Chinese businesses are becoming more aware of the value of maintaining goodreputations as the government ramps up corporate social responsibility regulation.

Chen Xuejiao has given a lot of thought to the bankruptcy in the past four months of two of hercompetitor farm produce companies in north China's Hebei Province.

The general manager of Shijiazhuang Dayin Farm Produce Company Ltd believes that theirfailings were based on irreparable loss of reputation. The two companies had advertised theirproducts as premium quality, but provided only regular vegetables after receiving money from theclients, according to Chen.

What is more, she is concerned that such untrustworthy businesses could even put the reputationof an entire sector at risk.

Such worries are not misplaced. In 2008, China was shocked by news of melamine-contaminated powdered milk that killed six children and sickened 300,000. While Sanlu Group,the maker of the products, went bankrupt in 2008, the whole domestic dairy industry continues tosuffer as customers turn to foreign baby formula brands thought to be safer.

In the restaurant sector, a series of scandals in recent yearshave left many Chinese fearing to eat out. Although the use ofexpired meat and oil recycled from drains is far from auniversal problem, the sector as a whole has suffered as aresult of these disreputable practices by some.

According to official data, corporate trust failures in Chinaare causing economic losses of around $100 billion eachyear. Companies' abandonment of corporate socialresponsibility in search of maximum profits clearly hurts notonly the individuals operators, but China's economy far morebroadly.

Feng Zhongsheng, an official at the National Developmentand Reform Commission, said that the major reason forwidespread consumer distrust is because companies orindividuals pay a very low cost for their misconduct. Thepenalties simply do not deter them from putting out dodgy ordangerous produce.

The Chinese government has been pushing forward "credit building" among companies throughpromotional campaigns and ratings systems. For instance, supervisory bodies have startedblacklisting companies and upping punishment for breaches of trust.

A national conference held by the central government in late July aimed to raise awareness of theissue by inviting responsible companies to make statements on their understanding as well aspractice of trust building.

CSR Corporation, a global leader in bullet trains, was one of the companies involved in theconference. "Corporate credit leads to employee confidence, trust from clients and thegovernment, and good market reputation," said Zheng Changhong, the corporation's chairman.

"CSR has carried out its business based on honesty and credibility. By nurturing trustworthyemployees and providing reliable products, we have contributed to making high-speed trains asource of national pride in recent years," he claimed.

Zheng cited honesty and credibility as the cornerstones of the company's success -- its productshave been exported to 84 countries and regions, and its contract value in the first half of 2014surged 128 percent year on year.

An upcoming regulation on corporate information disclosure may inspire more companies to actethically, knowing that their reputations (and therefore bottom lines) depend on it.

Companies will be obliged to hand authorities annual reports containing information ranging fromtheir contact details, new subsidiaries and stake purchases to penalty records. All the informationwill be available to the public.

Such moves may make Chen Xuejiao rest slightly easier.�