Ethical Insights: Working Across Cultures — Business and Ethics in China



hi I'm Ron James with the center for ethical business cultures in the Opus College of you have st. Thomas thank you so much for joining us as we take another look at epical insights today we want to focus on the whole notion of working across culture business and ethics and China we're excited to have with us today dr. Darrel Payne she's a recognized expert in China and doing business in China and ethics in China and were elated because she's just recently returned from a trip in China dr. Caine hails from the opus College of Business at the University of st. Thomas and as a professor in business ethics thanks so much for being with us today Darryl oh thank you for inviting me Darryl you've just recently been in China what were themes as you reflect back on the trip that stood out to you well I guess I'm always struck when I go to China by the immense population and how that affects people's thinking so the large population I think the power of local governments that sometimes we Americans don't focus on so much collectivism in China and then I guess what you would call management by relationship or management by guanxi to use the Chinese term these are fascinating topics I take them one at a time and let's go to this population observation that you had normally multinational corporations think about the large population of China as a business opportunity but how do Chinese think about the population in China yes you've zeroed in on the crucial point I think that when you're in China you hear the government talking about the population as something always to be managed and its potential threat interestingly the Mandarin word for population or at least one of the words is Ranko people's mouths and that should already give us a kind of clue that in China the issue is how to keep people fed historically that's been a very big problem because the population has always been relatively large in China so the Chinese government and Chinese academics I would say worry a lot about people being hungry and the problem of social instability so that's an ongoing theme in China couple of years ago the Chinese guy and announced that they're big national theme would be social harmony and social stability so every conference done in China or many of them had to touch upon that theme well population is very important how do how does government work inside of China a multinational corporation how should they think about government in China well I guess in general they need to remember that although the system is centralized there are local governments which I think we can talk about a little bit and the local governments have quite a lot of power and I guess that if I were a multinational coming to China I would be really focused not just on what I want for the company but how the Chinese government is likely to see an issue so let's take a topic like intellectual property a lot of multinationals are very worried about that in China and they of course see intellectual property as a matter of property rights for the firm and as a protection of their investment in research and development into the firm and that's quite natural that they would see it that way but I think the Chinese government is going to see intellectual property again in terms of social stability so as part of reform the state-owned enterprises shed many many people and those people they need to eat right again people's mouths and many of those people who've been let go from the SOE are now manufacturing counterfeit goods there's a huge popular business and counterfeit goods in China in fact there are whole local cities that are pretty much devoted to the production of counterfeit goods so that means that I would argue the Chinese government is not immediately going to shut down those operations because what are those folks going to do how are they going to feed themselves so in MNC who's who is interested in intellectual property might want to think about how they can make an argument that protecting intellectual property rights would in the long run let's say lead to social stability so when they're engaging with the government they should always think about that government's perspective what is going to be done that's going to increase or decrease social harmony or social stability and perhaps try to tailor their argument in a meaningful and truthful way to that concern and is there a distinction between the centralized government and the local government sure I think in America we think about a kind of monolithic China with a very strong controlling central government and I don't want to downplay the power of the central government it's real we know there's a lot of censoring of Weibo or Twitter and stuff like that but I think that people need to remember that historically local government officials have been very powerful as well in fact there's a saying in China 10 gal Hong D un heaven is high and the emperor is very far away and I don't know you could if you could exactly translate it as well the cat's away the mice will play but there certainly is some sense there that we're the local officials on the ground and we can do what we want and in fact there's an interesting artwork I saw that was part of the squirrel painting of camels in the desert and they're talking to each other saying 10 gal Wong de un and I think the subtext there is they're in the desert which is the western part of China she jiong and the central government of Beijing is you know thousands of miles away so that they have some relative autonomy there and that should matter to local businesses in a couple of ways first of all it means that I think governments that sorry that company should not just think about going to China but they need to think about which profits they're going to in China and there are real differences Shanghai for example it's very business friendly so that would be one aspect of things so you have to think broadly at what happens at the central government as well as locally what happens at that government stage right and that's an important point because some local governments might be more corrupt than others government local government corruption is a huge problem that's openly talked about by academics for example I was at a conference and it was about five years ago and a government official from Beijing was sitting in on our subgroup on business ethics and it was interesting because this government official was the chief editor for the chief Communist Party paper so it would be like the editor of Pravda in the Soviet Union sitting in on your session and I was interested to see whether or not my Chinese colleagues would self-censor and I didn't hear a lot of self-censorship they were openly talking about corruption but primarily corruption at the local government level so are there any other implications that businesses should think about at the local government level well I guess I would just caution businesses that if they run into trouble with let's say a contractual dispute at the local level they may have to just deal with the local government and they may not get a lot of help from this central party government because the central government may not feel like it wants to step into a power struggle with that local gotta understand what about cultural uniqueness can you talk a little bit about cultural unique differences in China please oh well I guess I'm always a little bit careful about things like Asian values or Chinese uniqueness because things change over time cultures are permeable but I think I would say that China is largely still a collectivist country with some emphasis on individual integrity that comes out of the Confucian tradition and I think I would say that the Chinese are extremely pragmatic they've had they've had to learn over the years how to do workarounds in a bureaucratic system so the pragmatism of the people really always strikes me when you say collectivist what does that mean please well I guess it means that there's always going to be a focus on the wheel every time I'm in China I'm really struck by the fact that presenters from the government and from academia will talk about we Chinese and I don't think when you go to an American conference you have people say so much we Americans it means that at the business level there has to be a kind of consciousness about the business as a community a community that's operating in the larger Chinese community so I think one of the mistakes that American businesses businesspeople commit when they go to China is they focus a lot upon what's in it for the company and maybe what's in it for them as individuals but they don't talk as much as they probably should about the weenus in the Shanghai office for I interviewed someone from a major American company who was one of the most successful people ever to operate in China he was Chinese American and he told me an interesting story about how he accounted for his success basically from by two things one was that he would always take the the company van in with all the other workers in the morning so he he didn't separate himself as senior management off from every other person in the local office so they all had that morning trip in together and even the company car that was given to him as a perk he immediately gave back to the group and he said it's really the company car so any of you need who need this car to dude it to do business company business can use the car it's the company car it's not my perk and that he said went a long way towards building sort of social solidarity and showing respect for the we of the of the Chinese in the Chinese group who's working in that company exactly a strong commitment to community mmm-hmm so fascinating you were talking about relationships and how they show up the collectivism shows up in a home setting what about in a business setting how might it show up well the third point would show up in a business setting as well business dinner but I think more broadly you could say that management in China is by relationship or by relationship capital capital they use the term Guan XI and so management by Kwan XI and what that means is a lot of things get done in China by means of whom you know and that's true in America true by two but I would say it's even more true in China so for example the Chinese people work there connections that are family connections historical connections alumni connections all connections matter in China and I think the implication for business here is that if you wit run into some kind of difficulty you're more likely to resolve the problem through Guan XI then through the rule of law I would say the rule of law is still very underdeveloped in China by American or Western standards and you read about cases for example where an American firm has trouble with the supplier and they want to try to enforce the contract and their Chinese colleagues will advise them No let's resolve this by contacting you know a colleague or a fellow student at Tong Shui and they'll work out things through my means of whom they know rather than going to the court system and I I think I would say that businesses need to cultivate guanxi not just an instrumental extractive way to use your phrase earlier but by showing that they're generally friendly genuinely friendly towards the Chinese and that their their intent upon being at China in the long haul and making things work in a way that's good for them but also good for the local Chinese firms and the local Chinese population and that circles back to where you started and it's this notion of population and how businesses will be viewed very important not to be viewed as coming to extract from but rather to invest in what's happening in China yes that's absolutely right dr. Caine thank you so much for being with us today and sharing with us your insights into business and ethics in China thank you very much for joining us today and looking at ethical insights i'm ron james with the center for ethical business cultures and we look forward to you joining us on the next ethical insight have a good day you

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