An Inter-Sectoral Comparison of Green Supply Chain Management in China: Drivers and Practices
An Inter-Sectoral Comparison of Green Supply Chain Management in China: Drivers and Practices
An Inter-Sectoral Comparison of Green Supply Chain Management in China: Drivers and Practices
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Abstract
The issue of green supply chain management (GSCM) has received increased attention in recent years among manufacturing
practice and research. Yet, the corporate and environmental manufacturing issues in developing countries have not been as well
investigated. This paper compares drivers and practices of GSCM in one developing country, China, focusing on three typical
sectors, the automobile industry, the thermal power plants and the electronic/electrical industry. We sought to determine where the
differences occur and which industries are further along. This study indicates that Chinese companies in different industries have
differing drivers and practices. We tend to confirm that globalization and China’s entry into the world trade organization have
helped promote GSCM practices in manufacturing enterprises.
Ó 2005 Elsevier Ltd. All rights reserved.
0959-6526/$ - see front matter Ó 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jclepro.2005.01.003
Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486 473
next couple of decades [7]. This growth is expected areas. Many of these topics have recently been covered
to create many opportunities in this part of the world, from a conceptual, empirical, and analytical perspective
but it will also bring about substantial environmental which are reviewed in subsequent sections of this paper.
burdens [8]. China and the Chinese economy will We contribute to this literature through an empirical
represent a large portion of this growth. This is broad-based study of many of these issues in China. We
a primary reason why study of Chinese environmental feel that further investigation of GSCM practice in
and GSCM practices is critical for regional and global China is warranted, especially as continued globaliza-
environmental health. tion in industrial production practice and research is
With the relative scarcity of resources, increased expected to increase in importance.
international pressures, and the potential pressure of
‘green barriers’ to trade, both the Chinese government 2.1. Drivers and/or pressures for GSCM
and companies operating in China have started to
promote a variety of environmental management There are some explanations as to why firms should
principles within various manufacturing enterprises. engage in GSCM activities. In addition to overall
Some of the principles and measures include environ- environmental improvement there may be congruent
mental impact assessments, ISO 14001 certification and results in tangible positive economic performance. Hall
more recently, GSCM. As a developing country, the also argued that large customer firms meet stakeholder
environmental issues facing China need to be addressed pressure that goes beyond legal environmental respon-
since long-term expenses of environmental degradation sibilities while many suppliers are often under consider-
may not be as easily addressed as they are in more able pressures from their customers [16]. Henriques and
developed nations. This paper describes the results of Sadorsky identified four critical environmental stake-
surveys and site visits to various Chinese manufacturing holder groups: (1) regulatory stakeholders, which either
enterprises. Over one hundred respondents provide set regulations or have the ability to convince govern-
insights into GSCM drivers (or pressures) and practices ments to set standards; (2) organizational stakeholders
within China with a focus on inter-industry, size, and that are directly related to an organization and that
ownership characteristics. This is one of the first studies can have a direct financial impact on the company; (3)
to examine these inter-sectoral relationships within community groups, environmental organizations and
Chinese manufacturing enterprises. A main goal of this other potential lobbies who can mobilize public opinion
paper is to examine if differences exist in GSCM drivers in favor of or against a firm’s environmental policies;
(or pressures) and practices in three industries, automo- and (4) the media, which have the ability to influence
bile, thermal power generating and electronic, in China. society’s perception of a firm [13]. These types of
We also explored which industries are further along the pressures are incurred in a wide variety of international
various drivers (or pressures) and practices. The results locals, for example, research in Spanish industries
may influence the way environmental regulatory policy confirmed that some of the external pressures could
and corporate environmental knowledge sharing and become sources of opportunity for those companies with
benchmarking can be expanded in China. Conclusions the intention to improve their environmental control
are drawn from the survey, the site visits and the [25]. It is similar for many Chinese companies. For
interviews. example, many Chinese companies acquired ISO14001
certification to meet environmental requirements from
their foreign customers, which also helps them to market
2. Literature review and study propositions their products to other customers [26].
Yet, all organizations are not exposed to the same
A number of authors have studied GSCM, which is types of pressure or to the same extent. Globalization,
one of the more popular emerging corporate environ- especially after China’s entry into the World Trade
mental management topics that have arisen over the Organization (WTO), may result in higher pressure and
past decade. A range of aspects on GSCM studies have drivers for Chinese enterprises to improve environmen-
been covered, including drivers and/or pressures for tal performance. Christmann and Taylor suggested that
GSCM [9e16] and GSCM practice [17e24]. The growth export and sales to foreign customers are two major
in this literature extends back to the early 1990’s with drivers for improving the environmental performance of
the advent of corporate environmental management, Chinese enterprises [27]. Sometimes, it is the latest
environmentally conscious manufacturing strategy, and global environmental issue that is facing Chinese
supply chain management literature. The literature has regulatory bodies, which may emphasize one environ-
ranged from empirical studies to modeling the behavior mental issue and industry over other environmental
of GSCM including such topics as product stewardship, issues and industries. For example, with Kyoto Protocol
green purchasing, eco-design, remanufacturing, disas- requirements and international pressures for reducing
sembly, and reverse logistics, just to name a few topical greenhouse gas emissions, there may be differing and
474 Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486
increased pressures on those industries that are heavy considered investment recovery as a critical aspect for
emitters of greenhouse gases (e.g. power generation). GSCM [41], which may occur at the back end of the
Another example is that some industries are more supply chain cycle. In China, the government has
domestic in orientation (e.g. power generation and changed its policies from a focus on resource subsidies
utilities) whereas other industries are more globally to levying taxes for some resources such as coal and
focused (e.g. electronic) and thus will have differing natural gas [40]. However, investment recovery has
national and international pressures and motivations for received much less attention in China compared to more
incorporating GSCM practices. Overall, different in- developed countries such as the U.S. and Germany,
dustries have different controls in competition, un- primarily due to waste management policies and lack of
certainty and technology, and thus, individual firms in recycling systems and infrastructure. The other set of
different sectors face different types and intensities of practices defining the ‘‘back-end’’ of the supply chain
environmental challenges [28e30]. Given these initial include the relationship with customers on environmen-
arguments, we make the first general proposition we will tal issues. In many cases international companies are
evaluate in this study: now emphasizing the need for their suppliers to main-
tain an environmentally benign position and would
Proposition 1. Chinese companies in different industrial require this of many Chinese suppliers so that these
sectors have different drivers and/or pressures for imple- organizations’ products are not boycotted due to
mentation of GSCM practices. environmental reasons.
Yet, the issues facing various industrial sectors may
cause some of the practices to be very different in terms
2.2. Practice of GSCM of levels of adoption and implementation. For example,
by using an economic inputeoutput model of the USA
GSCM has emerged as a strategy for some leading economy with 519 commodity sectors, McMichael et al.
companies. GSCM practices have ranged from green found that different industries have different direct and
purchasing to integrated supply chains flowing from indirect environmental effects by emissions (toxic, harm-
suppliers, to manufacturers, to customers and reverse ful, and ozone depleting) and resources used (electricity
logistics, which is ‘‘closing the loop’’ as defined by and fuels) [42]. Due to different drivers and pressures, as
supply chain management literature. Similar to the well as potential improvements companies can make,
concept of supply chain management, the boundary of manufacturers in different sectors have made different
GSCM is dependent on the goal of the investigator, e.g. efforts on GSCM. Thus, we posit the second proposition.
should it be just the procurement stage or the full
logistics channel? The research in GSCM addresses Proposition 2. Chinese companies in different sectors
a variety of issues ranging from organizational research implement different practices of GSCM.
and practice in GSCM [16,31,32] to prescriptive models
for evaluation of green supply chain management
practices and technology [33e35]. 3. Methodology
Given that the literature in this area is expanding in
a number of directions, this paper focuses on five The data used in this study consist of questionnaire
GSCM practices (internal environmental management, responses from managers in the Chinese automobile,
green purchasing, cooperation with customers including power generating and electronic/electrical industries.
environmental requirements, investment recovery, and These three industries have significant environmental
eco-design practices) that Chinese enterprises may and economic concerns within China. After China’s
implement to improve their performance. All five entry into the WTO, the automobile industry is one of
GSCM practices are integrative and need cross-func- industries that have faced some of the most stringent
tional cooperation rather than oriented to a single pressures to compete with international companies.
function or department. Suppliers in this industry have worked on improving
Internal environmental management is a key to their environmental performance, which has helped
improving enterprises’ performance [36,37]. Large cus- them to establish relationships with foreign customers
tomers have exerted pressure on their suppliers for in China [26]. Thus, the automobile industry was
better environmental performance, which results in selected as one industry. The power generating industry
greater motivation for suppliers to cooperate with is chosen because it is a heavy polluter in China and has
customers for environmental objectives [38,39]. Green seen increased environmental pressures from the gov-
purchasing and eco-design are two emerging approaches ernment and the public [43]. In China, thermal power
in evidence in Chinese enterprises [40] and focus on the plants generate a majority of the electricity, about 81%
inbound or early portions of a product’s supply chain. of the total [43]. Power plants have struggled to improve
United States and European enterprises have also their environmental performance for survival.
Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486 475
Due to increasing concerns and importance of electronic industries were administered in October of
environmental issues, manufacturers, especially elec- 2002 in the School of Management at Dalian
tronic companies, are seeking methods to improve their University of Technology, and 27 usable question-
environmental performance [44]. Electronic/electrical naires were collected.
companies in China have strong export product markets (2) Interviews and site visits: To further understand the
and have significant close relationships with foreign situation of GSCM in Chinese enterprises, inter-
customers in China. Thus, experiences from this in- views and site visits in the Dalian High-tech Zone in
dustry may be useful for other Chinese manufacturing Liaoning Province and the Zibo Industrial Zone in
industries during their process of globalization, espe- Shandong Province were also completed. During
cially after China’s entry into the WTO. this time a total of 25 questionnaires were com-
The questionnaire includes items of drivers/pressures pleted. When more than one completed question-
and practice and was initially developed using literature naire was obtained from one enterprise they were
as the main resource. Twenty items of drivers/pressures aggregated into one questionnaire.
were based on a number of sources from the literature (3) Surveys during workshops for the second time: In
[27,45e47]. Questions were developed using a five-point February and March of 2003, mid-level managers
Likert-type scale (e.g. 1 Z not at all important, 2 Z not from three industries were asked to complete the
important, 3 Z not thinking about it, 4 Z important, surveys during three training workshops at Dalian
5 Z extremely important). Twenty-six items of GSCM University of Technology. Sixty-six usable question-
practices were based on the literature [41,48,49]. naires out of a total 100 were obtained after collating
Questions were answered using another five-point scale several questionnaires from one enterprise into one
(1 Z not considering it, 2 Z planning to consider it, response; simple means were used to collate the
3 Z considering it currently, 4 Z initiating implementa- multi-company samples. Before each of the three
tion, 5 Z implementing successfully). training workshops, the objective of the survey and
To customize the questionnaire to the situations in the concept of GSCM were briefly introduced to the
China, we asked for suggestions from environmental respondents such that definitions were clear.
managers when they participated in workshops. The
draft questionnaire was handed out to environmental Our study methodology has precedent in that the
managers during two workshops in September of 2002 work of Christmann and Taylor [27], who saw the same
in the Tianjin Economic and Technological Area difficulty in data collection for Chinese organizational
(TEDA) and Dalian Economic and Technological practices, completed their empirical study by surveying
Development Zone (DETDZ), the largest and the Chinese managers participating in two seminars on
second largest industrial zones in China according to standards-based management practices conducted by
GDP. Twenty-eight of 36 managers provided sugges- the Asia Pacific Economic Corporation. In addition
tions for the modification of the questionnaire. On the Lou’s study investigated 60 EMBA students and 55
basis of brief results from two workshops, we began to participants in the Advanced Management Training
focus on companies in the three selected industries, Program, both in Southeast University in China [50].
namely, the automobile industry, power plants and Out of a total of 171 questionnaires administered to
electronic/electrical industry. these enterprises and representatives a total of 118 unique
The survey instrument was administered using and usable manufacturing enterprise responses were
convenience sampling2 through three steps: received. The people targeted by this study and respond-
ing to the survey had middle management or higher
(1) Surveys during workshops: Forty-six questionnaires experience. This level of response is supported by other
in a training workshop for managers from a variety research such as Carter et al. who concluded that mid-
of disciplines from the automobile, electrical and level managers such as those in a purchasing department
could, at a minimum, facilitate incremental adoption of
environmental practices, which is consistent with our
2
The National Center for Industrial Science and Technology in the findings from extensive corporate interviews beyond the
School of Management at Dalian University of Technology was survey instrument [36]. Bowen et al. used middle
established in 1980. The Center was directly proposed by Mr. Deng
Xiaoping. The center is the first joint training project between Chinese
managers to find positive relationships between middle
and American stakeholders. Since 2001, it has been one of nine managers’ perceptions of corporate environmental pro-
training bases for industries in China designated by the State activity and GSCM [51]. In another paper, Bowen et al.
Economic & Trade Commission. In recent years, the center has found that the further the middle managers’ perceptions
provided training for manager in three main industries targeted by our of the corporate attitude to environmental issues is in
study. Since managers involved in training programs are representa-
tives from these industries throughout China, we can argue that
advance of legislation, regulation and other firms in the
responses from them during two workshops can generally represent industry, the more likely the unit is to implement a GSCM
situations in China for these industries. practice [52].
476 Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486
Table 1 shows the distribution of respondent enter- specific elements within those groupings that were
prises in terms of industry and enterprise size using included in the questionnaires. Composite factors and
employment levels. Enterprise sizes ranged from under items for each category together with means and
500 to over 8000 employees with the majority of standard deviations are shown in Table 2. ANOVA
companies falling into medium-sized company classifi- and the t-test results across industries and their
cation of between 501 and 3000 employees. significance are used to evaluate Proposition 1 and are
These three industries represent companies that have shown in the final four columns of Table 2.
struggled to become suppliers of foreign companies in ANOVA results in Table 2 show that only one
China, heavy polluters and those exporting products, composite factor, ‘marketing,’ has significant differences
respectively. Due to higher awareness or pressures, it (at the !0.05 level) among these three industries while
can be argued that these enterprises in China are another internal factor shows slight differences (at the
innovators in GSCM and their experiences will diffuse !0.10 level). Generally speaking, the ANOVA results
to other enterprises [53]. for five composite factors only partly support Proposi-
tion 1. Further, the results of the t-tests show that the
automobile industry has the highest marketing pres-
4. Analysis and results sures, significantly stronger than power plants and
slightly significantly stronger than the electronic in-
We compared drivers/pressures and practices of dustry. Another slightly significant difference is the
GSCM in the three industry sectors. To evaluate if internal composite factor. The automobile industry has
significant differences exist in the drivers/pressures and slightly stronger internal drivers (or pressures) than the
practices among three industries, a one-way analysis of electronics industry.
variance (ANOVA) was performed. To further compare
if one industry is further along than the other two 4.1.1. Regulations
industries in certain aspects, two-tailed independent- Overall, regulations are still the most prevalent
samples t-tests were used. To obtain overall results, we pressure for Chinese companies. Table 2 shows that all
compared composite factors before we evaluated the means of four items for the three sectors are over 4.00
specific items within the factors. with one exception of import countries’ environmental
regulation for power plants, which makes sense since it
4.1. Drivers and pressures comparisons is not expected that much of the power plant’s output is
generated for export.
According to the literature [27,36,41,45,47e49] and The ANOVA results presented in Table 2 show
suggestions from experts of environmental management significant differences among the means for the pressure
departments in manufacturing industries, we grouped of central governmental environmental regulations.
the items of environmental drivers/pressure into five Further, t-tests show that the means do not show
categories. Table 2 provides the various groupings and a statistically significant difference between the automo-
bile industry and power plants, yet there does seem to be
statistically significant differences between the electronic/
Table 1
Distribution of survey respondent enterprises by industry, size and electrical industry and the other two industries.
ownership Since China has more strict laws for air emission
Total Percentage from vehicles, automobile industry ranks domestic
central governmental environmental regulations as the
Industry
Automobile 59 50 most important factor with a mean of 4.75. Because of
Power generating 34 28.8 more serious air pollution, China has enacted more laws
Electrical and electronic 25 21.2 to control sulfur dioxide. Since the 1990’s, several small
Total 118 100 thermal power plants have been closed due to govern-
Size (employees) ment intervention [43]. Thus, thermal power plants
O3000 28 23.7 consider central governmental environmental regula-
500e3000 58 49.2 tions as the highest pressure with the mean of 4.79. As
!500 32 27.1
!100 9 7.9
for electronic/electrical industry, companies are ‘cleaner’
Total 118 100 than the automobile industry and thermal power plant.
As a result, these companies meet relatively lower
Ownership
State-owned 72 61.0 pressures from the central government.
Foreign direct 27 22.9 Our survey shows that regional environmental
investment or joint venture regulation is the second important pressure for all res-
Private 19 16.1 pondent companies, with the average mean of 4.40. This
Total 118 100
may be due to regional governments adopting and/or
Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486 477
Table 2
Comparison of GSCM drivers/pressures in Chinese enterprises in different industrial sectors
Itemsa Automobile Power plants Electronic ANOVA Industries comparisonb
(n Z 59) (n Z 34) (n Z 25) (F-statistic)
Mean S.D. Mean S.D. Mean S.D. 1 and 2 1 and 3 2 and 3
Regulations 4.46 0.596 4.31 0.507 4.27 1.315 0.625 1.072 0.865 0.695
Central governmental 4.75 0.632 4.79 0.415 4.24 1.348 3.371* ÿ0.328c 2.207* 1.908C
environmental regulations
Regional environmental regulations 4.47 0.796 4.50 0.590 4.06 1.435 1.585 ÿ0.141 1.557 1.358
Import countries’ 4.47 0.754 3.88 1.361 4.29 1.312 2.770C 2.521* 0.686 ÿ0.986
environmental regulations
Products potentially conflict 4.14 0.805 4.08 0.830 4.25 1.342 0.161 0.277 ÿ0.421 ÿ0.486
with laws
Marketing 4.41 0.593 4.02 0.750 4.07 1.071 3.102* 2.483* 1.680C ÿ0.152
Export 4.40 0.699 3.67 1.435 4.00 1.366 4.368* 3.101** 1.594 ÿ0.734
Sales to foreign 4.31 0.725 3.87 1.058 3.69 1.195 3.986* 2.134* 2.597* 0.501
customers in China
Chinese consumers’ 4.36 0.846 4.13 0.850 4.27 1.100 0.580 1.126 0.343 ÿ0.452
environmental drivers
Establishing enterprise’s 4.56 0.726 4.29 0.550 3.94 1.478 3.581* 1.625 2.387* 1.067
green image
Suppliers 4.15 0.652 3.94 0.538 3.80 1.057 0.058 0.116 0.321 0.203
Supplier’s advances in developing 4.14 0.753 4.14 0.702 3.50 1.155 4.176* ÿ0.174 2.649** 2.275*
environmentally friendly goods
Supplier’s advances 4.15 0.867 3.75 0.989 3.69 1.352 2.255 1.840C 1.672C 0.169
in developing environmentally
friendly packages
Environmental partnership 4.12 0.745 3.96 0.690 3.94 1.237 0.496 0.907 0.740 0.068
with suppliers
Making sure that suppliers will 4.20 0.761 3.88 0.680 3.80 1.207 2.242 1.836C 1.611 0.249
remain in business
Competitors 4.10 0.687 4.08 0.565 4.03 1.056 0.058 0.116 0.321 0.203
Competitors’ green strategies 4.36 0.760 4.21 0.884 4.13 1.088 0.587 0.765 0.978 0.266
Industrial professional 3.85 0.805 3.96 0.624 3.94 1.124 0.187 ÿ0.604 ÿ0.363 0.075
group activities
Internal factor 4.28 0.623 4.15 0.385 3.88 0.985 2.372C 0.921 1.977C 1.184
Enterprise’s environmental mission 4.54 0.703 4.67 0.482 4.06 1.391 3.042C ÿ0.793 1.958* 1.988C
Internal multinational policies 4.34 0.710 4.36 0.492 4.20 1.082 0.255 ÿ0.150 0.604 0.624
Potential liability 4.49 0.679 4.25 0.442 3.94 1.249 3.671* 1.606 2.392* 1.121
for disposal of harmful materials
Cost for disposal 4.24 0.953 3.96 0.806 4.00 1.000 0.971 1.261 0.895 ÿ0.148
of harmful materials
Cost of environmentally 4.05 0.860 3.71 0.859 3.82 1.015 1.420 1.646C 0.922 ÿ0.393
friendly goods
Cost of environmentally 4.03 0.830 3.83 0.816 3.71 1.047 1.143 1.003 1.352 0.438
friendly packaging
a
Scales of items based on, 1 Z not at all important; 2 Z not important; 3 Z not thinking about it; 4 Z important; 5 Z extremely important.
b
1 Z Automobile industry, 2 Z power plants, 3 Z electrical/electronic.
c C
p ! 0.10; *p ! 0.05; **p ! 0.01; ***p ! 0.001.
enforcing more strict environmental standards than tronic/electrical companies have similar high pressures
China’s central government. Both the ANOVA result from foreign countries’ regulations, but further analysis
and the t-tests in Table 2 shows that means for three shows that it may be due to different reasons. For
industries are not statistically significantly different. example, after China joined the WTO, automobile
Import countries’ environmental regulations are companies, especially component suppliers, were eager
another very important pressure, with a mean of 4.47 to establish relationships with foreign companies [53].
for the automobile industry and 4.29 for electronic/ By using the same environmental standard all over the
electronic industry. The ANOVA result shows a slight world, multinational enterprise subsidiaries in develop-
statistically significant difference among three industries. ing countries might exert pressure on domestic suppliers
The t-tests show that automobile industry and elec- to self-regulate environmental performance [27]. Thus,
478 Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486
automobile companies have struggled to meet not only environmental awareness and are starting to prefer
China’s regulations but also regulations of their ‘green’ products [55]. Thus, Chinese enterprises pro-
customers’ countries. Different from the automobile ducing final products have considered Chinese consum-
industry, the electronic/electrical industry highlights ers’ environmental awareness as an important pressure.
import countries’ environmental regulations because Table 2 shows that all means of this item are over 4.00,
they developed better environmental awareness pro- and the highest for the automobile industry with 4.36.
cesses for meeting ‘‘green barriers’’ at the beginning of With increasing environmental awareness and high
their supply chain relationships. As an important pressure, more Chinese companies have tried to establish
manufacturing country, China exports many electron- their green image. For example, leading companies have
ic/electrical components. Thermal power plants have integrated environmental aspects into their strategies and
significantly lower pressures from other countries than missions [56]. Traditional heavy polluters, such as the
the automobile industry. Environmental regulations in automobile industry and thermal power plants, have
other countries have not affected thermal power plants been stimulated to improve their environmental image,
in China, yet. However, since China joined the WTO, it with the mean of 4.56 and 4.29, respectively. Electronic/
is the trend for China’s government to enact more laws electrical companies are relatively reluctant to improve
with similar environmental standards such as sulfur their green image with the mean of 3.94, which may be
dioxide emission for power plants. partly because that most of these companies have
All respondents in the three industries have similar established long-term relationship with their customers.
awareness of products potentially conflicting with laws, ANOVA results in Table 2 show that all items except
with the mean of 4.14 for the automobile industry and an item of Chinese consumers’ environmental drivers
4.08 for power plants. Both the ANOVA result and t- have significant differences. The t-tests show that the
test also indicates no difference of means for all three automobile industry has significantly more pressures
industries. Electronic/electrical companies have a rela- from the export market than power plants and has
tively higher mean, 4.25, which may due to higher significantly higher pressures for sales to foreign custom-
environmental awareness since they have exported ers in China than both power plants and electronic/
products or established relationship with foreign cus- electrical industry. Public environmental awareness
tomers in China. results in similar pressure for all respondents. It is also
In summary, results indicate that regulations, as a an important driver for power plants to establish their
group, seem to exert the highest pressure on the green image though the driver is not as strong as that for
automobile industry. In addition, the three industries automobile industry. Electronic/electrical companies
have slightly differing pressures except for the products have significant lower pressures for establishing compa-
that potentially conflict with laws factor, which gener- nies’ green image than automobile industry. This is
ally, but only partially supports Proposition 1. a surprising finding since it can be argued that both these
industries have strong consumer driven supply chains
4.1.2. Marketing that would require a good environmental image.
Marketing is a relatively important driver of GSCM in Overall, the automobile industry seems to emphasize
Chinese enterprises. To obtain more sustainable solu- all marketing items as important ones. Generally
tions, environmental properties of products and services speaking, power plants and electronic/electrical industry
must meet customer requirements [54]. Using survey data have similar pressures from green marketing while
from firms in China, Christmann and Taylor concluded realizing the importance of different drivers. Results of
that multinational ownership, multinational customers, marketing support Proposition 1.
and exports to developed countries increase self-regula-
tion of environmental performance [27]. This is consis- 4.1.3. Suppliers and competitors
tent with our survey results. As stated in the previous Environmental performance of suppliers is consid-
paragraphs, export and sales to foreign customers in ered a less important driver for GSCM practices when
China are two most important drivers for the automobile compared to other drivers. Through a survey, Min and
industry in China, with the mean of 4.40 and 4.31, Galle identified ten key factors that affect a buying
respectively. Chan and Lau compare the greening firm’s choice of suppliers [45]. Among ten factors,
purchasing behaviors between American and Chinese supplier’s advances in providing environmentally friend-
Consumers, and concluded that both subjective norm ly packages, supplier’s advances in developing environ-
and perceived behavioral control exert stronger influen- mentally friendly goods and environmental partnership
ces on Chinese consumers’ behavioral intention than on with suppliers were on the list and ranked 8, 9 and 10.
American consumers while the translation of green Zhu and Geng found factors related to suppliers were
purchasing intention to corresponding behavior is more ranked similarly. However, further analysis indicated
effective in American consumers [47]. However, Chinese that companies in China consider these factors less
consumers are developing an increasingly heightened important than those counterparts in the USA [26].
Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486 479
ANOVA results presented in Table 2 show one in regulations that may make them historically re-
significant difference among the three industries, that sponsible for harmful wastes.
is, suppliers’ advances in developing environmentally It also seems that the environmental mission of
friendly goods. The t-tests show more differences for companies in China is more important for Chinese
means of items across different industries. For the first enterprises compared to those results of Min and Galle
item, supplier’s advances in developing environmentally [45]. This result may be due to the reason that export
friendly goods, the mean for automobile industry is not and sales to foreign enterprises in China are two
significantly different to power plants but very signifi- important incentives for Chinese enterprises [38,39].
cantly higher than that for the electronic/electrical The ANOVA results show one significant difference,
industry. This driver for power plants is also significantly that is, potential liability for disposal of harmful
stronger than for the electronic/electrical industry. This materials. The t-tests show some differences among
is a somewhat surprising result, but may be attributed to internal items in different industries, and are summa-
where in the supply chain companies are located. It may rized in Table 2. Some examples include the automobile
be that the electrical/electronic industry suppliers are industry’s consideration that enterprise’s environmental
early in the electronic supply chain (e.g. suppliers of parts mission and potential liability for disposal of harmful
and components rather than end products), and the materials is significantly more important for them than
other industries are closer to the end product or service it is for the electronic/electrical industry. Another
development and thus manage suppliers more closely. example is that enterprise’s environmental mission is
As for the second item, supply’s advances in providing considered slightly more important by power plants
environmentally friendly packages, the driver for the than by the electronic/electrical industry. Proposition 1
automobile industry is slightly stronger than that for both is partly supported. It is interesting that the electrical
power plants and electronic/electrical industry. The and electronic industry considers potential liability for
t-tests show no significant difference for the driver of disposal of harmful materials less important, especially
environmental partnership with suppliers for all in- if these Chinese companies complete business in Europe
dustries. As to business continuity, making sure that where harmful material laws for electronic are prevalent.
suppliers will remain in business, the automobile industry It may be that the electronic industry may have some of
considers it slightly more important than power plants. these factors already under control and thus does not
All companies consider competitors’ green strategies view many of these elements as important.
important but rank industrial professional group In conclusion, all companies have strong drivers and
activities as the least important item with means below pressures to implement GSCM, with most means over
4.00. The t-tests show there are no differences for both 4.00. Among all the investigated companies, the auto-
items related to competitors for all industries. mobile industry seems to have the highest importance in
Therefore, we can conclude that drivers and pressures drivers and pressure factors. Power plants and electronic/
from suppliers are perceived as mostly different amongst electrical industry have similar levels but differing drivers
the three Chinese sectors, but pressures and drivers and pressure. Overall, there are many similarities across
related to competitors has little significant difference industries in China, but significant differences do exist.
amongst these industries. Thus, there is partial support
for Proposition 1. 4.2. GSCM practice comparison
4.1.4. Internal pressures and drivers Recognizing the increased importance of environ-
Internal pressures, especially enterprise’s environ- mental programs to market success, companies in the
mental mission and internal multinational policies, are USA have sought to invest billions of dollars during the
considered very important, and all means for three 1990s to green their products and processes [57]. Given
industries are equal or close to those of regulations. the various drivers and pressures introduced above,
However, electronic companies in China are not well a growing number of companies in China have started
aware of the importance of potential liability for to develop their GSCM and environmental programs. A
disposal of harmful materials with the industry mean broad set of activities relating to GSCM have been
of 3.94, which is consistent with the results of previous considered and/or implemented, including green pur-
literature by Zhu and Geng [26]. On the contrary, chasing, cooperation with customers including environ-
companies in the USA highlight potential liability for mental requirements, investment recovery, eco-design
disposal of hazardous materials, ranking it the most and internal management. The results of this portion of
important factor that affecting a buying firm’s choice of the analysis are shown in Table 3.
suppliers [45]. This result supports the idea that it is still Overall, looking at the means, the results may indicate
a relatively reactive stance by Chinese enterprises who that there is a lag between the pressures being felt by
may not be faced with Superfund like regulations at this Chinese organizations in Chinese manufacturing enter-
time and are not farsighted enough to integrate a change prises and their adoption of these practices, with a prepon-
480 Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486
derance of results around the ‘considering it currently’ value-added products and services. More foreign com-
stages. It can be argued that these Chinese manufacturing panies have established real or anticipated requirements
enterprises are still in the early learning stages of corporate for their suppliers. For example, Bristol-Myers Squibb,
environmental programs and practices. This overall result IBM and Xerox have encouraged their Chinese suppliers
also points to the need for Chinese enterprises to become to develop environmental management systems consis-
better educated in GSCM practices. ANOVA results for tent with ISO 14001, while Ford, GM and Toyota have
five composite factors show that two of them have required their Chinese suppliers to obtain the ISO 14001
significant differences, that is, green purchasing and certification [58]. This is the case for companies that
internal environmental management. Thus, Proposition want to become long-term suppliers to joint ventures or
2 is partially supported. We shall now investigate the five foreign direct investment (FDI) enterprises in China
major grouped practices in more details. with strong environmental policies. ANOVA results
show a significant difference in cooperation with
4.2.1. Green purchasing customers for eco-design and a slightly significant
Green purchasing seems to get significant attention difference in cooperation with customers for cleaner
within leading companies in developed countries. production. Proposition 2 is partially supported.
However, Chinese companies’ practices are still in the Results in Table 3 show that automobile industry has
early stages, lagging behind practices in developed lower levels of cooperation with customers. This may
countries. For example, many enterprises from dev- change since the automobile companies, especially
eloped countries evaluate not only their direct suppliers leading component suppliers, are seeking to cooperate
but also second-tier suppliers (suppliers’ suppliers). In with foreign customers in China. For example, Dalian
this regard, it is noteworthy that in their investigation, Diesel Engine Plant has planned to establish a joint
Walton et al. put forward the ten top environmental venture with a German company, Deutz, to produce
supplier evaluation criteria and that, among these, new generation diesels that will meet more strict
second-tier supplier environmentally friendly practice environmental standards [59]. In this situation, it seems
evaluation is the second most important criterion [48]. that power plants have significantly more established or
However, second-tier suppliers’ environmental practice evolving cooperative programs with their customers
is only in early consideration stages by Chinese enter- than the automobile industry has. This may be because
prises, with relatively low means of 2.74, 2.95 and 3.29 most of them are state-owned and maintain long-term
for three sectors, respectively. relationships with their customers.
ANOVA results presented in Table 3 show that three As for the electronic/electrical industry, they are
items have significant differences among the three considering cooperation with customers for eco-design
industries. The t-tests show more details in different with the mean of 3.06 which is slightly less than power
levels of green purchasing practices in different in- plants. Many of these electronic/electrical industry
dustries. Power plants seem to be significantly further companies have exported products or sell products to
along in implementing green purchasing than the other foreign companies in China for a longer time than
two industries, but most clearly, over the automobile automobile industry, which may mean longer and closer
industry. For example, power plants seem to have customer/supplier relationships and awareness to co-
provided design specification to suppliers that include operate with their customers. These results do point to
environmental requirements for purchased items with the further support of Proposition 2.
mean of 4.23. It was confirmed by our interviews that
showed that power plants such as the thermal power 4.2.3. Investment recovery
plant in Dalian Economic and Technological Develop- One area of a more broad comparative GSCM practice
ment Zone and Yuanbaoshan power plant in Inner where research has been completed and information
Mongolia select low-sulfur coal to reduce their sulfur exists is in the area of investment recovery. Zsidisin and
dioxide emissions which are highly restricted in China. Hendrick found that in the U.S. and Germany, enter-
However, the automobile industry is, at most, in early prises highlight investment recovery as the most impor-
consideration stages, with a mean of 2.91. It seems that all tant practice for green purchasing [41]. In China,
practices of green purchasing are not really implemented investment recovery has received much less attention
in automobile industry with all means lower than 3.00. than in developed countries such as the U.S. and
This clearly supports Proposition 2 that GSCM Germany due to Chinese waste management policies
practices are adopted at differing levels. and lack of recycling systems. Yet, the results in this
evaluation show that the means are relatively higher in
4.2.2. Cooperation with customers including terms of consideration and implementation in the
environmental requirements automobile industry than for most of the other practices
Competitive Chinese companies have an increased within that industry (e.g. mid-high 3.6 levels in responses).
focus on customers’ needs and the development of Yet, the industries do not show a significant difference in
Table 3
Comparison of GSCM practices in Chinese enterprises in different sectors
Itemsa Automobile (n Z 59) Power plants (n Z 34) Electronic (n Z 25) ANOVA Industries comparisonb
Mean S.D. Mean S.D. Mean S.D. (F-statistic) 1 and 2 1 and 3 2 and 3
Green purchasing 2.77 1.072 3.61 0.880 3.60 1.163 7.847*** ÿ3.330*** ÿ2.884** 0.031
Providing design 2.91 1.354 4.23 0.869 3.71 1.263 9.699*** ÿ4.222*** ÿ2.151* 1.527
specification to suppliers
that include environmental
requirements for purchased item
Cooperation with 2.69 1.340 3.83 1.029 3.65 1.498 7.916*** ÿ3.656*** ÿ2.522* 0.448
suppliers for environmental objectives
Environmental audit 2.84 1.344 3.18 1.332 3.53 1.179 1.969 ÿ1.021 ÿ1.909C ÿ0.849
for suppliers’ internal management
481
482 Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486
0.991
0.627
1.154
0.553
0.646
0.982
ÿ0.973
as well supported for this category of GSCM practices.
4.2.4. Eco-design
ÿ2.926***
ÿ2.873**
ÿ2.985**
ÿ2.879**
ÿ1.650C
ÿ2.086*
ÿ2.124*
ÿ2.401*
1 and 3
ÿ1.467
Industries comparisonb
ÿ3.328***
ÿ3.364***
ÿ4.193***
ÿ4.588***
ÿ4.776***
ÿ2.922**
ÿ3.210**
ÿ1.142
products, the supply chain is implicated, as is design.
Eco-design (and design for the environment (DFE)) is
a helpful, emerging tool to improve companies’ environ-
mental performance by addressing product functionality
(F-statistic)
1 Z Not considering it, 2 Z planning to consider it, 3 Z considering it currently, 4 Z initiating implementation, 5 Z implementing successfully.
9.004***
10.243***
11.828***
12.919***
ANOVA
5.547**
5.551**
6.744**
5.695**
2.819C
while simultaneously minimizing life-cycle environ-
mental impacts. The success of eco-design requires the
internal cross-functional cooperation among the entire
company and the external cooperation with other
partners throughout the supply chain.
Results presented in Table 3 show that eco-design has
1.000
1.078
1.147
1.033
1.246
1.131
1.335
1.163
1.100
S.D.
Electronic (n Z 25)
3.88
4.07
3.87
4.18
3.93
3.93
3.73
0.998
0.864
0.864
0.832
0.935
1.593
Power plants (n Z 34)
S.D.
4.22
4.26
4.26
4.35
4.27
3.26
1.154
1.186
1.143
0.999
1.108
1.320
Automobile (n Z 59)
S.D.
2.91
3.13
3.59
3.34
3.36
3.37
3.36
3.00
2.84
Cross-functional cooperation
Environmental management
Environmental compliance
Eco-labeling of products
ISO 14001 certification
mid-level managers
senior managers
factor may also be considered as a driver, but without doing the job in pressuring adoption of improved
this initial upper management commitment, most environmental practices. Domestic regulations and the
programs are bound to fail, much less be truly initiated. enterprise’s environmental mission are two main pres-
Overall, in each of the industries, this internal environ- sures for thermal power plants in China. With the
mental management support by senior managers is very reform of the power generating industry and the
conducive to other practices advancing in their imple- competition of hydropower plants, thermal power
mentation and adoption stages. ANOVA results show plants have struggled to reduce their costs and to
significant differences for all items, and thus Proposition improve their environmental image simultaneously.
2 is strongly supported for this factor. Reduction of the sulfur dioxide emission and the
Further analysis shows that power plant and electron- amount of fly and bottom ash to landfills are two
ic/electrical industry have higher levels of internal challenges. By purchasing low-sulfur coal and installing
environmental management practices than the automo- desulfurization facilities, thermal power plants in China
bile industry organizations. The t-tests show that all have reduced their sulfur dioxide emissions. By explor-
internal GSCM practices in automobile industry are very ing more applications such as for fly ash incorporation
significantly earlier on in implementation and adoption into cement and bottom ash use as a road construction
stages as the power plants, and also less so than the material, power plants both reduce the amount of solid
electronic industry. On the contrary, all practices in power wastes and gain economic benefits [43].
plants and electronic/electrical industry are relatively The electronic and electrical industry seem to be more
similar in adoption. Thus, there is some support, and very mature in their adoption and implementation stages, but
strong support for the automobile industry versus other still have other potential challenges. Take-back obliga-
industries, that levels of practice implementation and tions, especially in Europe, have been designed for
adoption are different, supporting Proposition 2. electronics. Though China has not yet established such
regulations, international laws in other regions have
caused China to re-evaluate their investment recovery
5. Discussion of results and reclamation programs. For example, the European
Community Directive on Waste Electrical and Elec-
Overall, we see that there are differences in drivers tronic Equipment (WEEE) will be implemented starting
and pressures for GSCM adoption, and that adoption August 13, 2005, and thus, Chinese manufacturers have
rates differ in various industries throughout China. This been asked to take back used products or pay extra
initial investigation was to determine where the differ- money when they export electrical and electronic
ences occurred and which industries seem to be further equipments to Europe. Nearly one quarter of exported
along, from a group of highly environmentally sensitive electronic/electrical appliances in China are sold to the
and influential industries. European Community, and in 2003 products with sales
We see that the pressures and drivers for the of about 30 billion US dollars are related to the WEEE.
automobile industry are greatest, especially import It was estimated that Chinese companies will pay about
countries’ environmental regulations, export and sales 3e5% of the sales price for the treatment of used
to foreign customers in China. This may result from the products which is about 0.9e1.5 billion US dollars [62].
fact that they are so far behind the other industries in Many Chinese electronic companies are struggling to
terms of adoption and implementation of GSCM initiate their take-back programs.
practices, especially on cooperation with customers. Yet, it is not clear, from this study which of the
However, a more important reason seems that they have pressures are truly tied to which practices that are
met more pressure during globalization. Chinese auto- adopted. Further investigation of this issue is warranted
mobile manufacturers have to compete with their foreign for each industry. It is not clear which alternative driver/
counterparts after China’s entry into the WTO, espe- pressure factor would be best to keep industry
cially because of the reduction of duties such as 25% for advancing in the adoption of these practices; however,
automobiles and 10% for components from July 1 in regulatory policies are clearly something that is central
2006, and the cancellation of quotas for import cars from to much of the advancement in this area. The continued
January 1 in 2005 [60]. Gan indicated that increasing emergence of globalization is also evident with the
number of private vehicles and the greening of automo- various external regulatory and competitive pressures
bile production and use are two trends for the industry that are evident.
development in China [61]. From a competitive perspec-
tive, the automobile industry has ample opportunity for
some organizations within that industry to gain further 6. Conclusions and implications
advantage by implementing various practices.
Regulatory pressures especially seem to have been Lye et al. indicated that ecological damage can be
influential in the power plant industry and seem to be minimized if all stages of a product are designed to be
484 Q. Zhu, J. Sarkis / Journal of Cleaner Production 14 (2006) 472e486
environmentally sustainable [63]. Therefore, through are not necessarily exhaustive. Additional drivers/pres-
cooperation with upstream and downstream companies, sures (e.g. capital investment, local community pres-
GSCM can improve environmental performance not sures, productivity gains, etc.) could be included and
only for an individual company but also for the whole should be investigated.
supply chain. O’Brien put forward creating a sustainable
economy in developing countries represents a challenge
on achieving economy parity with the developed world
Acknowledgement
without extensive pollution of the environment [28]. At
the same time, manufacturing bears a particular re-
Supported by the CIDA Tier 1 ECOPLAN China
sponsibility for achieving international standard for
Project (S-61562), the National Natural Science Foun-
sustainability. Thus, this paper presents results of our
dation of China Project (70202006), the National Social
studies of three manufacturing industrial sectors in
Science Foundation of China (03CJY001), the Ninth
China on drivers and practices related to GSCM.
Huo-yingdong Young Faculty Foundation (91082), the
Compared to Canada and Japan, China may have
Scientific Research Foundation for the Returned Over-
weaker corporate culture, resource, knowledge and
seas Chinese Scholars, State Education Ministry and the
performance on environmental management [64,65].
Liaoning Doctoral Startup Project (2001102090).
However, Christmann and Taylor argued that increas-
ing globalization has made different cultures more
similar [27]. Chinese manufactures have strong drivers
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