5. Business Ethics in China_2005
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Transcript of 5. Business Ethics in China_2005
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Business Ethics in China
Georges Enderle
Published in: Werhane, P. H., Feeman, R. E. (eds.) 2005. The Blackwell Encyclopedia of Management.
Volume II: Business Ethics. Second edition. Oxford: Blackwell, 76-80.
Business ethics faces a vast array of daunting challenges in China. Many observers of Chinas
development, particularly from outside the country, see an urgent need to address these ethicalchallenges while others believe that the time for business ethics has not yet come. Because of the
size of the country, with its 1.3 billion people, and the pace of change, developing business ethics
in China is a highly complex task. Thus the approach must be comprehensive as well as differen-
tiated (see Enderle 2003). To focus solely on what individuals and organizations can and shoulddo (which is a tendency of business ethics in the USA) does not suffice; and to deal only with
questions of the economic system or economic order (as many Europeans tend to understand
business ethics) is not sufficient either. Instead, business ethics in China has to come to gripswith all three levels, the individual, organizational and systemic. It is best expressed in Chinese
by the now commonly used term jingj lnli, that is, ethics in the economic sphere of life, in-
cluding and going beyond business ethics as corporate ethics or management ethics.
Although it appears premature to assess the emergence of business ethics in China in the last 10-
plus years, four important features already have become unmistakably clear.
(1) Contrary to a belief widely held in western countries, there is no ethical vacuum in China.
Confucian ethics, with its 2500 year history, socialist ethics promulgated since 1949 and many
western and other influences have combined to create a kind of ethical awareness that sharply
contrasts with a value-free view of business. This does not mean that China has a unified andconsistent ethical understanding. Indeed, one can observe not only moral pluralism but also
much moral confusion (which, by the way, also characterizes other countries in varying degrees).To put it simply, the question is less whether or not ethics matters and more what kind of ethics
should be applied.
(2) Given the extremely complex and dynamic transformation process being experienced by
China, there is an urgent need to build up formal institutions that are effective, stable, and fair. Of course, institution building is a difficult and lengthy process and cannot succeed without nu-
merous trials and errors. Yet, such a buildup is essential from the ethical perspective because
institutions and the lack thereof shape, for better or worse, the behavior of individuals and or-ganizations. Those who conceive ethics in only personal terms have difficulty recognizing the
crucial importance of institutional ethics. Well understood, it does not diminish in any way the
indispensability of personal ethics.
(3) With the national economic reform the world of enterprises in China has changed dramati-
cally. Not only have business organizations multiplied and taken on a wide variety of forms.
More importantly, they have gradually gained more autonomy and bigger spaces of freedom.
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Accordingly, the presuppositions for corporate ethics have been established. There is no doubt
that, for the development of business ethics in China, the roles and responsibilities of business
organizations, be they Chinese, joint-ventures or foreign companies, are becoming increasingly
important.If, as stated above, a kind of ethical awareness exists in China today, it will be inter-
esting to observe how this impacts the shape of business organizations.
(4) Talking about business ethics in China evokes many questions in the West as to whether or
not the cultural differences between the two prevent a genuine mutual understanding. Such ques-
tioning is part of a necessary and healthy process to neutralize naive assumptions about Chineseattitudes and behavior and to identify real cultural differences. At the same time, to take all cul-
tural differences as insurmountable seems equally naive and unacceptable. Continuous and open
communication can certainly reduce the cultural obstacles significantly, and cultural diversitydoes not necessarily mean ethical relativism. The development of business ethics in China needs
to address cultural differences and to find a common ethical groundsupported by a majority of
Chinese and in accord with international standards.
These four essential features form the backdrop against which the following challenges gain aclearer profile.
Sustainable human development
The overall challenge for China (as for other developing and developed countries as well) isstriving for sustainable human development. This means, in a nutshell, a process of enlarging
peoples choices, as proposed by the United Nations Development Programme in its Human
Development Reportssince 1990 (see, particularly, the report on China, UNDP 1999). It involvesthe long-term perspective of sustainability, defined by the World Commission on Development
and Environment in 1987 as follows: to meet the needs of the present without compromising theability of the future generations to meet their own needs. China faces enormous environmental
challenges, to a considerable extent because of rampant economic growth and despite fairly ad-
vanced environmental laws and regulations. Among the most important problems, one should
mention the widespread reliance on polluting coal energy, the effects of acid rain, the pollutionof Chinese cities, and the waste of energy sources in the building and transportation sectors.
Moreover, the concept of human development has been enriched by Amartya Sen with five typesof real freedoms that people enjoy, namely political freedoms, economic facilities, social op-
portunities, transparency guarantees, and protective security (Sen 1999). Bench marked against
these freedoms, China shows a mixed record. In terms of economic facilities and social opportu-nities (providing basic health care and education to all citizens), China has been widely success-
ful. With regard to political freedoms and transparency guarantees, the record indicates that the
country has much catching up to do. This matters not only because these freedoms are importantin themselves, but also because they are instrumental to achieving other types of freedom as
well. Protective security also presents a big challenge for China, as the country steadily moves
from a centrally planned economy (guaranteeing an iron bowl to everybody) to a market econ-
omy that needs to be complemented with a social security system. Regarding economic facilitiesin the future, China has to pursue a policy of sustainable economic growth with equity. It would
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Confucianism, an ethics of virtue (see Cao 2001), guided by the ethical ideal of a good humanlife as a whole (dao), stresses character formation or personal cultivation of virtues (de); first the
basic, interdependent virtues of ren(love and care for ones fellows), li(a set of rules of proper
conduct), andyi(reasoned judgment concerning the right thing to do); then the dependent virtues
of filiality, respectfulness, trustworthiness, and others. It emphasizes the Golden Rule (What Idont want others to do to me, I do not want to do to others. Confucius, Analects 5:12) Like
other traditional Chinese approaches to ethics, Confucian ethics is of communitarian nature. It
aims for a well-ordered society based on good government that is responsive to the needs of thepeople, to issues of wise management of natural resources, and to just distribution of burdens and
benefits. Contemporary challenges are to come to grips with gender equality, to apply of this
virtue ethics to economic and political institutions, and to fully recognize the importance of thelaw.
Characteristic of socialist ethics is a strong concern for the interests of society including social
stability that has been urged by the Chinese government over the last 20-plus years. Compared
to Confucianism, an important socialist objective has been the advancement of the role ofwomen and gender equality. In order to clarify and promote socialist ethics, the Central Commit-
tee of the Communist Party of China issued various key documents on the reform of the eco-nomic system (October 1984, November 1993, October 2003) and on ethical and spiritual civili-
zation (October 1996, November 2001). As a case in point, the resolutions of October 1996 vig-
orously and directly emphasize the crucial role of ethical and cultural progress. But they do notspeak of individual rights but rather of the personal legitimate interests of the citizens which
should be fully respected. Since then, it is noteworthy that the discussion about individual rights
has intensified in academic and business circles, and there are Chinese companies (though notmany) that are committed to respect and promote the human rights of their employees.
The third set of ethical resources available to the Chinese are derived from other cultures, and an
overview, limited to western resources, will be even sketchier than the previous discussion of
Chinas internal resources, since it cannot account for the ethical thoughts offered by Japan, In-
dia, and other countries. A major contribution of the West is certainly the notion of basic indi-vidual freedoms and rights, which embody an essential part of human dignity and should be in-
corporated in and respected by any social institution. Another important value is transparency
based on a modern system of relatively autonomous social institutions. It is an indispensablecondition for building and maintaining the confidence needed for the well-functioning of any
complex society. In addition, there is a basic assumption, though often ignored, that ethical re-
sponsibility presupposes freedom, and the bigger the space of freedom of the moral actor, thegreater is his or her ethical responsibility. If the market economy is not just a mechanism, but a
place in which human freedom is at stake, ethics, epitomized in responsibility, must play a cen-
tral role in the market economy. Similar to other resources, caveats are in order. The emphasis onindividual rights does not necessarily imply an individualistic philosophy, but can be supported
by a communitarian view as well. And the value-free view of business and economics, widely
advocated in the West, avoids addressing tough questions about a common ethical ground and
appears unable to take up this crucial challenge for business ethics in China.
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More specific challenges
As China is becoming the manufacturing powerhouse of the world, not only the quality of the
goods but also the quality of the working conditions is increasingly coming under scrutiny (see,
e.g., Santoro 2000) and the treatment of employees including recruitment, training, promotion,
and layoffs needs serious ethical examination. The reform of the banking and financial sector is atop priority. It can learn from recent developments in the USA and should promote, as an impor-
tant objective, professional ethics in accountancy and financial services. As they gain more
autonomy and freedom, the companies in China (including state-owned enterprises) must bearmore moral responsibility. Increasingly exposed to public criticism, they have to establish and
live up to high standards of corporate governance and improve their cultures in ethical terms as
well. Multiple experiences with business leaders, ranging from the scandalous to the exemplary,have made the question of ethical leadership a hotly debated issue. On top of these and other
challenges, China faces globalization. It has to speed up and strengthen its reform to adjust itself
to international technical, legal, and ethical standards. At the same time, as a major economic
power, it is expected to play a constructive and responsible part in shaping globalization. (For an
early report on business ethics in China, see Lu 1997; for a recent discussion on major issues, seeLu and Enderle 2006.)
References
Cua, A. S. 2001. Confucian Ethics. In Becker, L. C., Becker, C. B. (eds.). 2001. Encyclopedia of
Ethics.Second edition. New York: Routledge, 287-295.
Enderle, G. 2003. Business Ethics. In Bunnin, N., Tsui-James, E. P. 2003. The Blackwell Com-
panion to Philosophy. Second edition. Oxford: Blackwell Publishers, 531-551.
Lu Xiaohe. 1997. Business Ethics in China.Journal of Business Ethics, October, 1509-1518.
Lu Xiaohe, Enderle, G. 2006. Developing Business Ethics in China.New York: Palgrave Mac-millan. [In Chinese: Shanghai Academy of Social Sciences Press, Shanghai 2003.]
Pastor, A., Videla, P., He, W. China and the WTO: How Much Truth Is There in the Threat The-ory? Forthcoming.
Santoro, M. 2000. Profits and Principles. Global Capitalism and Human Rights in China.NewYork: Cornell University Press.
Sen, A. 1999.Development as Freedom.New York: Knopf.
UNDP. 1999. The China Human Development Report.United Nations Development Programme,
China. New York: Oxford University Press.