Business Ethics is Shaky Here: What About in China?
Executive crooks in the US have been in the news a lot, but what’s the situation in China? I have the strange notion that it is worse in China but less evil. Here, the problems come from greed; there the basis is survival. But in any case, anyone doing business deals with China better know the rules of their game.
Where I’m Coming From
I’m an American and am disgusted and embarrassed by all the corruption recently uncovered in US corporations. At the same time, being of Chinese ethnicity, I’ve been disturbed by Chinese in China blatantly violating agreements and business law such as mass copying of copyrighted material.
So I need to first say this article is not about philosophical or moral issues. My blog is to provide guidance to help US firms get business done in China more easily and efficiently. More profound thinkers can figure out the mysteries of ethics in this world. I’m digging into the Chinese mind to see how it views our notion of ethics and hopefully come up with intelligent ways to deal with this issue when conducting business in China. I’m analyzing the lack of “ethics” and “integrity” in China and suggesting ways to cope with it.
The Explanation Starts Here
Chinese live in an environment we cannot imagine. For Americans, the idea that your spouse or parents could suddenly disappear in the middle of the night for two years cannot be real – either a nightmare or something that happens in some uncivilized country.
But that happened to a Chinese biochemical professor who stayed at our house at Stanford during his exchange studies, except it was he who was taken away during the night. For TWO YEARS he was locked up in a jail without knowing why he was there while his wife and son continued living their daily life with no explanation of what happened. Finally, he was told he had made a derogatory remark about Mao Zedong’s wife when she spoke at his college campus. One of his friends had reported on him. After two years of jail without explanation he was abruptly released on the condition he would stand up on a public stage for a day and loudly confess his stupidity. Yes, that was 20 years ago, but there are tens of thousands of such memories still in the heads of Chinese citizens today.
Now fast forward for a reality check in China today. Amazingly, not a lot has changed in terms of “Big Brother” situations: Sudden shutdown of your business, change of rules and regulations without warning, sudden disappearance of institutions, media outlets, sources of goods and services, people, or massive removal of jobs or relocations with almost no explanations or warnings. This is happening now!
Just last week, some lawyers who are known to represent Government dissenters in China suddenly disappeared! No explanations and no official statements. Poof! They’re gone. No official news. Only through pieces of evidence circulated through the Internet was this known.
What does this have to do with ethics?
The psychologist Abraham Maslow in his famous 1943 paper A Theory of Human Motivation, explained how humans operate under a hierarchy of needs. We first take care of our most basic needs, like bodily safety and hunger. As each lower level is taken care of, we can progress to the next higher level until at the top, after we have satisfied our personal needs for recognition and/or fortune, we move into altruistic endeavors to help others or to enhance society in some way. Maslow showed how we cannot jump up levels of priority until lower needs are satisfied. The homeless man who is hungry cannot worry about some higher issue like campaigning to stop pollution. Or the ethics of stealing food from the back of a restaurant.
Most Americans in the business world are not at the low levels of Maslow’s hierarchy of needs. They are not regularly worried about their basic safety or security, such as whether or not they have food on the table, or if their home might be taken away, or their spouse disappearing, or their business suddenly shut down. Generally, we’ve been at a much more comfortable level for many generations. We have a democratic government that gives the people a lot of protection and a system of law and order that is much more predictable and stable than in China.
Imagine Growing up in China
In contrast, generations in China have existed at the lowest levels of Maslow’s hierarchy. A young man there would know about horrors inflicted on his parents, grandparents, friends’ relatives, etc. A sense of survival is inborn and nurtured within him. He grew up learning hard lessons we would consider outlandish. I suppose it is not unlike growing up in a ghetto in the US where you join a gang and together you fight for survival.
The overall theme in China is “I gotta survive today. Tomorrow might be a whole different thing! Get it now – I may not have a chance tomorrow! Rules and laws and agreements? What do they mean a few days from now? They come and go, changing whenever – and I have no control over it.”
If you grew up having seen survival only by the smartest, shrewdest, toughest people, you would certainly learn everything you could about how these survivors operate. If you don’t, you will not survive!
Integrity was not in her vocabulary
Jenny Cai Maher, Senior Partner at Sino Management Partners (www.sinomanagement.com), spent half her lifetime in China, coming to the US at the age of 20, then progressed through the highest levels of academia and the US corporate world. She told me a shocker about herself: She did not know what the world “Integrity” meant when she arrived in the US! Further, you can’t just look up the meaning of such a word because you still wouldn’t get it unless you had the experience to understand it. It’s like looking up the word “love” – would you get it without appropriate experience? Jenny had to learn the meaning of the word gradually as she watched people operate with integrity.
Growing up in China with constant concern for survival puts a different light on basic behavior. A lot we take for granted does not apply. How can you be concerned with Integrity and operate on a high ethical level if any day you could be suddenly locked up in a jail without explanation?
My US client (who was a Chinese immigrant living in California) came back from China having secured the “exclusive US marketing rights” for a biometric lock. My client said he and the CEO had developed a close relationship and they agreed to grow a major company together in North America. As my client began promoting the lock across the country, he learned the same lock was suddenly available from a small vendor in New York who also claimed he had the “exclusive rights.” When my client confronted the CEO about the breach in their agreement, the answer was essentially this: “The New York vendor brought cash to the door to buy some locks, so you don’t expect me to turn down cash do you? I have to live every day you know, and besides, he is just a one-man company; he won’t be much competition for you.” When my client asked about the agreed “exclusivity” it turns out the CEO did not even know what the word meant!
(BTW, contracts written by US companies’ lawyers are a joke. They are undecipherable by even US business executives, so what are they thinking when they ask Chinese to sign them? Don’t these lawyers realize their stupid language just gives others an excuse for misunderstandings?)
The business people in China have not had 10 years in the US as Jenny had to learn what words like integrity and ethics mean. Even if they learned the words, the environment in China does not allow these words to be fully functional. Maslow would say: They can’t operate at this level if they are still concerned about the lower level needs!
What to Do
How to do business in China without getting burned? The answer starts by recognizing there are no simple rules. I cannot give you 10 steps to ethics in China.
Think this way: How would you deal with a homeless, destitute person if you needed his help in doing some work and he barely speaks English?
1. You give simple instructions
2. You monitor his work
3. You keep your eyes on him
You can consider him a cheap resource to get your task done, but also keep in mind:
1. He is a fellow human being who is trying to survive the best he knows how
2. He is living from day to day and does not have the luxury to plan ahead in his life
3. He is not able to communicate with you on your level, your social status or your position on Maslow’s hierarchy of needs
