Business Ethics
Political Challenges
China has been under the communist party rule for many decades. The communist party exercises absolute power over legislations and economic & cultural institutions. Unlike western economies where the government promotes transparency for doing business; in
China rules and regulations are not so transparent or absolute. Large manufacturing businesses can come under various regulations and bureaucracies, China promotes a form of social network called guanxiwang, where guanxi [10] is the relationship between the individual and the entities of the network. Due to lack of transparency and corruption the guanxiwang or the social network with people from the communist party can help western businesses avoid red tape and bureaucracy.
Unlike in the west, where building relationships has less importance due to the strict laws and a culture that supports contractual obligations, in China, one relies on one’s guanxiwang, Without guanxi a westerner entering China is like entering an abyss, which is also exemplified by the famous Chinese saying “turning at the temple door without a pigs head” [5]. Understanding guanxi is a challenging process for a westerner and building a guanxiwang is often a time consuming process, so it is prudent for a western company to recruit the right people with the appropriate guanxiwang to overcome these challenges.
Legal Challenges
Strict laws and patents in economies of the west protect domestic and foreign businesses, whereas in China, the legal system is loosely defined, giving rise to various loopholes in the law. China’s accession to the WTO has brought with it the inclusion of international business laws and patent rights amendments, but even today it is common to see technology being stolen either by the employees of the outsourced firm in China or by a Chinese competitor in the country.
“Shanzhai” or the copycat culture is an integral part of the Chinese society; the society is
China has been under the communist party rule for many decades. The communist party exercises absolute power over legislations and economic & cultural institutions. Unlike western economies where the government promotes transparency for doing business; in
China rules and regulations are not so transparent or absolute. Large manufacturing businesses can come under various regulations and bureaucracies, China promotes a form of social network called guanxiwang, where guanxi [10] is the relationship between the individual and the entities of the network. Due to lack of transparency and corruption the guanxiwang or the social network with people from the communist party can help western businesses avoid red tape and bureaucracy.
Unlike in the west, where building relationships has less importance due to the strict laws and a culture that supports contractual obligations, in China, one relies on one’s guanxiwang, Without guanxi a westerner entering China is like entering an abyss, which is also exemplified by the famous Chinese saying “turning at the temple door without a pigs head” [5]. Understanding guanxi is a challenging process for a westerner and building a guanxiwang is often a time consuming process, so it is prudent for a western company to recruit the right people with the appropriate guanxiwang to overcome these challenges.
Legal Challenges
Strict laws and patents in economies of the west protect domestic and foreign businesses, whereas in China, the legal system is loosely defined, giving rise to various loopholes in the law. China’s accession to the WTO has brought with it the inclusion of international business laws and patent rights amendments, but even today it is common to see technology being stolen either by the employees of the outsourced firm in China or by a Chinese competitor in the country.
“Shanzhai” or the copycat culture is an integral part of the Chinese society; the society is