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Markkula Center for Applied Ethics

Building an Ethical Business Culture in China

Margaret Steen

What values and trends shape politics, economic policy, and business practices in China? And are these trends also the drivers of business ethics? At a recent meeting of the Business and Organizational Ethics Partnership at Santa Clara University's Markkula Center for Applied Ethics, the focus of one discussion was how to build an ethical business culture in China.

The panel was moderated by Sheridan Tatsuno, owner of Dreamscape Capital, and included Stanley Kwong, professor at the University of San Francisco, and Jacqueline Fan, a partner at Ernst & Young. Meeting participants included business executives, attorneys, consultants, and academics, many with extensive experience in China.

To understand the business climate, it's important to first understand the trends and events that are shaping Chinese society. One recurring theme, for example, was the Cultural Revolution and its ongoing impact. This major disruption to Chinese culture destroyed a lot of traditional values, and young people today aren't necessarily learning about it because the generation that went through it is uncomfortable bringing up the excesses of that time.

China is also undergoing urbanization. Prior to 1980, almost all Chinese lived in the countryside. But in the next few decades, almost two-thirds relocated to and live in cities. This means new marketing opportunities for companies, as the country needs more infrastructure. This increasingly urbanized population is also using social networks, accessing the Internet primarily via cell phone.

With these changes come strains, including those on the educational system. For example, one participant who has trained Chinese workers on Western ethics codes noted that Chinese education puts less emphasis on critical thinking. A common workers' reaction, when presented with principles in training and asked to interpret and apply them, is to say, just tell me what I can and cannot do.

It's also important to remember that China isn't just one market: It's a huge country, with big differences among regions, ethnic groups, and population centers

China faces several other challenges in building a business culture that meets Western ethical standards:

  • • The one-child policy is creating a generation of "spoiled" children, people who have trouble cooperating, never having been asked to do so.
  • • Chinese culture is full of slogans that may not be taken seriously. There's a risk that a company code of conduct will be viewed as just another slogan.
  • • Junior workers in China tend to be loyal to their local boss, not necessarily to a policy or the company, or the national government
  • • It's not easy to integrate an ethics code from one culture into a company in another culture.

There are ways that Western companies can create workable policies, however. Some ideas from participants:

  • • It may take several additional training sessions to get the company's code of conduct engrained in the Chinese business culture. Some participants mentioned making it the screensaver on workers' computers, or having executives send frequent emails with reminders.
  • • Leading by example is a critical way to reinforce the ideas in the organization's code of conduct.
  • • American companies need to consider what their competitive advantage is and make use of it in order to thrive in an environment where they can't use bribes to get ahead, though their competitors can. Innovation and high energy, consistent messaging can take the place of bribes.

Margaret Steen is a freelance writer, editor, and writing instructor.

Aug 1, 2012