While women have enjoyed tremendous gains in gender equality in China over the past fifty years, there is still substantial room for improvement regarding participation by women on corporate boards of directors.
According to Credit Suisse’s CS Gender 3000 data,1 on average only 9.2% of board seats were held by women in China in 2015 (only up 0.1% from 2014).2 Deloitte and MSCI released reports that showed comparable numbers for 2016 and 2017.3 Sixteen of China’s 28 largest companies in the Fortune Global 200 do not have a single women director, according to Corporate Women Directors International’s 2015 Report.4 A 2011 survey of the top 100 largest Chinese companies conducted by The Korn/Ferry Institute found that the biggest enterprises fare no better, with only 8.1% female representation on those boards.5 Some of the country’s top tech companies have all-male boards.6
These surveys did not specify whether the companies analyzed were publicly listed. However, a 2010 survey focused solely on publicly traded Chinese firms showed that more than 90% had female directors and that women accounted for 16.7% of the board seats of these companies.7 While the survey did not offer an explanation as to why the percentage of women directors is so much higher for publicly listed companies, one reason could be that many such firms are outgrowths of closely held operations where family relationships trump gender.
Thus far, none of the studies have compared the board composition of Chinese foreign-invested enterprises (or FIEs) to those without international involvement. However, as few FIEs are listed in China, little information is publicly available. Anecdotally, examples can be found of female general counsels and compliance officers of FIEs also serving as board members of these FIEs. The consensus seems to be that, while FIEs generally encourage women who hold senior management positions to move into the boardroom, the variation from company to company makes it difficult to draw any comparison with their domestically funded counterparts.
The presence of female directors on the boards of foreign companies where representation tends to be higher has not gone unnoticed in China. However, compared with other countries in East Asia and South Asia, China seems like less of an outlier. While Malaysia (13.9%), Thailand (12.7%) and the Philippines (10.9%) come out ahead in the region for female board representation, Indonesia (6.2%), Taiwan (4.5%), South Korea (4.1%) and Japan (3.5%), all fare worse.8
In contrast to the United States and the European Union, gender parity on company boards has never been a particularly hot topic in China. Unsurprisingly, legislative efforts to increase representation are still in preliminary stages. Currently, there is no specific law in China setting a gender quota for women on boards of state-owned or privately held companies. However, China’s State Council, the country’s chief administrative authority, has formulated certain goals for women.
As early as 1995, the State Council articulated its Programs for the Development of Chinese Women (the “1995 Programs”), outlining major goals for women’s development over the ensuing five years, including measures relating to women’s participation in decision-making processes and administrative bodies. The 1995 Programs delegate responsibility for articulating and implementing specific plans to individual government agencies and lack the force of law. They are more aspirational than legislative in nature.
A further set of initiatives adopted in 2001 (the “2001 Programs”) stipulate that, from 2001 to 2010, state-owned enterprises (SOEs) shall increase the representation of women on their boards and that the relevant governmental organs (i.e., the State-owned Assets Supervision and Administration Commission) shall endeavor to promote gender parity. These goals were reiterated in amendments to the 2001 Programs passed in 2011 (the “2011 Programs”). As one notable example, in its draft implementation plan for the 2011 Programs, the government of Jiujiang City (in the southern province of Jiangxi) set a 10% target for female directors on SOE boards. If passed, this program would represent the first time that a specific target for female membership was proposed for the boards of Chinese companies. The 2011 Programs exceed the scope of the prior programs by calling for an increase in the participation by women on boards of all enterprises, public or private, by 2020.
The Code of Governance for Listed Companies (the “Code”) is issued by the China Securities Regulatory Commission and State Economic Trade Commission. All listed companies are required to comply with this Code. Currently, the Code does not provide for a quota or any other provisions regarding gender diversity on corporate boards.
Despite these positive developments, given the absence of any governmental enforcement mechanism pushing for their adoption, the 2011 Programs, like their predecessors, remain advisory. Moreover, the tightly constrained nature of China’s non-governmental organization sector means that there are no private organizations to take up the slack as they might in other countries. In the current political climate and general economic slowdown, the likelihood that the Communist Party leadership will expend significant resources promoting women’s issues is uncertain at best. With the local governments slow to take up the task of implementing the 2011 Programs in the SOE context and the lack of impetus to apply them in the private sector, significant government-led initiatives to increase women’s board representation in the coming decade are unlikely.
While the current picture of Chinese women in the boardroom is not exactly hopeful, in the long term Chinese women have numbers, if not the laws, on their side. One bellwether is the Graduate Management Admission Test (GMAT). In the testing year 2016, women made up 67 percent of all GMAT test takers in China, up from 65 percent in 2011.9 Many of those women pursue MBAs at prestigious western institutions with the ultimate goal of taking leadership positions in Chinese companies.10 Whether or not legislation mandates it, as more women graduate from business school programs and rise through the ranks of their organizations gaining the solid business experience and corporate leadership skills that are foundations of board membership, the pressure to appoint women as directors will likely build.
3 Women in the boardroom: A global perspective, Deloitte (2017), https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Risk/Women%20in%20the%20boardroom%20a%20global%20perspective%20fifth%20edition.pdf; Meggin Thwing Eastman, Women on Boards: Progress Report 2017, MSCI (Dec. 2017), https://www.msci.com/documents/10199/239004/MSCI_Women+on+Boards+Progress+Report+2017.pdf/b7786a08-c818-4054-bf3f-ef15fc89537a.
4 2015 CWDI Report on Women Directors: Fortune Global 200 – 2004-2014, Corporate Women Directors Int’l (2015), http://globewomen.org/CWDInet/index.php/2015-cwdi-fortune-global-200-report/.
5 Alicia Yi, Mind the gap: Half of Asia’s boards have no women, a risky position for governance and growth, Korn Ferry Inst. (2011), http://www.kornferryinstitute.com/about_us/thought_leadership_library/publication/2956/Mind_the_gap.
6 Bruce Einhorn, These Asian Billionaires Don’t Have Any Women on Their Boards, Bloomberg (Sept. 25, 2017), https://www.bloomberg.com/news/articles/2017-09-25/you-won-t-find-any-women-on-boards-of-these-asian-billionaires.
7 Ren Ting and Wang Zheng, Female Participation in TMT and Firm Performance: Evidence from Chinese Private Enterprises, Nankai Bus. Rev., Vol. 13, No. 5, at 81-91 (2010).
8 Credit Suisse, supra note 1, at 8.
9 Profile of GMAT Testing: Citizenship, GMAC (Nov. 2016), https://www.gmac.com/~/media/Files/gmac/Research/GMAT-Test-Taker-Data/gmat-profile-citizenship-ty2016-web-release-2.pdf.
10 Alison Damast, For Chinese Women, U.S. MBAs Are All the Rage,Bloomberg Business Week (May 5, 2011), https://www.bloomberg.com/news/articles/2011-05-05/for-chinese-women-u-dot-s-dot-mbas-are-all-the-rage.