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Doing Ethical Business in China: Human Resources Management

Results of a Fulbright-Hays Seminar Tour

Elizabeth Scott

on 20 November 2013

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Transcript of Doing Ethical Business in China: Human Resources Management

Workplace Safety
Red =Revolution
the working class,
the peasantry,
the urban petty bourgeoisie, and
the national bourgeoisie (capitalists)
Communist Party
Doing Ethical Business in China
The Eightfold Path
1. Right View
2. Right Intention
3. Right Speech
4. Right Action
5. Right Livelihood
6. Right Effort
7. Right Mindfulness
8. Right Concentration
Ethical Conduct
Mental Development
The Four Noble Truths
1. Life means suffering.
2. The origin of suffering is attachment.
3. The cessation of suffering is attainable.
4. The path to the cessation of suffering
Chapter 10 --- Leadership of Party Committees

Ask your subordinates about matters you don't understand or don't know, and to do not lightly express your approval or disapproval. We should never pretend to know what we don't know, we should "not feel ashamed to ask and learn from people below" and we should listen carefully to the views of the cadres at the lower levels. Be a pupil before you become a teacher; learn from the cadres at the lower levels before you issue orders. What the cadres at the lower levels say may or may not be correct; after hearing it, we must analyze it. We must heed the correct views and act upon them. Listen also to the mistaken views from below; it is wrong not to listen to them at all. Such views, however, are not to be acted upon but to be criticized.

from "Quotations from Mao Tse Tung," Peking Foreign Languages Press, 1966. Transcription by David Quentin. Retrieved from Internet Archive at: http://www.marxists.org/reference/archive/mao/works/red-book/index.htm
Chapter 13 --- Relations Between Officers and Men

Our army has always had two policies. First, we must be ruthless to our enemies, we must overpower and annihilate them. Second, we must be kind to our own, to the people, to our comrades and to our superiors and subordinates, and unite with them.

Communists must use the democratic method of persuasion and education when working among the laboring people and must on no account resort to commandism or coercion. The Chinese Communist Party adheres to this Marxist-Leninist principle.

Our comrades must understand that ideological remolding involves long-term, patient and painstaking work, they must not attempt to change people's ideology, which has been shaped over decades of life, by giving a few lectures or by holding a few meetings. Persuasion, not compulsion, is the only way to convince them. Compulsion will never result in convincing them. To try to convince them by force simply won't work. This kind of method is permissible in dealing with the enemy, but absolutely impermissible in dealing with comrades or friends.

from "Quotations from Mao Tse Tung," Peking Foreign Languages Press, 1966. Transcription by David Quentin. Retrieved from Internet Archive at: http://www.marxists.org/reference/archive/mao/works/red-book/index.htm
Selected Works of Chairman Mao
Chapter 20 --- Building Our Country Through Diligence and Frugality

We must see to it that all of our cadres and all our people constantly bear in mind that ours is a big socialist country but an economically backward and poor one, and that this is a very great contradiction. To make China rich and strong needs several decades of intense effort, which will include, among other things, the effort to practice strict economy and combat waste, i.e., the policy of building up our country through diligence and frugality.

In order to speed up this restoration and development of agricultural production and industrial production is small towns, we must do our utmost, in the course of our struggle for the abolition of the feudal system, to preserve all useful means of production and of livelihood, take resolute measures against anyone's destroying or wasting them, oppose extravagant eating and drinking and pay attention to thrift and economy.

A dangerous tendency has shown itself of late among many of our personnel -- an unwillingness to share the joys and hardships of the masses, a concern for personal fame and gain. This is very bad. One way of overcoming it is to simplify our organizations in the course of our campaign to increase production and practice economy, and to transfer cadres to lower levels so that a considerable number will return to productive work.

from "Quotations from Mao Tse Tung," Peking Foreign Languages Press, 1966. Transcription by David Quentin. Retrieved from Internet Archive at: http://www.marxists.org/reference/archive/mao/works/red-book/index.htm
Chapter 26 --- Discipline

We must affirm anew the discipline of the Party, namely:
(1) the individual is subordinate to the organization;
(2) the minority id subordinate to the majority;
(3) the lower level is subordinate to the higher level; and
(4) the entire membership is subordinate to the Central Committee.
Whoever violates these articles of discipline disrupts Party unity.

All officers and soldiers of our army must heighten their sense of discipline and resolutely carry out orders, carry out our policy, carry out the Three Main Rules of Discipline and the Eight Points for Attention -- with army and people united, army and government united, officers and soldiers united, and the whole army united -- and permit no breach of discipline.

The Eight Points for Attention

Speak politely.
Pay fairly for what you buy.
Return everything you borrow.
Pay for anything you damage.
Do not hit or swear at people.
Do not damage crops.
Do not take liberties with women.
Do not ill treat captives.

The Three Main Rules of Discipline

Obey orders in all your actions.
Do not take a single needle or piece of thread from the masses.
Turn in everything captured.

from "Quotations from Mao Tse Tung," Peking Foreign Languages Press, 1966. Transcription by David Quentin. Retrieved from Internet Archive at: http://www.marxists.org/reference/archive/mao/works/red-book/index.htm
Economic Systems
Philosophy and Religion
Cultural Revolution
The Great
Leap Forward
May 4th Movement
Asian Economic Crisis
Confucians have very strong ideas about duties and obligations of people,
but do not see those duties and obligations as creating rights for others.
This is difficult for American managers to comprehend, since their ethical training (and legal experience) is grounded in a rights-based system. One proposed solution is for Confucians to recognize rights in an employment situation even though rights would not be recognized in other situations.

2008, Business Ethics Quarterly, Volume 18, Issue 1, ISSN 1052-150X, pp, 67-83
6000 years of culture (5000 BCE to 1839 CE)
100 years of humiliation (1839-1949)
Employment Law
Student Activities
Five cardinal virtues:
Filial Conduct
Comparing Chines culture to Western Culture
KFC case:
Beijing Law requires that companies pay enough for employees to cover their living expenses. The court decided in this case that the employer must not only pay a sufficient hourly wage, but must schedule the worker for enough hours to allow the worker to earn enough each month.
Thank-you banner from clients to lawyers in the KFC case.
Minimum Wage
Four great inventions:
Images of Chairman Mao are everywhere, even at the entrance to institutions of learning, whose faculty experienced harsh treatment during the cultural revolution. The Communist Party is present in everyday activities, addressing things that affect individuals directly. Local groups help set rules very much as a condo association might.
While modern China allows individuals to own property, they do not own land, and they are aware that the government may decide to return profits of private businesses to the people of China.
Though Confucian ideas were not in favor during the Cultural Revolution, Confucius is recognized on modern Chinese university campuses.
Shanghai was home to many Jews until the middle of the 20th century. Sephardic Jews, such as the Sassoons (from Mumbai) and Kadoories (from Baghdad) came in the 1800s, providing financial support for real estate development. The city served as safe haven for Jews escaping the progroms of Russia and the holocaust. A Chinese consular official, Doctor Ho Feng Shan, helped thousands of Austrian Jewish refugees acquire visas for Shanghai. A Japanese consul in Lithuania, Chiune Sigihara, approved visas for thousands to go to Shanghai by way of Japan. The Jewish residents of Shanghai lived through WWII in a "Designated Area." Fortunately, the war ended before the Nazis were successful in pressuring the Japanese occupying forces to extend the "final solution" to the Jews of Shanghai.
When the People's Republic of China came into existance, most of the Jewish residents left China, usually with very few belongings and a small percentage of their assets. Subtle signs of their presence still remain -- nailholes where mezuzahs hung, for example -- but the cemetaries were bulldozed and gravestones reused as washboards. The Jewish population of Shanghai is growing again, due almost exclusively to the influx of Western expatriate employees of multinationals. While they gather for worship regularly, the Chinese government still places restriction on their use of the Ohel Rachel synagogue to four times a year.
Chinese culture rests on thousands of years of "eastern" philosophy and religion, predominantly Confucian philosophy and Daoist and Buddhist religions. The Cultural Revolution suppressed religious expression and destroyed many religious artifacts. "Western" philosophies and religions were less well-represented, but they did not escape the systematic attack of the Red Guard. The Hui, ethnic Chinese practicing Islam, were forced to eat pork. Christian churches and other institutions were destroyed.
While there seems to be greater tolerance of religious practice in modern-day China, the restrictions are not trivial. Passports are required at church services for foreigners, so that no Chinese citizens can attend. Chinese Catholic bishops are chosen by Chinese authorities, not the Roman Catholic church hierarchy. Judaism is not one of the 5 "recognized" religions, so its few remaining buildings are generally not used for worship. The Torah has been removed from the OhelMoshe synagogue; it serves as an historic site. Even Western Jews are allowed to use the Ohel Rachel synagogue in Shanghai for worship only rarely - never from 1952-1999, 2 days a year at the turn of the century, and now, more recently, 4 days a year. With the exception of Tibetan followers of the Dalai Lama, practitioners of Eastern religions experience fewer restrictions.
The Sassoons provided money to build many famous landmarks along Nanjing Road, including the Peace Hotel.
Homes in the Hongkou District display small signs of Jewish identity -- windows reminiscent of the Star of David and small holes in the doorjambs where the mezuzah was affixed.
Houshan Park houses a monument commemorating the "designated area" where the Jews were forced to reside between 1937 and 1941 by the Japanese occupying China.
The renovated Ohel Moishe Synagogue is now the Shanghai Jewish Refuges Museum. No services are conducted in the building, but its displays remind visitors of the Jews who lived in Shanghai.
Under the Communist Party, the state-approved Catholic church is the Chinese Catholic Patriotic Association. This group rejects the Vatican's authority and its bishops are appointed by the state. Millions of Chinese Catholics are loyal to the Pope in Rome and worship clandestinely.
Harmony with nature
Harmony with other people
Taoist ideas of harmony with nature support corporate social responsibility efforts towards sustainability. Buddhist ideas of harmony with other humans support good relationships with all organizational stakeholders, including, but not limited to employees, customers, suppliers, distributors, stockholders, and communities.

Wang and Juslin, The Impact of Chinese Culture on Corporate Social Responsibility, Journal of Business Ethics (2009) 88:433-451.
Confucian philosophy focuses on managing one's self and society. Though not technically a religion, it provides guidance on how to live and has had considerable influence on Chinese values. It is associated with personal values of savings, education, and family that are believed to help industry grow. Some criticize it for focusing too much on this world.
Islam has a long history in China. The Great Mosque in Xi'an was built in the 700s, using Chinese architectural styles. The followers of Islam are mostly among the Hui people. As were other religious institutions, many mosques were destroyed during the Cultural Revolution. Now, the practice of Islam is allowed.
Shanghai installed a new bull on the Bund in 2010. It requested that the sculptor that made the bull on Wall Street make one younger and stronger, to symbolize China's economy.
AMD sponsored training in game development for the children of migrant workers at the Dandelion School. They donated new computers and monitors for the students' use.
Confucian ethics emphasize trustworthiness rather than trust, being thoughtful rather than adhering to rules or codes. This means that contracts, especially long contracts, are viewed as tools to avoid ethical behavior. In Confucian understanding, even promise-keeping might not represent trustworthy behavior if the person keeping the promise ignored another, more urgent need. This means that both sides to an agreement should be flexible and understanding of changing conditions in order to be considered truly trustworthy. Confucius also suggests that part of trustworthiness is not promising more than one can deliver. Similarly, leaders who live lavish lifestyles are not able to recognize the living conditions of their followers, so are less able to be trustworthy.

Confucian Trustworthiness and the Practice of Business in China, by Daryl Koehn in Business Ethics Quarterly (2001), Volume 11, Issue 3. pp. 415-429.
Chinese Philosophy and Religion
Visit the websitehttp://www.froginawell.net/china/2008/04/east-meets-west/, and view graphics comparing Chinese culture to Western Culture. Answer the following questions in small groups or individually: 1. Can you identify reasons in the philosophy or religions of China that might explain any of these differences? 2. What might these differences suggest for business relationships?
Buddhism came to China from India, but has been adapted to fit Chinese culture. It focuses on eternal life, so experiences some criticism for not providing attention to the here-and-now. Ideas of filial piety and ancestor worship have been incorporated into Buddhism.
Daoism (or Taoism in the earlier Romanization system) addresses the physical body, with the goal to preserve life on this earth.
View the YouTube videos on guanxi. Answer the following questions in small groups or individually: 1. Do you have any relationships that exhibit the properties of the Chinese concept of guanxi? 2. How do you think policies on nepotism, conflict of interest, and equal employment opportunity would be received in a culture that values guanxi? 3. Have you ever given someone a job or interview (or received a job or interview) because of the recommendation of a friend, family member, or friend-of-a-friend? Do you think this is an acceptable practice? Why or why not?
Compare Cultures
The China Christian Council and the Three-self Patriotic Movement form the state-approved Protestant church. Many house churches exist to circumvent state control.
In its Chongqing plant, the Swiss firm Rieter proclaims "Fight for profits" as one of the company values.
GM in China
China has embraced private ownership of property, including stock in firms with profit motives.
Chinese Economic Systems
Income Inequality
Examine the maps of Income Inequality at one of the following websites:



Answer the following questions in small groups or individually: 1. Is there more or less income inequality in the US as compared to China? 2. What effect might Chinese values and the history of communism have on views the average Chinese citizen would have of having a large disparity between rich and poor?
Examine trends in income inequality over time:

(Be sure to step through the 3-year period.)

(Select Wealth and Health of Nations and click on China, then click “play.”)

Answer the following questions in small groups or individually: 1. What effects do you think changes in income have on attitudes towards income inequality? 2. If the current trend of increasing income and life expectancy does not continue, what will be the attitude towards income inequality?
Worker protection
Visit the site of the Beijing Children’s Legal Aid and Research Center (http://www.chinachild.org/) and the Beijing Legal Aid Working Station for Migrant Workers (http://www.zgnmg.org/). Find articles about child labor and workplace safety (Google translate will translate the text to English.) and answer the following questions in small groups or individually: 1. How often do similar cases occur in the United States? 2. What laws in the United States would be relevant to these situations? 3. What relationship do you see between Chinese values and the way the case was addressed in the legal system?vvv
Some workplaces have slack safety practices - workers smoking near open containers of flammable materials, e.g. - but others have detailed safety procedures which they follow.
China has public interest law groups which advocate for the rights of workers. Beijing Children’s Legal Aid and Research Center finds that violations of child labor laws are rarely reported until the child suffers a severe workplace injury. The Beijing Legal Aid Working Station for Migrant Workers also relies on reporting by wronged workers. While companies may be paying off workers or their families, the success of litigation draws more workers willing to file complaints.
Chinese Employment Law
Corruption perception
Look at Transparency International’s Corruption Perception Index (http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results). Examine the data used to create this index and answer the following questions in small groups or individually: 1. Are the measures biased against or in favor or any religion or philosophy of ethics you have studied? If so, how? 2. Are the measures biased against or in favor of countries embracing capitalism or communism? If so, how? 3. What possible reasons are there for China’s rating? Hong Kong’s?
Explore Chinese labor and employment law websites. Identify laws and policies designed to address discrimination in employment. Conduct research to identify what minority groups exist in China. Answer the following questions in groups or individually: 1. How are Chinese discrimination laws similar to and different from U.S. discrimination laws? 2. How are minority groups in China identified and treated?
Employment Discrimination
Minimum Wage
Read about Kentucky Fried Chicken’s violation of the minimum wage laws (http://iso.china-labour.org.hk/en/node/38856 and answer the following questions in groups or individually: 1. Why might U.S. managers fail to follow the existing minimum wage laws in China? 2. Why might Chinese managers fail to follow the existing minimum wage laws in China?
Read some of the sayings of Chairman Mao. Answer the following questions individually or in groups: 1. To what extent is Communism a value system? 2. How well does China adhere to the values of Communism? 3. What values of capitalism has China adopted?
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