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Business Ethics in the Chinese Context

Stephan Rothlin, general secretary of the Center for International Business Ethics in Beijing, expressed confidence that there has been real progress on the climate for business ethics in China over the past two years. Rothlin updated the Markkula Center for Applied Ethics Business and Organizational Ethics Partnership in January on the situation in China since his last visit two years ago.

He cited movement in the following areas:

Worker Rights and Labor Standards
China's new Labor Contract Law, which went into effect Jan. 1, protects longtime workers from being fired without cause and requires employers to contribute to their workers' social security accounts. Other legislation is supposed to protect worker safety and set working conditions.

While Rothlin referred to these as "legal milestones," he stressed the need to enforce the laws. In the case of child labor, for example, he pointed to revelations in June that children as young as eight had been virtually enslaved and forced to work in rural brick kilns in Shanxi and Henan provinces. Party officials, he said, had a stake in some of these operations.

Rothlin hopes that global companies will lead the way in adhering to the stronger standards in China's new laws, and he spoke favorably of Nike's public commitment to uphold them.

Consumer Rights
The wave of product recalls in 2007 "damaged the 'made in China' brand," Rothlin said, and made the subject of consumer rights more prominent and legitimate in China. He discussed product safety, prompt action on problems, and false advertising as areas of concern.

Anti-Corruption Activities
The 2006 crackdown on corruption in Shanghai-including the firing of Mayor Chen Liangyu-"sent shockwaves" throughout the country, Rothlin said, and suggested that China was ready to get more serious about issues such as bribery and graft. "It takes more than lip service to bring change," he said.

"We have to rely on the commitment of top officials to combat corruption," Rothlin said, but he added that he believes party officials realize they must address the perception that China is a corrupt environment for business because "they lose credibility by doing nothing."

To a question from one of the partners on whether a corporate "No Gifts" policy would be appropriate in China, Rothlin gave a quick and simple answer: No. He said that a categorical refusal to give and accept gifts would be contrary to cultural norms in Asia, but he did suggest that company training programs on appropriate levels of gift giving could create enforceable norms for this practice that would not allow gifts to morph into bribes.

However, codes of conduct must set specific limits on gift giving, he added; using "nominal" and "industry standards" (especially after translation) provide no guidance whatsoever. A Chinese employee would interpret this language to mean it is up to his personal discretion, Rothlin explained.

Environmental Sustainability
With the upcoming Olympics as a spur, China has made progress in public transit, Rothlin said, and the current premier is behind efforts to conserve energy and curb air and water pollution.

Community Contribution
A philanthropic culture has not yet developed among Chinese businesspeople, according to Rothlin, and it is not being encouraged to develop through the tax system. Still, he indicated that there is growing interest in social responsibility, especially in the area of contributions to education.

Criteria for Ethical Companies
Rothlin's Center is working on developing criteria for ethical companies in the Chinese context. These criteria will be used to judge companies participating in a survey to identify the most ethical companies in China.

The Center for International Business Ethics in Beijing partners with the Markkula Center for Applied Ethics, whose executive director, Kirk O. Hanson, is honorary chair of the CIBE.

Feb 1, 2008

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