IBE Report: Doing Business Ethically in China

A new report by the Institute of Business Ethics (IBE) reviews the business ethics climate within China and the challenges that a business seeking to operate with high ethical standards might encounter.

With the advent of the UK Bribery Act and its extra-territorial reach, it is imperative for companies entering the Chinese market to be mindful of particular cultural traits (such as gift giving traditions and personal networks) when rolling out training and guidance designed to establish and ensure high ethical standards of business practice among employees.

Business ethics and corporate social responsibility (CSR) in China are maturing fields. Heavily influenced by the state and traditional Confucian values, there are high expectations on business to play a part in addressing social inequalities and issues such as bribery and corruption, discrimination, human rights and environmental degradation. The Chinese government expects ethics and CSR programmes to be in line with the country’s long-term strategy for social improvement, as outlined in its Five Year Plan.

The IBE said that it is important that western companies acknowledge the roles that personal connections (guanxi) and respect or ‘avoiding loss of face’ (mianzi) play when guiding employees on how to manage business relationships appropriately. Other Confucian influences on employees’ behaviour include: reluctance by staff to speak up against colleagues (particularly their superiors) or use a reporting hotline as they are taught unquestioning respect for authority and loyalty to their group.

Philippa Foster Back, director of the IBE, said: “While China is still developing a robust corporate governance framework and universal rule of law, the pace of change in China is fast and the scale of their ambition in areas such as corporate governance, sustainability and anti-corruption is growing. This paper will assist companies operating there to keep up with these developments when considering the efficacy of their ethics programmes.”

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