Corruption
Some of the key ethical challenges that face companies seeking to implement a
business ethics programme and operate with high ethical standards in China are
discussed below.
In Transparency International’s (TI) Corruption Perception Index 2011, China is ranked 75th out of 185 countries. This has been a consistent score since 2008. Exploring this more deeply, the TI Global Corruption Barometer 2010/2011 found that 46% of the 1,000 Chinese respondents felt that the level of corruption in the Country had increased and just over a third considered the Government’s actions ineffective in combating corruption. When respondents were asked “To what extent do you perceive the following institutions in this country to be affected by corruption?”, business was seen as the most corrupt institution, closely followed by political bodies and public officials.
Whilst bribery is highly prevalent in all sectors in China, it is particularly common in sectors such as construction (driven by rapid economic development and massive urban expansion and the high number of government-funded construction projects), the extractive industry and textile manufacturing (falsification of factory audits is common). Other recent corruption scandals have focused on the NGO sector with NGO officials using donations to afford luxury lifestyles for themselves rather than the donations going to the causes they were intended for.
It can be difficult for foreign-owned companies operating in China to compete against SOEs, or companies in which the State has a stake, on an even basis; common corruption risk areas include dealings with public officials, lack of separation of public officials from management in SOEs, lack of transparency when entering joint ventures with Chinese companies, and requirement to use agents. Facilitation payments, also known as ‘kickbacks’ or ‘backhanders’ are a common form of bribery in China.
Reflecting the Confucian values of loyalty to one’s group, respect for superiors in
a hierarchy, and avoiding loss of ‘face’, the willingness of Chinese to speak up or
‘blow the whistle’ on fellow employees if they become aware of unethical practice
is low. In China, the concept of reporting misconduct, particularly through the
use of anonymous helplines, can be equated with negative historical events such
as the Cultural Revolution and employees often view reporting as an ‘all risk, no
reward’ activity.
In Transparency International’s (TI) Corruption Perception Index 2011, China is ranked 75th out of 185 countries. This has been a consistent score since 2008. Exploring this more deeply, the TI Global Corruption Barometer 2010/2011 found that 46% of the 1,000 Chinese respondents felt that the level of corruption in the Country had increased and just over a third considered the Government’s actions ineffective in combating corruption. When respondents were asked “To what extent do you perceive the following institutions in this country to be affected by corruption?”, business was seen as the most corrupt institution, closely followed by political bodies and public officials.
Whilst bribery is highly prevalent in all sectors in China, it is particularly common in sectors such as construction (driven by rapid economic development and massive urban expansion and the high number of government-funded construction projects), the extractive industry and textile manufacturing (falsification of factory audits is common). Other recent corruption scandals have focused on the NGO sector with NGO officials using donations to afford luxury lifestyles for themselves rather than the donations going to the causes they were intended for.
It can be difficult for foreign-owned companies operating in China to compete against SOEs, or companies in which the State has a stake, on an even basis; common corruption risk areas include dealings with public officials, lack of separation of public officials from management in SOEs, lack of transparency when entering joint ventures with Chinese companies, and requirement to use agents. Facilitation payments, also known as ‘kickbacks’ or ‘backhanders’ are a common form of bribery in China.
Speaking up
Human Rights
Human rights remains a controversial topic in China with a focus on issues such as labour standards in the supply chain, child labour, human trafficking, civil and political rights. High profile scandals have included the spate of suicides in the Foxconn factory in the Shenzhen province over poor factory working conditions in 2010-2012,37 child labour among Nike suppliers in the 1990s and the arrest of human rights activists. Recent research by China Labour Watch found that working conditions were “deplorable" across Apple’s Chinese suppliers; the key issues being excessive working hours, low wages, overcrowded/dirty dormitories, hazardous working conditions, inadequate trade unions, excessive use of agency labour, poor food and routine cheating of overtime pay.38
The Chinese Government has said that human rights are improving. Some major manufacturers doing business in China have raised wages to address problems of increasing employee turnover and even suicides (e.g. Foxconn and Honda).
Human rights remains a controversial topic in China with a focus on issues such as labour standards in the supply chain, child labour, human trafficking, civil and political rights. High profile scandals have included the spate of suicides in the Foxconn factory in the Shenzhen province over poor factory working conditions in 2010-2012,37 child labour among Nike suppliers in the 1990s and the arrest of human rights activists. Recent research by China Labour Watch found that working conditions were “deplorable" across Apple’s Chinese suppliers; the key issues being excessive working hours, low wages, overcrowded/dirty dormitories, hazardous working conditions, inadequate trade unions, excessive use of agency labour, poor food and routine cheating of overtime pay.38
The Chinese Government has said that human rights are improving. Some major manufacturers doing business in China have raised wages to address problems of increasing employee turnover and even suicides (e.g. Foxconn and Honda).
Discrimination
Discrimination against women in the workplace in China is a common problem.
Few women are found in senior positions in Chinese companies, reflecting the
‘masculine’ orientation of the Chinese culture and the reluctance to speak up or
‘cross’ a male colleague. Sexual discrimination at work is not uncommon with
junior female employees often finding it difficult to say ‘no’ to sexual advances
and still maintain their jobs. Few Chinese businesswomen would consider it
suitable to travel alone or with a male colleague; this limits their prospects for
promotion in a country which relies on personal contacts to transact business.
Rural migrants vs. urban citizens and ethnic discrimination are also pertinent issues. Migrant workers are often considered inferior by their urban counterparts and endure poorer working conditions, lower wages, living conditions and longer hours. They often do not benefit from the protection of China's labour laws due to
Rural migrants vs. urban citizens and ethnic discrimination are also pertinent issues. Migrant workers are often considered inferior by their urban counterparts and endure poorer working conditions, lower wages, living conditions and longer hours. They often do not benefit from the protection of China's labour laws due to
Environmental
degradation
China’s cities have grown so quickly that the Country now has more urban
centres than most Western nations. It is predicted that by 2020, China will
have 400 cities with at least 250,000 middle-class inhabitants – and 50 of
those cities will have more than 1 million middle-class inhabitants.44 With such
rapid growth, environmental degradation has become a real problem for China.
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