Ethics: China

7/30/2019 Ethics: China

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BUSINESS ETHICS IN CHINA


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The pre-Republican era (till the beginning ofthe 20th century)

The Republican era (early 20th century tillaround 1948)

The Communist era (1948-1976)

The Reform era (1976 onwards)

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HISTORY

China has the world's oldest living civilization.

Its written history goes back about 3,500 years.

The Chinese people take great pride in their nation,

its long history, and its influence on other countries.

The Chinese were the first people to develop the

compass, paper, and silk cloth.


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PEOPLE About a fifth of the world's people live in

China.

74 per cent of live in villages and small towns.

Most are in densely populated eastern China.Western China has less than 10 per cent of thetotal population.

By law, men marry not until 22 years old, andwomen until 20. Late marriage is encouragednot more than one child is allowed.


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Family is Important

Before 1949, some Chinese lived in family units withmore than 100 relatives under oldest male. Theideal was "five generations under one roof." (mainlythe families of rich rural landowners, wealthy

merchants, and government officials).

Among the poorer people, households consisted ofparents and children, but some also included

grandparents and uncles.

Today, the Chinese live in smaller types of familyunits.


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Family dynamics

In the past, only men were expected to work outsidehome. But today, almost all adults have a job.

Relationships are less formal and more democratic.Parents no longer expect children to showunquestioning obedience. In the past, father couldlegally kill his children if they disobeyed him.

Young people today generally choose their ownmarriage partners.


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Gender Relations Traditionally sons are preferred more than

daughters. A husband could divorce his wife if shefailed to give birth to sons. In some cases, daughterswere killed at birth.

Today, social policy in China values girls as well asboys. The Communist government strongly supportsthat women should contribute to the family incomeand participate in social and political activities.

Equality between the sexes is more widely acceptedin Chinese cities than in countryside.


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ECONOMY

The national government has tremendouscontrol over China's economy. It owns andoperates most important industrial plants anddirectly controls most nonagriculturalemployment and wages. The governmentalso controls and operates the bankingsystem, transportation, and foreign trade. Itrations some foods, clothing, andnecessities.Sets the prices of many goods andservices.


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Economy

In early 1980's, the Chinese government beganseries of economic reforms that led to lessgovernment control over some businessactivities.

Since then, number of privately ownedbusinesses has increased dramatically.

Many experts believe the increased ownershipof business has contributed significantly toChina's economic health.

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Economy

The government receives most of its income

from taxes paid out of the profits of state-

owned businesses. Government planners

invest heavily in development of China's

manufacturing industries. Worker is expected

to produce.

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MANAGEMENT IN CHINA; STAGE -I (1949-56)

Transformation from a semi-feudal, semi-capitalistChina to a socialist China.

When communist party took over the control of themajor industries, administrative personnel wereeither appointed from within or transferred to state

owned enterprises. By 1956 manufacturing and service enterprises that

were privately owned were merged into state ; soonprivate cooperatives were converted into state run

enterprises. The former capitalist managers lost their powers and

independence, but remained in the enterprises toperform technical consulting functions.


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MANAGEMENT IN CHINA; STAGE- II (1957-66)

Overall implementation of the Soviet model of one-man management, which implied rigid centralcontrol and left little autonomy for local enterprises.

Enterprises managers had virtually no direct voice inthe economic, social, humanistic, or political goals oftheir enterprises. All decisions made at the top leveland little autonomy was assigned to lower levels of

management and participative management was notencouraged.


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MANAGEMENT IN CHINA; STAGE -III (1967-79)

The stage of Cultural Revolution when enterprisemanagement was again centralized; many managerswere replaced by radical revolutionaries.

Operational efficiency was neglected, and profitssuffered dramatically. Criticism was directed at thosewho remained in privately owned enterprises andwere going capitalist. Their numbers were reduced

to the lowest level since 1949.


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Between 1976 and 1979, the economy of

China experienced some recovery and

development. However, since the economic

reforms started in rural areas, changes inenterprise management in urban areas were

not yet considered a high priority target for

the government

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MANAGEMENT IN CHINA; STAGE- IV (1980-86)

Management reforms, which were instituted to copewith the economic reforms spread to urban areas.

Decentralization was once again emphasized, andmore autonomy was granted to enterprises and theirmanagers.

A new phenomenon seemed to emerge: managers of

both state and collective enterprises were youngerand better educated. At the same time , individualenterprise was officially sanctioned and encouraged.


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MANAGEMENT IN CHINA; STAGE- V (1987-2003)

In Nov 1987, the Communist Party General Secretary Mr. ZhaoZiyang accepted China to be at the primary stage of socialismand three messages were released:

1. China should develop a new economic system in whichthe state makes adjustments to the market and the marketprovides directions to the enterprises.

2. China allows the existence of private enterprises

3. There has been debate whether China should allow theissuing of stocks and bonds i.e. whether to adopt Westernmanagement practices.


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PHILOSOPHY

Taoism

Confucianism

Buddhism

Modern Thought

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TAOISM

The Taoist Sage learns from

observing the way of nature

(flowing water, wind) andletting nature guide the way

through life.

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Origins & Texts

Legendary founder: Lao Tzu (6ThCentury BCE)

Primary text: Tao Te Ching(Book ofthe Way and the Power)

Chuang Tzu (4th Century BCE)

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Tao Concepts

The Tao(path or way)

The nameless

The uncarved block

All pervading within and beyond nature

Te( power or virtue)

Ones natural ability brought to peak potential

through following the way

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Tao Concepts

Wei-wu-wei: active non-action Passive non resistance to the natural forces of life

Natural way to get things done with the least effort and

greatest successes Go with the flow, yield to the natural way of things

Applied in all walks of life

Relativity: Good and Bad as a

matter of perspective The Taoist stage is non-judgmental

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Wu Chi & Tai Chi

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Born in Wu Chi (wholeness), itsthen divided and goes to Tai Chiand at death back into Wu Chi

Union of opposites

Yin-female, soul, dark

Yang- male, spirit, light

Androgyny is balance ofyin &yang

Wu Chi

Tai Chi


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LAW OF POLAR REVERSAL

Balance Anima (feminine part of psyche),

animus (masculine part of psyche)

Basis of integration. Transcend &

transform opposites into wholeness

Androgyny- Healthiest emotional state is

to have both (feminine & masculine)

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Taoist Way

Seeking Health and Longevity: through diet,meditation, exercise and stress free life

Alchemy: seeking the chemical elixir of life to

achieve immortality Meditation: Inner Alchemy Meditation-

seeking spiritual rather than chemical

transformation

Natural/ Holistic Healing: Herbal medicine,

acupressure, acupuncture ,exercise

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Taoist Ethics

1. Not emphasize status, intelligence, orpossessions.

2. Govern with least visibility and with aserving attitude.

3. Reduce laws and govern lightly.

4. Treat other countries non-aggressively.

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CONFUCIANISM

A political and social philosophy seekingharmony at all levels:

Within the self The family

The community

The state

The nation The world

The cosmos

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Goal of Confucianism

To develop ones Jen: Human

heartedness- the innate goodnessof humanity and becoming a Chun

Tzu: The Great Man

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The Five Classics (Wu Jing)

1. The I Jing(Book of Changes)

2. The Shu Jing(Book of History)

3. The Shih Jing(Book of Odes *poetry+)

4. The Li Ji(Book of Rites)5. The Chun-chiu(Spring & Autumn

Annals)

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The Four Books:

1. The Analects

2. The Great Learning

3. The Doctrine of the

Mean

4. The Works of Mencius

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Teachings- About Man

Like Taoists ,Confucius held the traditional view that

all men are born good. ( unlike Western view)

People are spoiled by bad influences, bad

environment, evil examples and yielding to evilappetites.

Each person has the abilityto fulfill duty as listed in

the rules of conduct.

Greatest concern was for conduct in a social context

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1.Jen/Ren-Love/Benevolence

The ideal is not the individual but theperson in relationship-welfare of othersand readiness to help

The Golden Rule is What you do notwant done to yourself, do not do toothers".

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2.Righteousness- Vi

Duty is based on reciprocity

Since your mother and father took care of you for

the first three years of your life you must

reciprocate by living in mourning for three years

after their death.

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3.Propriety-Li

The relationship is hierarchical -Respect andobedience in return of benevolence andsupport

Ruler and subject Husband and wife

Father and son

Elder and younger brothers Older and younger friends

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4.Wisdom-Zhi

The innate knowledge of what is

right and wrong.

Confucius:The wise are free from

perplexities.

Know-howrather than know-that.

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5.Fidelity/Trust-Xin

Be truthful and straightforward in speechand faithful to promises

Be conscientious in the discharge ofduties

Observe the rules of right conduct in bothheart and action

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Taoism versus Confucianism

Confucianism stresses moral goodness of humanbeings [i.e. jen] the Taoists stressed the harmony andperfection ofnature.

Taoists are critical of human institutions used byConfucians (and others) to regulate human behavior.

Lao Tzu commends a simple life withfew duties lived inharmony with the Tao, in contrast to the Confucian

view that the good life requires a conformity to li(i.e. acomplex system of rules of propriety), with the aim ofdeveloping or cultivating our full humanity

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Sun Yat-SenNovember 12, 1866March 12, 1925

Born to a Cantonese peasant family in Cuiheng.

First provisional president when the Republic of China

was founded in 1912.

Developed a political philosophy known as the Three

Principles of the Peoplewhich still heavily influences

Chinese governments


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Sun Yat-Sen: Three principles

The Principle of Mnz : Nationalism The Principle of Mnqun : Democracy

The Principle of Mnshng : Socialism

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Maoism- Communism

Blend of Modern and Confucian thought

The Cultural Revolution (1964)demolished

imperialism completely

The obedience of masses to socialist party wasa significant shift .

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ESSENCE OF CHINESE ETHICAL

VALUES

Inner harmony

Social harmony

Structural harmony

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Inner Harmony

1. The middle way

2. Moderation

3. Self control

4. The five constant virtuesrighteousness,

wisdom, fidelity, filial piety and considered

appropriateness

5. Paternalism

6. Education & Self development

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Social Harmony

Jen- human heartedness

Licultivation of appropriateness in everysituation

Collectivism/relationship oriented Familism

Reciprocity

Face Guanxi

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Structural Harmony

Wu Lun firm hierarchical relationship betweenprince-

minister, father-son, husband-wife, older brother-

younger brother, friend-friend

Hierarchy

Respect for authority

Patriarchy

Limited and bounded trust

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Chinese values that determine notions of right &

wrong ; appropriateness & inappropriateness.

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FACE

Lien:- Lien refers to ones moral character and isa persons most precious possession. Without it, onecannot function in society. It is earned by fulfillingones duties and other obligations.

Mien-tzu:- Mien-tzu refers to a persons reputationor prestige and is based on accomplishments,political status or bureaucratic power. It also refersto ones ability to deal smoothly with people face-to-face. Face enhancement can be attained by acts ofgenerosity in terms of time of gifts, or praise ofothers.


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What is Face

Face is the cooperative manner in which people behave towardsone another in order to avoid loss of self respect or prestigeby either party.

Another aspect is saving of face, similar to the Western conceptof being a good sport, or being a good winner. Modesty overones own achievement and appreciation of the losers skilland effort are central to saving face.

Face requires little effort and is attention to courtesy inrelationships with others. This has a great positive effect uponthe recipient and if lost, face will have a negative effect.

A d i f h l FACE


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Accommodation of the loser -FACE

Once face has been lost, the loser will prefer to avoidthe winner and ignore the face-losing incident asthough it never occurred. In circumstances where

the two parties must continue a relationship, theloser will return to formal and polite etiquette,pretending that the incident had not occurred. Theother party should accommodate the losers

preference and not refer again to the incident. Faceinvolves a high degree of self-control, socialconsciousness, and concern for others.


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FACE- Six types

Enhancing ones own face

Giving face to another

Losing ones own face

Damaging anothers face

Saving ones own face Saving the face of another

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GUANXI

Guanxi is a relationship between two peoplecontaining implicit mutual obligation,assurances and intimacy, and is the perceivedvalue of an ongoing relationship and its future

possibilities that typically govern Chineseattitudes toward long-term business. If arelationship of trust and mutual benefit isdeveloped, an excellent foundation will be

built for future business with the Chinese.

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The intricate, pervasive network of personal relationswhich every Chinese cultivates with energy, subtletyand imagination.

Guanxi is the currency of getting things done andgetting ahead in Chinese society.

Guanxi ties are helpful in dealing with the Chinesebureaucracy as personal interpretations are used inlieu of legal interpretations.

GUANXI


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Due to cultural differences and language

barriers, the visitors to China are not in aposition to cultivate guanxi with the depthpossible between two Chinese.

Regardless, guanxi is an important aspect of

interrelations in China and deserves attentionso that good friendly relations may bedeveloped.

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GUANXI

Guanxi is governed by the unwritten law of

reciprocity which is to be kept in constant

maintenance and long-term balance.

Guanxi is often interpreted as connections by

foreigners, Notion of old boys clubs,

fraternities or peer group network is not guanxi

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Space and Privacy

Borders of personal space and concomitant requirements ofindividual privacy seem different for Chinese. The same isquite evident from the extract of the interview of the Chinesesocial scientist for the Chinese explanation for privacy :-

Hotel room is not a place for privacy;

Those who need privacy have something to hide;

Those who need privacy are anti-social for they

avoid people: Those who need privacy are not cooperative; and

The Chinese feel that they are all comrades andmust be open to one another all the time.


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Chinese Business Model

The Chinese depend upon world-wide family and

business links both for information and as havens for

investment. The company is based on the immediatefamily. Business is conducted first with extended

family members, then with members of the village,

clan and then with ethnic group.


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Family Networks foster business

Wherever promises the greatest safety; Wherever promises the highest profit.

National barriers are often unimportant

However, the footloose quality of Chinesecapital investment also has a negative aspectwhich does not promise well for the long-term

development of the region.

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Chinese Model;

An entrepreneur employs his eldest son in thefamily shop in Hong Kong. He trades gemswith his brothers and a cousin in Los Angelesand Singapore, and buys property from a clan

member on Vancouver. He sends his youngersons to study in Canada and Australia, wherethey seek residence and set up their owncompanies; and a daughter is sent to work for

a cousin in Amsterdam. Eventually, thesechildren will be brought back in the flagshipcompany or will establish their own networkof family influence.

Chinese Model Employing Family


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Chinese Model; Employing Family

MembersPresident: Tan Soo Sin (father)

Production

Manager

L K Tan (Son)

Marketing

Manager

John Tan (Son)

Finance

Manager

Amy Tan(Daughter)

Administrative

Manager

Henry Siew (Son-in-law)

Purchasing

Manager

Lee Tan (Son)

N O N F A M I L Y W O R K F O R C E

SectionLeader

Wong

SectionLeader

Chung

SectionLeader

Oi


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Case -1

A German expat one asked his Chinese driver

to take the passenger seat , while he drove the

car himself. Next day when the German saw

the car was not cleaned and asked the driver ,he answered : The person who drives , also

washes the car .The German wanted to

charge the driver for insubordination. Is the German being ethical ?

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Case 1-German Manager and Chinese Driver


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Case 1 German Manager and Chinese Driver

1. This is not a case of insubordination andinsult; it is rather violation of the FACE of thedriver .

2. Explain to the driver that it is common for aforeigner to take the wheel and this doesnot connote loss of confidence in the driversability. Hence there is no loss of face.

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3. The German has to be explained even though he isa foreigner there is FACE that gives him certain

privileges along with obligations which includesrespect that he should accord to other faces -bothhigher and lower.

4. Explain that the face is not mere face losing or facesaving as westerners understand but is a factor ofhigher concern in Chinese minds which reflectsethical, professional and social standing of a personand to which are assigned status and defined roles

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Case -2

The German president on arriving to the China

Germany Joint venture in Guanghzhao found

a particular Liaison officer to be redundant

even though he was highly respected andpaid. He wanted to terminate the position

much against the advice of locals .

Is the German correct ?

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Case 2-Ambassador of the enterprise

The Chinese manager is not a liaison officer forthe company and should be definitely retained ashe is important for maintaining GUANXI

In simple terms Guanxi is not trouble shooting orfire fighting as some foreigners are likely to think.

Rather it is like a fire extinguisher and much more;which should always be there to not only prevent

fire but also open doors.The Chinese believeGuanxi should never be described as if you do itsmagic disappears

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Case -3

While doing the due diligence the Chinese

were adamant that a certain price be

attributed to a boiler that was functioning at

low capacity being of an old technology but inuse . The Germans could not understand why

a value should be attached to it at all.

Are the Chinese being unfair?

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QUALITY


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QUALITY

The Chinese attribute a value to a product or a task if it

still fulfills the purpose or intended function. Thus theboiler has some value as it is still functioning

For Germans quality is evaluated by objective quasi -

absolute standards and norms that are largelyindependent of changing circumstances. Hence the boilerhas no value.

Notions of value , utility and quality derives from thedeeper philosophical tenets of Taoism , Confucianism andspirituality.

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Case -4

Bill is Chinese born but educated in the westentrepreneur. He exports and imports globally

objects of art and has a great a flair for this business.

His father has a factory in China that employs morethan 500 workers who live in cramped conditions

and work long hours for which they are paid over

time. They get only two holidays per month , but

during Chinese New year they get a month off. The supervisor is a tough task master. And Bill

resents the overall management style and wants to

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Issues

Can Bill go against his fathers style of functioning?

Are the workers exploited?

Is the factory breaking rules with over utilization of

capacity ?

How will the Western markets feel about the

treatment given to workers ?

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Bill cannot violate the Confucian value of Filial

Piety The face of the father cannot be lost

People are not exploited but get a chance to

work hard and earn.

The extra production is often seen by Chinese

government as good for domestic economy

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Ethics: China