Delixi: Development and Implementation of CSR Strategy for Electrical Equipment Company
Delixi Group Co., Ltd is a leading Chinese manufacturer of electrical appliances and power distribution equipment, and also operates in the areas of mining, energy, and private equity investment. The company faced a number of challenges in the areas of employee rights and benefits, legal compliance, environmental protection, and quality control. DELIXI cooperated with GIZ to enhance its social responsibility and to make improvements to its overall business operations. It was striving to enhance its role as a responsible corporate citizen by cooperating with GIZ.
GIZ guided DELIXI on how to develop and implement a customised and systematic CSR strategy. Specific guidance was provided on how to set up the company’s CSR governance system, how to identify key stakeholders and stakeholder issues as well as on how to develop a CSR policy and a comprehensive CSR implementation plan. GIZ provided technical support on how to develop a company-level CSR policy and on how to define specific, measurable indicators. A system to implement and monitor these measures was also set up with the assistance of GIZ.
GIZ helped DELIXI develop and adopt a series of effective measures and approaches to improve its CSR performance. These covered such issues such as employee rights and benefits, legal compliance, environmental protection, integrity and quality control. Of particular note are the establishment of production lines for pregnant workers and of a green supplier system.
1. Established two production lines for pregnant female workers
DELIXI Electronic Co., Ltd, a branch company of DELIXI Group Co., Ltd, has more than 5,300 workers. 5,000 of those workers are women and one-third of them are young women (18 to 35 years old). At any given time, between 50-60 pregnant women are working for the company. Usually female workers will take leave or resign due to pregnancy. To solve this problem, DELIXI Electronic Co., Ltd established two additional production lines especially dedicated to its pregnant female workers after the first pregnant female workers production line was set up in 2005.
The pregnant workers’ production lines have three characteristics: (1) the speed of production line is lower than normal (2) the workload is reduced (3) employee payment is calculated on the time worked instead of a piece wage rate. In addition, a special management system allows workers to choose how many products they want to process based on their daily health. The management system also forbids overtime and heavy labour. Female workers can have reduced working hours and are afforded additional sick leave if they feel unwell. Furthermore, these women are allowed to wear maternity dresses. DELIXI regularly communicates with its pregnant workers to ensure that they are under no additional pressure and are happy with their working environment.
The costs of setting up the two production lines amounted to approximately RMB 2 million, including costs associated with the worksite, facilities and the optimisation of machines for the two additional production lines.
Establishing these two additional production lines for pregnant workers positively impacted the company. In 2011, DELIXI’s annual employee turnover was reduced from 10% to 3%. Furthermore, the construction of the pregnant workers’ production lines enhanced employees’ loyalty towards the company. Major media in China reported on the measure, with one media organization commenting that “The pregnant workers’ production lines are flashing lights of human nature“. Local government also showed appreciation for the measure: In 2011, DELIXI was selected as “Enterprise with Harmonious Work Relationship in Yueqing City”.
2. Enhanced Green Supplier System
DELIXI has more than 1,000 suppliers in Wenzhou. The suppliers’ CSR awareness and performance, particularly in the area of the products’ environmental performance and quality, is very important to DELIXI’s sustainable development.
To enhance its supply chain management and mitigate operational risks, DELIXI implemented the Green Supplier System Audit Standard. The system requires that a green supplier will be free of audits for a certain time period if no faults are found with its products within half-year of cooperating with DELIXI. This means that all the products must pass a quality check. If this is achieved, DELIXI will ensure that orders with the green supplier will be increased and that there will be opportunities for the supplier to cooperate with foreign companies and to export to foreign countries.
Of DELIXI’s 1,000 suppliers more than 200 suppliers were selected as “Excellent Suppliers” in 2010. These were further divided into “Green Suppliers”, “Best Cooperation Partners”, “Suppliers with Best Quality Performance”, and “Long-term Cooperation Partners”. Following the annual supplier conference of Delixi Group Co., Ltd in 2010, Delixi Electronic Co., Ltd held its own annual supplier conference on 25 January 2011, in which more than 150 “Excellent Suppliers” participated. During this occasion, Delixi Electronic Co., Ltd selected its “Best Cooperation Partners”, “Suppliers with Best Quality Performance” and “Long-term Cooperation Partners”. Furthermore, 22 “Green Suppliers” were awarded by Delixi Electronic Co., Ltd on 22 May 2011.