF that only minimal additional human resources and a few
key structural changes to knock this program can truly transform the way energy is
managed in Chinese factories (Greenbiz, 2011).
We could describe this strategy as a quick answer to market changes and price increases by
partnering with suppliers for fast adaptation. In terms of environmental development, it is not
a matter of sustainability any more (Elkington, 1994) but a matter of SustainAgility, a
combination of risk management and speed innovation investment.
3) Conclusion
The example of Walmart is remarkable on its own but is very particular to the companys
self-global engagement vis--vis environmental performance. The feasibility of such a
commitment is compromised by the investment capabilities of organizations, which only big
corporations can have.
57

Therefore implementation of GSCM management policy in China is not an easy thing to do
especially for SMEs in China (at a micro level) (Greenbiz, 2013), unless like the Walmart
farmers example above, all other suppliers have only small investment capabilities with no or
difficult access to loans, or unless client requirements with collaboration or co-investment like
provided sales. If there are not such possibilities, then the price increase could simply be a
solution.
Pro-environmental investments can be seen as a long-term strategy to be more competitive
and to avoid the risk of noncompliance with existing and soon promulgated laws. The world
watch is always on the lookout to detect wrong behavior, and sometimes they to uncover
green campaigns that hide harmful activities as it has been done with the Prix Pinocchio in
France every year.
Governments need to be more rigorous in laws application, even if incentives, loans and tax
deductions are good manners, there must be sanctions too. Some example of fines and factory
shut downs for heavy polluters to answer urgent citizen concerns (TheGuardian, 2010). There
is also a deep restructuring need of going against as usual practices in the SCM like
corruption practices (Kroll Report, 2011/12).
We may wonder ourselves who will bear the additional costs? A close relationship with
purchasing companies and their suppliers can enable collaboration for investment. However,
in the case of China with multiple small suppliers who dont rely more on a client than
another, like trading relations, this type of investment relationship is difficult. Therefore
trading companies will have to build closer relationships with fewer vendors (Inc.,
Entrepreneur). This, in turn, leads to the question, will the final purchasers be ready to pay
their contribution for a greener environment ? (Worldwatch Institute, 2013), and will the
consumers be ready to buy more expensive products which are more sustainable? And this is
made possible through the supply chain with in between the role of the purchaser as a
conductor and as an educator.
The following part will try to answer the questions of GSCM knowledge in todays
purchasing activities in China and the readiness of Chinese citizen to pay a premium for
greener products.
58

Methodology
The following study was based on a survey from secondary data that will push further the
research started in the literature review, to be more representative in a way (Steward and
Kamins, 1993) and to prove the research hypothesis. However a risk of not matching research
questions exists (Saunders et al., 2009).
The survey was conducted between April and August 2014 in the form of two distinct online
questionnaires to collect numerous answers without long personal commitment of delivering
and collecting data, in a mix of closed-end questions, multiple choice questions (MCQ) and
open questions. One was dedicated to purchasing managers working in or with China and the
other one addressed to Chinese consumers. We mainly used personal and professional
relations, alumni networks, professional online networks (as LinkedIn) and groups of
discussion to find relevant respondents.

The survey was addressed to purchasing managers working in China or having bought goods
or services with China across every sector in the form of an online questionnaire. In total, 18
questions were requested in 2 main parts :
i) Demography : Q1 Nationality, Q2 Experience (in years), Q3 Job title (closed question), Q4

Country of work (in China or abroad), Q5 Chinese or foreign company (where respondents
work), Q6 Size of the company (closed question), Q7 Sectors of activity (MCQ), Q8 Sectors
of sourcing (MCQ), Q9 If source from Chinese companies (Yes/No question), Q10 Sourcing
experience with Chinese suppliers (in years).
This first part are closed questions (only one possible answer) showing which sample replied
to the survey, what the relevancy of their answer is regarding their work experience with
Chinese business partners in China or abroad.
ii) Sustainability : Q11 Capability to sell sustainable products at a higher price to clients
(Yes/No question), Q12 Capability to work with sustainable suppliers at higher costs (Yes up
to 5%, 10%, 20% or No), Q13 Certification cognition (MCQ), Q14 Certifications requirement
59

from the company (MCQ), Q15 GreenSCOR model knowledge and application (closed
question), Q16 CSR model application in their company and knowledge (closed question),
Q17 Recycling activities in their company (Yes/No question), Q18 Benefits perceived from
sustainable purchasing (ranking).
This second part will depict the level of knowledge and implementation of green policies in
surveyed managers companies, and the capability of purchasing professionals to transmit
higher costs from sustainable suppliers and to what extent.
In the question 13 and 14 we chose traditional standards such as ISO 9000 (for quality
management) and ISO 14001 (environmental management), then more recent standards as
ISO 26000 (for CSR) and ISO 50001 (for energy management), a local Chinese standard CCC
(Chinese equivalent of CE or UL), building standard LEED (green building), sourcing
standard PEFC/FSC/CFCC (for wood and paper management), Zerofootprint Carbon (for
CO2 emissions), 1% for the planet (a donation label up to 1% of the companys sales to
environment causes). The TUV SUD has been deleted in the answer collection because it is
not a standard or a certification but a private agency which grants certifications to other
companies.

The second survey was addressed to young Chinese consumers who speak English, either
students or employees with an assumed modern and educated background, representing a
sample of the emerging middle class, in other terms, the next generation of customers that will
lead purchasing habits.
The questionnaire can be divided into 3 sub parts :
i) Demography : Q1 Age (closed question), Q2 Gender (closed question), Q3 Occupation

(closed question).
This first part will show if the type of population sought has been attained.
60

ii) Personal features : Q4 Pollution concern (ranking), Q5 Environmental issues in the 195070s (Yes/No question), Q6 Generations concern to the environment (Yes/No question), Q7
Pro-environmental family habits (Yes/No question).
This second part indicates the personal perception of the environing pollution of today from
its beginning with the generational differences per family.
iii) Knowledge & Actions : Q8 Waste management companies type (MCQ), Q9 Trust in those
companies (Yes/No question), Q10 Overseas product consumption (MCQ), Q11 Capability to
pay premium price for green products (Yes up to 10%, 25% or No), Q12 Factors influencing
decision for school/company application (ranking), Q13 Awareness of government action
(open question).
This last part is certainly the most important one, showing the personal commitment of
Chinese citizens to sustainable activities in their daily consumer habits.
Question 10 gives choices among food products, home appliances and cosmetics.
Question 13 proposes a ranking selection between salary, ethics, environmental concern,
location, clients, sector and product/service.
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Findings and Discussion
This part shows the results of the 2 online surveys.
The 1st results are collected from 55 questionnaires, they aim to show purchasers involvement
with GSCM as it relates to the Chinese business environment in the first part : Sustainable
Purchasing Study. The results are then subdivided in 2 categories : Demography and
Sustainability.
The 2nd survey accounts 59 answers from Chinese citizens to analyze their habits toward the
environment in terms of consumption. Those second results are then divided in 3 areas :
Demography, Personal features and Understanding & Actions.

a) Results
The survey has been completed by 55 participants, however we had to eliminate 5 answers
that were not relevant for the study because they involved people who were not sourcing in
China and were working abroad in non-Chinese companies. Among those 5 only 1 respondent
was Chinese, all had little experience in purchasing. Therefore the study is based on a sample
of 50 answers.
i) Demography
This first part of the survey shows the profile of participants having participated in the survey.
The respondents of the online study are mainly non-Chinese persons accounting for 80% of
the total sample; more than a half (56%) work in China and in foreign companies (90%).
All respondents source from Chinese companies, except for only 2 participants.
On average half of the sample has 5 years experience in purchasing activities with Chinese
business partners.
62

Table 3 : Q2 and Q10 Working experience
Regarding working positions, 32% are Buyers, 26% are Sourcing Managers, 20% are
Operations Managers and 12% are Logistics Managers.
Table 4 : Q3 Job position
According to the definition of SMEs in China, we can consider a Chinese company as a SME
with employees below to 500 (China Briefing, 2011). In this survey, 56% of the respondents
work in SMEs.
63

Table 5 : Q6 Companys size
As for the sectors where respondents work and source, the response category Textile was
proposed twice in the MCQ, therefore we had to net them to eliminate the duplication. The
most highly-represented sectors are presented below.
Table 6 : Q7 and Q8 Working and sourcing sectors
The most represented sectors are Manufacturing, Trade, Textile, Services, Retail and
Automotive.
64

ii) Sustainability
Due to a technical problem of the website administering the online survey, there were 45
answers in the 2nd part of the survey, but only 42 were kept as relevant for the study.
More than a half of the participants think that sustainable products can be sold at a higher
price to their clients. In the 10% of other answers people also agree to this condition if the
price premium adds value to the product and if the raw material comes from sustainable
sources.
As regarding the question to know if purchasing managers are willing to work with an ecofriendly supplier at increased cost, we notice that a strong majority (82%) agree to this,
mainly to the extent of a 5% increase (50%), and to 10% (29% of respondents) and a very few
up to 20% (3%). Only 12% are definitely against such action. In the remaining 7% of other
the participants may agree if the market is in a need of such products.
Table 7 : Q12 Green supplier price
As for the question relating to knowledge and requirement for certifications and standards we
see strong awareness of the traditional ISO 9000 and ISO 14001 (93% and 79%), then a very
small knowledge of the more recent ISO 26000 and ISO 50001. The Chinese local equivalent
of CE, the CCC is known by less than half of the sample. Then there is an average ranging
from 21 to 33% for forest and paper standard, building standard and carbon emissions. The
donation label 1% for the planet is known by only 9% of the persons. In the 17% other
65

answers we mainly see notes for the chemical standards RoHS and REACH, and a social
performance index, the BSCI.
Concerning the required certifications and standards, only ISO 9000 has a score exceeding
50% (up to 67%); the next one is ISO 14001 at 33%, all the other are below 20%. In the
other field accounting for 40% we divided the propositions in 3 main answers : 12% say it
depends of the clients requirements, 7% reply that none are required and 5% claim for the
TS1949 certification which is used in the automobile industry.
Table 8 : Q13 and Q14 Certifications and standards
In the question of GreenSCOR knowledge and application, 71% of the respondents dont
know it, 24% have heard of it and only 5% apply it, and those 5% are not working in China.
Regarding CSR policy, 52% of the respondents say that it is implemented in their company,
and 19% dont know what it is.
66

Tableau 3 : Q15 andQ16 Sustainable policies
The last question concerns the potential benefits perceived from the implementation of a
Sustainable Purchasing Policy. Answers have been strongly toward a good image and ethical
benefits for the company at more than 50% (respectively 69% and 60%), then for direct
economic benefits at 45% and potential clients at 43%. The less carbon emission benefit is
only perceived by 26% of the sample. In the 10% of other field of answers no themes can
be highlighted.
Table 10 : Q18 GSCM advantages
67

b) Discussion
The sample surveyed is mainly of non-Chinese respondents at 80% which is not very
representative of the total purchasing activities in China, but more of an expatriate point of
view (56%) who work in foreign companies (90% of the participants) as important as SME
(56%) with for half of them with more than 5 years of experience with Chinese business
partners.
The participants work in every kind of sector, mainly in manufacturing, trade, textile, retail
and automotive.
There is a good knowledge of major standards (ISO 9000, ISO 14001 and CCC) but not for
the other ones which are also important regarding environment concerns, as the PEFC, ISO
26000, ISO 50001, LEED and Zerofootprint Carbon. Moreover in the application of them in
companies, all figures drop drastically and only ISO 9000 is above 50% followed by
ISO14001 and PEFC at 33% and 17% respectively. Only the quality standard seems to be
required but not so often though. Therefore more efforts need to be given on the application
and requirement of those standards either by customers or by governments (Lam, 2011).
We notice a quite good score for CSR application in companies (52%) and mostly a strong
level of knowledge (only 19% dont know about it). As far as GSCM is concerned (the
application of CSR in SCM), respondents dont know GreenSCOR (71%) and only 5% apply
it in their company. Those figures can be linked to the precedent ones of standards and
certifications, even if some knowledge exists, there is no application of green policies. Even
for a simple action of recycling, only 67% of the surveyed companies practice it in China or
abroad.
For the perceived potential benefits of GSCM, results mostly depict advantages relating to
good image (69%) and ethics (60%) (linked to CSR) but not much for CO2 emissions
reduction (26%) which is directly linked with costs savings and direct economic benefits
(45%) that has been demonstrated by He et al. (2007) and also linked to customers relations
(Oshika et al., 2012). There are also recognized benefits to acquire potential clients (at 43%,
only in 4th position over 5) as it has been advanced by Lee et al. (2012).
68

Finally, the purchasers seem to be ready for a price increase from supplier (at 82%) at varying
degrees and that this increase can be passed on to clients (52%). Therefore the benefits of
sustainable purchasing presented before have convinced them.
We will now compare the answers between Chinese and foreigners in the second part of the
survey to see on which points there are differences and to what extent.
All comparison tables can be found in the appendix.
Chinese participants are more confident on selling sustainable products to their clients by
almost 30%; however they are less inclined to invest more in eco-suppliers than foreigners by
20%.
Regarding the certifications and standards, Chinese purchasing managers have better
knowledge of the ISO 50001, CCC and PEFC by 20% to almost 30%, however there is not
much difference in the companys requirements. Therefore there is no evidence of better
implementation of ISO 14001encouraged by the government as it has been advanced by some
research (Li, 2011; Zhu et al., 2004)
For the CSR policy, the Chinese respondents are more aware of it by 8% and its application
by 12,5% than foreigners, which goes against the findings of Liu (2007) and Lam (2001) but
that is close to Ip (2011) and Wang and Dou (2012).
Finally concerning the GSCM benefits, Chinese tend to see more advantages to acquire
potential clients (by 24,5%) and the related reputation and image given to customers of the
government (Kolk et al., 2008; Lam, 2011) and not much for carbon emissions reductions (by
17%). This is a barrier to implement sustainable policies (Wang & Dou, 2012).
We may reconsider this survey thinking that only half of the respondents work in China and
90% of them in foreign companies, therefore it shows the view of purchasing managers
working with Chinese suppliers. On the other hand, the results are from SMEs point of view,
which have more difficulties to implement GSCM policies (Greenbiz, 2013) and that is what
we want to study as being of more interest.
Purchasing managers are ready for investing in suppliers through higher prices for sustainable
products and then pass on this increase to their clients. Interestingly Chinese purchasing
managers are more willing to increase the price of the green products they propose to their
customer than increasing spending with own suppliers for such products. Comparatively we
notice more knowledge of CSR and standards than foreigners. Those points prove the greed
69

developed by Chinese (Faure, 2002) to gain more clients and business shares through green
policies.

a) Results
All answers are supposed to be filled in by Chinese citizens and therefore useful to the study.
Total respondents of 59, however due to unknown issues from the website the number of
respondents varies from 58 to 59, except for question 4 that gets 49 answers only and the last
question (14) that goes down to 57 respondents.
i) Demography
The sample found to answer this survey is mainly (66%) from employees from 25 to 40 years
old to 68% and with a small majority of women (up to 58%).
Concerning pollution concerns the Chinese respondents are gradually more affected by air
pollution (65%), food safety (61%), water pollution (57%) and by wastes & recycling
management (34%) as the table below details it by responses.
70

Tableau 11 : Q4 Pollution concern
Regarding generational differences, results show that younger generations (the respondents
ones) are more inclined to respect the environment (91%) than their parents (73%) and their
grand-parents (60%). This can be linked to the general lack of concern regarding the
environment in the 1950-1970s (by 63%) according to the answers. Finally 76% of the sample
declares having pro-green habits in their family.
Concerning waste management companies, 63% of the respondents think that it is operated by
stated owned companies and that over half of the respondents do not trust them.
Actions taken by Chinese consumers to avoid risk related to products can be shown in the
following table that represents by order of preference their consumption habits for general
products.
71

Tableau 4 : Q10 Overseas product consumption
In the question about paying a premium price for sustainable products, there is a strong
majority of yes (95%), with 66% ready to pay more 10% and 29% ready for an increase of
25%.
Regarding the preferences in applying for a job, they are shown by calculating the weighted
average of the answers rank, it depicts tendencies for the salary (1.81/7), the location
(3.41/7), ethics (3.66/7), environmental concerns (3.97/7), sector of activity (4.88/7),
product/service (4.97/7) and the clients (5.31/7) (1 being the most preferred, and 7 the least
one).
Finally the participants were asked if they are aware of government actions toward the
environment. 61% of them replied positively regarding air pollution and recycling measures,
the remaining replies say that the policies are not effective or that they simply have not heard
about them.
72

b) Discussion
i) Demography
The sample is mainly composed of active people (66%) with sufficient purchasing power
(survey done in English). So the target of young wealthy Chinese citizens, tomorrows
purchasers is well represented here.
For pollution concern, air pollution is the most noteworthy one, undoubtedly because it is
physically seen and strongly felt almost everywhere in China, especially in the North with
coal factories. The American embassy set up its own measurement website to inform its
countrys residents in the city of air quality, and this goes against Chinese official metrics.
Food poisoning has been strongly felt; it is in 2nd position with a score of 61%, certainly due
to scandals of infant milk poisoning. However, concern about recycling and waste
management is in last position (34%) even if it is a growing issue due to the todays
overconsumption of high-tech products and the planned obsolescence. This can also be related
to the mistrust given to waste management companies (52%).
The generational differences show the evolution of a respectful mindset toward the
environment that recognizes the extensive use of natural resources since the 1950s. However,
the survey does not describe what kind of in-house practices are used at home regarding the
environment.
ii) Knowledge and action
Concerning the consumption of overseas products, it is surprising to see how many imported
products are preferred to be bought rather than local ones. Milk has the biggest rate with 61%.
It is another consequence of infant milk poisoning. Other food related products with
impressive scores around 30% are fruits, seafood, vegetables and oil, and this shows a real
issue about the perceived quality of local products. Meat has also a quiet high score with 23%
but it can be explained by the new taste for foreign food such as beef from Japan, Australia or
New-Zealand. Rice shows also an interesting score with 20%, another taste related preference
73

for more expensive and more recognized varieties of rice from elsewhere in Asia (i.e.
Thailand). Regarding non-food products, the small and big electrical appliances have high
preferred scores, 45% and 39% respectively, certainly due to the high competition in the
sector of smartphones and home appliances with strong local Asian brands in Korea (like
Samsung, LG), in Japan (as Toshiba, Sony, Panasonic) and in Taiwan (HTC, Acer,
Asus).
But how much are the Chinese consumers ready to pay for better quality products or for more
sustainable ones like organic food? Impressively the study shows that they are ready to
increase their expenses by 25% for almost 30% of them and up to 10% for 66% of them (or
96% when we cumulate both figures), this proves the growing interest of young generations
for sustainable products (Lo and Leung, 2000). This has to be taken in account by companies
because it has been shown that customers have a direct impact on the companies
environmental purchasing activities (Carter and Ellram, 1998).
In the priorities for a job application, respondents put the ethics and the environmental
concerns in position 3 and 4 over 7 that shows some importance for considering a company,
employers should take this element in consideration, especially when you know that young
generations change jobs easily (Rozman, 2002).
Regarding the low awareness of governments policies it goes with the lack of enforcement of
existing rules (Lam, 2011; Wang & Dou, 2012). Even if 61% of the sample says that they are
aware of some actions, the descriptions are really vague and poor.
This second survey on Chinese consumers demonstrates a strong concern about pollution,
because and even if they are not very aware of governmental green actions, they are already
buying imported products to prevent quality and health issues and they are ready to pay extra
for those products and especially for better sustainable goods.
74

Conclusions and recommendations
The academic study of sustainable purchasing showed that there are numerous
different policies that can be implemented in a company, by looking at the whole picture of
the supply chain from the conception of the product itself, the cost savings generated by
reducing emissions to the better management of waste or reverse logistics. Companies can opt
to integrate the whole closed loop system of the product lifecycle or only implement a
selection of eco-possibilities. Alternatives can be selected following the review of past
examples of successful implementation or with the help of specialized bodies.
It has been demonstrated that green policies adapted to the supply chain can lead to very
effective performance in terms of tangible and intangible results.
Applied to the context of China and its environment where there is the urgent need to evolve
toward more sustainable ways of production and consumption, the government has rapidly
developed measures which are seen as neither sufficiently attractive nor dissuasive.
The Chinese purchasing managers tend to see more green policies as potentially beneficial for
themselves or their company. However, they neither manifest a mindset for sustainability nor
a desire to invest in long term green plans. This is especially true for SMEs where there is a
lack of resources to improve sustainability. Education will need to be developed by bridging
universities and corporations to raise environmental awareness and providing tools to enable
efficient sustainability initiatives with associated economic benefits.
Closer relationships should be forged between purchasing entities and their suppliers, such as
a group of purchasers pooling their supplier base to enlarge the investment capacity but also
to increase supplier interest in sustainability issues. We could envision groups of trading
companies working collaboratively together across industry sectors to enhance supplier
capabilities and in so doing create competitive advantage through new and improved
environmentally- and socially-friendly and competitively priced goods for their clients.
Moreover, Chinese end-users are prepared to accept higher prices to be able to acquire better
and more sustainable products from local or international sources certified by eco labels and
75

standards. Future developments should aim for growing consumption of local production to
cut transportation costs and the associated pollution, as part of sustainability initiatives.
Even if foreign customers are requesting improvements in the sustainability of Chinese goods
and their manufacturing methods, the policies are being implemented only slowly in China.
However domestic consumers are making their voices heard through NGOs to reveal abuses
and make demands for improvements.
Because intentional customers tolerate less and less the risk of consuming cheap and risky
goods, and are increasingly prepared to buy green products at a price premium, companies
should seize the business opportunity.
In the future, if Sustainable Purchasing is not made mandatory by the Chinese government,
then consumer organizations will need to take the lead. We could envision NGOs and
experience private consulting companies offering their consulting services as a means to
implement green policies in a company supply chains with an emphasis on working
collaborations between the purchasing entity and the supplier and collecting industrial data to
develop new and improved methods for green policies.
We will take the easier case of a Purchaser in a MNC that has a green policy in his values,
with support from his managers who created the position and if necessary the budget or the
targets of achievements.
-
Cooperation with key/biggest suppliers at early stage of product development (ecoconcept), arrange working meetings between project managers and suppliers
responsible actors ;
Transparency from the suppliers : their suppliers list, reports;
Build the whole LCA chain of major products (in terms of volume for better pollution
decrease and in terms of best sales/margins to save more costs/increase the margin)
Easy actions : recycling ;
Link with HR to build companys employees cognition about environment concerns :

recycle, consume less, give ideas ;
Working with existing suppliers, help them to improve toward green actions / Looking
for new suppliers and their opportunity
Tools : to analyse suppliers (EDF in China), suppliers list per sector ;
76

-
Rewards : share achievements internally through communication and HR department

but also externally to clients and to public ;
Meet local stakeholders to hear their concerns and see how through SC can meet their
demand;
Meet local government representatives to look for regulations and potential aids ;
Finally we could extent the subject in another research to study which sector might be the best
for Green Purchasing.
77

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Appendix
Appendix A : Sustainable Purchasing in China Online Questionnaire
Sustainable Purchasing in China Study 1/2

Dear readers, I am an MSc student in International Business at SKEMA Business School in
Suzhou, China.
As part of my thesis on Sustainable Purchasing in China, I am surveying managers who have
experience in sourcing/purchasing activity in China.
The study below will highlight the best practices of Sustainable Sourcing with Chinese suppliers.
After completion of the questionnaire and the publication of my thesis, I will send you personally a
copy.
Thank you in advance to spend 10 minutes of your schedule for this study.
92

1) What is your nationality ?
Chinese
Non-Chinese
2) How long have you been working in Purchasing/Sourcing ?
1-2 years
3-5 years
6-10 years
11-20 years
more than 20 years
3) What is your job title ?
Junior Buyer
Experienced Buyer
Senior Buyer
Sourcing Manager
Operations Manager
Procurement Manager
Logistics / Supply Chain Manager
4) In which country do you work ?
China
Abroad
5) Do you work in a Chinese or in a non-Chinese Company ?
Chinese
Non-Chinese
6) What is the size of the company you are working for?
1-9 employees
10-49 employees
50-499 employees
500-999
+1'000 employees
93

7) In which sector(s) do you work mainly?
Apparel & Fashion
Automotive
Chemicals
Cosmetics / Luxury
Energy
Environment & Agriculture
Food & Beverages
Health Care
Heavy Industry
Hospitality & Tourism
International Trade, Import & Export
IT
Manufacturing
Media & Publishing
Pharmaceuticals
Retail
Textile, Apparel & Fashion
Transport, Logistics & SC
Other Services
Other (Please Specify)
8) In which sector(s) do you source mainly?

Apparel & Fashion
Automotive
Chemicals
Cosmetics / Luxury
Energy
Environment & Agriculture
Food & Beverages
Health Care
Heavy Industry
Hospitality & Tourism
94

International Trade, Import & Export
IT
Manufacturing
Media & Publishing
Pharmaceuticals
Retail
Textile, Apparel & Fashion
Transport, Logistics & SC
Other Services
9) Do you source from Chinese companies?

Yes
No
10) How long is your sourcing experience with Chinese suppliers?
0-2 years
3-5 years
6-10 years
11-20 years
more than 20 years
Sustainable Purchasing in China Study 2/2

11) Do you think sustainable products can be sold at a higher price to your clients?
(Use "Other" field to comment if necessary)
Yes
No
12) Are you willing to work with an ecofriendly supplier if the Total Cost of Doing Business with
him is higher than a traditional supplier ?
(Use "Other" field to comment if necessary)
Yes if less than 5%

Yes if less than 10%
95

Yes if less than 20%
No
13) What certifications do you know?

ISO 9000
ISO 14001
ISO 26000
ISO 50001
CCC
Green Building Label / LEED
TUV SUD / TUV Rheinland
PEFC / FSC / CFCC
Zero Footprint Carbon
1% for the planet
14) What certifications do you require from your suppliers?

Either mandatory by your company or by your clients, from sourcing, RFI and quotation demand
ISO 9000
ISO 14001
ISO 26000
ISO 50001
CCC
Green Building Label / LEED
TUV SUD / TUV Rheinland
PEFC / FSC / CFCC
1% for the planet
15) Do you know and do you apply GreenSCOR model in your company's SCM ?
(GreenSCOR :
http://c.ymcdn.com/sites/www.dmsca.us/resource/resmgr/Docs/Introduction_to_GreenSCOR__J.pdf)
96

Yes I have heard of it
Yes I know what it is and we apply it in our SCM
No, I don't know what it is
16) Is there a CSR Policy in your company ?
Yes
No
I don't know what is CSR
17) Does your company recycle ?
Yes
No
18) What advantage(s) will your company get from a Sustainable Purchasing policy?
Direct Economic Benefits
Good Image
Ethics
Potential Clients
Less Carbon Emission
19) Thank you for participating to this study about Sustainable Purchasing in China. Please
do not hesitate to contact me for questions about my work (kevin1.premel@skema.edu).
If you want a copy of my thesis, please fill in the box below with your email address.
97
Appendix B : Comparison tables

Q11 Sustainable
products sold higher
price to client
Yes
No
Other
Q12 Engage with

ecofriendly supplier
more expensive
Yes if <5%
Yes if <10%
Yes if <20%
No
Other
Non
Chinese Ranking
Chinese
Ranking
Difference
47,06%
1
75,00%
1
27,94%
44,12%
8,82%
2
3
12,50%
12,50%
2
3
-31,62%
3,68%
Non Chinese Ranking Chinese Ranking Difference

47,06%
1 62,50%
1
15,44%
32,35%
2,94%
11,76%
5,88%
2
5
3
4
12,50%
0,00%
12,50%
12,50%
2
5
2
2
-19,85%
-2,94%
0,74%
6,62%
Non
Q14 Certification required Chinese
Ranking Chinese Ranking Difference
ISO 9000
64,71%
1 75,00%
1
10,29%
ISO 14001
ISO 26000
ISO 50001
CCC
35,29%
5,88%
0,00%
5,88%
3 25,00%
6 0,00%
9 12,50%
6 0,00%
3
9
4
9
-10,29%
-5,88%
12,50%
-5,88%
Green Building Label /

LEED
PEFC / FSC / CFCC
1% for the planet
Other
8,82%
14,71%
2,94%
0,00%
41,18%
5
4
8
9
2
4
4
4
4
2
3,68%
-2,21%
9,56%
12,50%
-3,68%
Average
17,94%
12,50%
12,50%
12,50%
12,50%
37,50%
20,00%
98
2,06%

Q16 CSR Policy in company
Yes
No
I don't know what is CSR
Q18 Advantages of GSCM

Direct Economic Benefits
Non
Chinese Ranking Chinese Ranking Difference
50,00%
1 62,50%
1
12,50%
29,41%
20,59%
2
3
25,00%
12,50%
-4,41%
-8,09%
Non
Chinese
Ranking Chinese Ranking Difference
47,06%
3 37,50%
4
-9,56%
Good image
Ethics
Potential Clients
Less Carbon Emission
67,65%
61,76%
38,24%
29,41%
1
2
4
5
75,00%
50,00%
62,50%
12,50%
1
3
2
5
7,35%
-11,76%
24,26%
-16,91%
Other
11,76%
0,00%
-11,76%
Average
42,65%
39,58%
99
-3,06%

Appendix C : Environment Study in China Online Questionnaire
Environmental Study
Dear readers, I am an MSc student in International Business at SKEMA Business School in
Suzhou, China.
As part of my thesis on Sustainable Purchasing in China, please find below a survey that will
highlight the best practices of sustainable consumption habits in China.
After completion of the questionnaire and the publication of my thesis, I will send you
personally a copy.
I would be grateful if you take 5 minutes of your time to complete this study.
This study is only addressed to young Chinese urban resident .
1) How old are you ?
< 25
25 - 40
> 40
2) What is your gender ?
Male
Female
3) What is your occupation ?
Student
Employee
4) On a scale from 1 to 5 how much do you feel concerned with :
( 1 Not Concerned - 5 Deeply Concerned )
AIR POLLUTION
WATER POLLUTION
FOOD SAFETY
WASTES & RECYCLING
5) According to you, were there any concern toward environmental issues during the 19501970's in China ?
Yes
No
100

6) According to you, were/are those category of people respectful of the environment ?
True
False
Comments:
Your grand-parents
Your parents
You
7) Are there any habits in your family regarding environmental care ?
(Consumption of eco-friendly goods, low-energy consumption or green energy, recycling your waste,
composting, )
Yes
No
8) According to you what companies hold waste management and recycling plants ?
State Owned Companies
Private Conglomerates
Private Companies
9) Do you trust those companies ?

Yes
No
Enter the answer option
10) For which of the following products do you prefer to consume overseas product ?
( Multiple choices available )
Rice
Vegetables
Fruits
Meat
Seafood
Oil
Milk
Water
Cosmetics
Small Electrical Appliances
Big Electrical Appliances
101

No
11) Are you more willing to buy a sustainable product (ecofriendly as : organic, recycled
packaging, zero carbon emission) than an ordinary one?
Yes, if less than 25% more expensive
Yes, if less than 10% more expensive
No
12) When applying for position/school, what are the most important factors that influence you?
Ranking
Salary
Ethics
Environmental Concern
Location
Clients
Sector
Product/Service
13) If there are any other factors please specify :
14) Are you aware of Official Governments Actions toward environmental issues?
If yes, please describe which ones.
15) Thank you for participating to this study about Sustainable Purchasing in China. Please do
not hesitate to contact me for questions about my work (kevin1.premel@skema.edu).
If you want a copy of my thesis, please fill in the box below with your email address.
102

Thesis Sustainable Purchasing in China - Kevin Prémel

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SKEMA BUSINESS SCHOOL

MASTER OF SCIENCE IN INTERNATIONAL BUSINESS,

SUSTAINABLE PURCHASING IN CHINA

ACADEMIC YEAR 2013-2014

Sustainable Purchasing in China 2013-2014

Supervisor : Catherine Taupiac

Sustainable Purchasing in China 2013-2014

Sustainable Purchasing in China 2013-2014

List of Tables & Figures

I) Sustainable Purchasing : Can Sustainable Purchasing Lead to Better Performance ?

II) Economic Development in China : Can Development be sustainable in China?

III) Sustainable Purchasing in China : Implementation and results

1) Sustainable Purchasing Study

2) Environment Study in China

Findings & Discussion

1) Sustainable Purchasing Study

Sustainable Purchasing in China 2013-2014

2) Environment Study in China

Conclusions and recommendations

Appendix A : Sustainable Purchasing in China Online Questionnaire

Appendix B : Comparison tables

Appendix C : Environment Study in China Online Questionnaire

Sustainable Purchasing in China 2013-2014

Sustainable Purchasing in China 2013-2014

Business for Social Responsibility

China Compulsory Certificate

China Council for International Cooperation on Environment and Development

Carbon Disclosure Project

Corporate Social Responsibility

China Training Initiative

Environment, Health and Safety

Environment Management System

Environmental Protection Agency

Environmental Profit & Loss

Foreign Direct Investment

Global Report Initiative

Green Supply Chain Management

International Institute for Sustainable Development

Institute of Public and Environment Affairs

International Organization for Standardization

Life Cycle Analysis

Logistics Management Institute

Leadership in Energy & Environmental Design

Ministry of Environmental Protection

Organisation for Economic Development and Cooperation

Registration, Evaluation, Authorization and Restriction of Chemical substances

Sustainable Purchasing in China 2013-2014

Request For Information

Request For Quotation

Restriction of Hazardous Substances

Supply Chain Council

Supply Chain Operations Reference

Security, Health & Ethics

Supply Chain Management

Small and Medium Enterprises

Sustainable Supply Chain Management

United Nations Global compact

Waste Electrical and Electronic Equipment

World Resource Institute

Sustainable Purchasing in China 2013-2014

Figure 2: IKEA Sustainable Product Scorecard (IKEA Report 2011)

Figure 3 : GHG Protocol Scopes (GHG Protocol)

Figure 4 : Stakeholders influence (CCICED Report 2011)

Figure 5 : PUMAs EP&L 2010