Kangnai: Development and Implementation of CSR Strategy for Shoe Manufacturer
Kangnai Group Co., Ltd. is a pioneer in the shoe-manufacturing industry in China and one of the best-known mid- to high-range companies in the sector. Its products are sold through a network of over 2,600 exclusive shops in China and 200 abroad. As is the case of other shoe manufacturing companies, Kangnai has faced the challenge of having to upgrade its products from a mid- to high-level quality and transform its economic growth to a more environmentally friendly model. Based on Kangnai’s understanding of Corporate Social Responsibility, the company needed to start taking into consideration environmental and community aspects of its activities. Kangnai faced a challenge to continuously improve its social responsibility, and its top management became very interested in cooperating with GIZ to improve its overall social performance and reputation.
GIZ guided Kangnai 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, identify key stakeholders and issues as well as how to develop a comprehensive implementation plan. GIZ provided technical support on how to develop a company-level CSR policy and on how to define specific and measurable indicators. A system to implement and monitor these measures was also set up with the assistance of GIZ.
By applying the methodology and approach provided by GIZ, Kangnai developed and implemented 25 measures, covering areas that included environmental protection, rights and benefits of female employees, supplier management, occupational health and safety and employee welfare and salary. Of particular note are the implementation of environmentally friendlier measures and reinforcement of employee skill training.
1. Implement environmentally friendly measures
Kangnai promoted environmental awareness across the company. In order to control pollution from its source, Kangnai implemented an environmentally friendly procurement system including environmental and energy saving indicators as key elements of the system. Kangnai also implemented a green production concept through all of its production processes, enabling a majority of its suppliers to supply environment-friendly materials. In the 4th quarter of each year, Kangnai reviews the existing qualified suppliers and identifies new ones able to supply environmentally friendly materials.
In traditional shoe-manufacturing processes, the typically used adhesives contain benzene solvents. These substances can pollute the environment, harm employees’ health and are of high risk to store and transport. In being volatile, their correct management is difficult and costly.
In order to protect the environment, as well as the health and safety of employees and improve the product safety, Kangnai started procuring products of higher quality standards and lower environmental impact. These included hot melt adhesives used for the inner heel and front box process as well as water-based adhesives.
From January to July 2011, the use of water-based adhesives increased from 70% to 84%, while the use of hot melt adhesives for the inner heel and front box processes increased from 70% to 90%. The operational rules for the handling of hot melt adhesives were also optimised.
By using environmentally friendly adhesives, the safety of the final products was improved, the health and safety of employees was better assured and the customer satisfaction increased. As assessed by an authorised third-party organisation, the customer satisfaction rate reached 84% by June 2011, which was increased by 40% compared to 2010.
2. Reinforce employee skill training and increase salaries
Achieving cost savings in manufacturing industry is always necessary and it can also be linked to the saving of resources such as electricity and water. However, Kangnai regarded the improvement of its employees’ skills as the most effective approach to reduce costs and increase efficiency. The skills of employees not only affect their work efficiency, but also production costs in a very direct manner.
Cooperating with GIZ Kangnai organized trainings for employees in order to improve their skills. The trainings included new-employee orientation, interview training, Excel training, on-site management, knowledge on ISO9000, development and management, foreign trade business and specific training for R&D employees.
Moreover, by July 2011, the average salary per employee increased by 39.7%, which was substantially higher than the previously targeted figure of 12%. These measures also allowed the employees’ qualifications to improve and reduced the turnover rate.