COMPANIES which viewed the concept of corporate social responsibility as just donating millions of yuan to charitable causes are now changing their view and seeing CSR as a competitive business tool.

In the past most people thought highly of companies which showed their CSR via giving off millions of yuan in donation to a series of foundations and social projects every year.

But the CSR concept is now being cultivated from just a money-oriented task to a key competitive edge and linked to a company's core business and long-term developing strategy, industry analysts said.

"CSR activities won't be sustainable if they have nothing to do with the company's core business," said David Zhao, managing director of Hill & Knowlton (China) Public Relations Co Ltd.

"Strategic CSR not only calls for unilateral action adopted by the company itself but it is also required for sustained growth. It's more essential for the company to survive and develop in the future," he added.

For example, a commercial bank could choose to donate money to China's Hope Projects and set up schools in remote and poor areas. But the bank could help etch itself in the minds of the people as a very good and superb example of a responsible bank if it, for example, offers a preferential mortgage rate to companies that pollute less as an encouragement to others to pay attention to the environment.

By linking with a company's core business, CSR projects would refute any misunderstanding that a company does CSR only to lift its brand image, advance good relationship with government or as a form of damage control after a public relation crisis.

The linkage will be a good way to differentiate the company from other competitors and help it to deliver the right message to consumers, clients and even government in a more diversified way.

Zhao said crafting the right strategic CSR also required companies to know the government policy in advance.

"Once your strategic CSR accords with government requirements, you would gain advantage against others."

He added that "environment protection and energy efficiency would be key words in following years."

For the automotive industry, car makers, including General Motors Corp, Toyota, Ford and BMW, have invested a lot of time and money into developing alternative or green vehicles to cut fuel consumption and environment protection.

GM has also awarded suppliers who make major achievement in streamlining working process and utilizing resources better.

Consolidating its supply chain system has not only lowered suppliers' operation costs to two million yuan (US$277,000) since 2005 but the strategy also met the government's target to cut pollution in production.

In addition, Ford Motor Corp introduced a pioneering program that helps improve the standards and working conditions of companies in its supply network.

BMW China has also launched a safety education among children during its 15-stop campaign around China. Michelle Du, public relations manager responsible for CSR at BMW, said such event is helpful to widen understanding on safety.

"Money could help out those in need," said Du. "But it is more important to take advantage of our speciality in the industry to call on people from all walks of life to be aware of the problem," she said.

One of the key points in a strategic CSR is emphasis on the effective communication with all related partners including clients, non-government organizations, opinion leaders as well as employees.

"Only a strategic CSR could be sustainable and could facilitate in building a win-win situation for all related partners," said Zhao. "If all companies follow the trend, society will gain advantages for sustained growth and robust development."

In China, however, the strategic CSR is in its infancy because most firms give lip service of easily accepting the concept but they are not prepared to take action.

But the strategic CSR is playing an even more important role for Chinese companies when they begin to conduct merger and acquisitions in overseas market.

"Foreign partners not only pay attention to balance sheets and products but also place high emphasis on corporate social responsibility. So there is urgent need to do CSR for the sake of long-term development of Chinese companies," Zhao said.

Some Chinese companies have done a good job. Esquel Group, one of the world's largest cotton T-shirt makers, has formed a good relationship with cotton producers.

It teaches them latest watering technology and also buys insecticides and build plants to deal with polluted waste.

All these efforts helped lift the added value of the firm's products and at the same time protect employees' health and the limited resources of land and water, the firm said.