Business Ethics in China

by Miriam Schulman

If you want to talk about business ethics in China, don't set yourself up as the Western expert
imposing foreign models on the Chinese. That was the message of Stephan Rothlin, general
secretary of the Center for International Business Ethics (CIBE) in Beijing in remarks to the
Business and Organizational Ethics Partnership of the Markkula Center for Applied Ethics
March 23.

The Chinese, Rothlin said, are very open to considering ethical issues: "They want to be global
players, and they realize that in order to become a real global power, they have to eliminate
corrupt practices." Many students at the Beijing University of International Business and
Economics, where CIBE is based, are pursuing an MBA because they are frustrated by the
corruption they witness, he noted.

But the Chinese do not want paternalism from the West. Instead, Rothlin said, they want
acknowledgement that "they can offer something, that they can actually become a driver in the
field of ethics." Because the Chinese are emerging as an economic powerhouse, any ethical rules
they integrate into their businesses practices will have an impact on the whole world.

Often, the Chinese see hypocrisy in criticism of their country by companies that tout their own
ethical codes but then close their eyes to what their own Chinese subcontractors are doing,
Rothlin said. To counteract this skepticism toward Western critiques, he counseled an approach
that acknowledges unethical conduct in other cultures as well. Swiss by birth, Rothlin teaches
about the failure of Swissair in 2001 "to avoid suggesting that only China has problems."

He gives the same advice to those who want to work with Chinese companies or bring their
businesses to China. "The strategy should be to limit the output of Western experts to a
minimum," he said. Setting up a code of ethics, for example, should be primarily the job of the
Chinese. "It does not mean anything if you translate your existing code from English and
distribute it," he cautioned. "The Chinese will say, 'Yes, thank you,' and then throw the code
away." Of course, that indifferent kind of implementation would not work anywhere in the
world, even, as one member of the partnership pointed out, "in San Diego."

Rather than imposing a code, Rothlin argued, "let the Chinese develop their own codes. Then the
managers can identify themselves with these codes."

Rothlin emphasizes China's own philosophical traditions when he talks about business ethics
with the Chinese. He gave this example of how he discusses the problem of corruption, which
often includes favoring family and cronies. Some students of China have argued that the Chinese
are encouraged in such favoritism by their traditions. They point to Confucius' focus on
responsibility to family, citing his admonition that a person who sees his father steal a sheep
should not turn his father over to the authorities.
But Rothlin points out counter-arguments within the Chinese tradition itself. Mozi, a philosopher
of the 5th century BCE, tried to replace the Confucian focus on the clan with a more universal
caring. He saw favoring the family as the root of corruption and instead advocated laws that
protect everyone equally.

Using his insights into Chinese philosophy, Rothlin has developed a textbook in Chinese,
Becoming a Top-Notch-Player: 18 Rules of International Business Ethics (Beijing: Renmin
University Press, 2004). The book draws on Chinese experiences for case studies and examples.
His center has also supported the translation of various classic business ethics texts into Chinese
and the development of rigorous research on business ethics issues at Beijing University of
International Business and Economics.

Rothlin addressed the Business and Organizational Ethics Partnership as part of reciprocal visits
between CIBE and the Markkula Center for Applied Ethics. Markkula Executive Director Kirk
O. Hanson has consulted with CIBE, the first center of its kind in China, and serves as honorary
chair.

Other speakers at the March Partnership meeting included Dan Sweeney from the Center for
Corporate Excellence on "Tone at the Top and Executive Compensation" ; Robert Finocchio,
teaching scholar at SCU and private investor on "Incorporating Ethics into the Organization s
Strategic Plan"; and Frank Daly, Markkula Center Fellow, Eric Pressler, Apple Computer, and
Sam Piazza, Hewlett Packard, on "Rules-Driven and Values-Driven Ethical Approaches: Trade-
offs."

The Business and Organizational Ethics Partnership brings together executives and scholars in a
forum designed to increase the members' knowledge about effectively managing ethics in their
organizations. Founded in 2003, the partnership currently includes 14 business organizations and
10 faculty members who share the goals of honing ethics and compliance policies and practices,
and advancing the state of business ethics knowledge.
18 Rules of International Business Ethics

Rule 1: If you strive to understand the values of different cultures, you will find common points.

Rule 2: if you analyze the facts, you will realize that honesty and reliability benefit you.

Rule 3: if you analyze case studies from different perspectives, you will discover the benefits of
fair play.

Rule 4: Respecting your colleagues is the smartest investment you can make.

Rule 5: To increase productivity, provide safe and healthy working conditions.

Rule 6: To inspire trust, make your performance transparent.

Rule 7: Your loyal dissent can lead your institution in the right direction.
Rule 8: Downsizing your labor force is only beneficial when you respect each stakeholder.

Rule 9: To establish your brand name, act as a fair competitor.

Rule 10: Reduce the gap between the rich and poor by developing a new social security system.

Rule 11: if you act against discrimination, you will increase your productivity and profitability.

Rule 12: If you protect intellectual property, all stakeholders will receive their due share.

Rule 13: Ongoing changes in information technology require new forms of loyalty.

Rule 14: Your public relations strategy will only secure your reputation if it witnesses your drive
for quality and excellence.

Rule 15: Your economic achievements will only stand on firm ground if you diminish
corruption.

Rule 16: Long-term success urgently calls you to constantly care for the environment.

Rule 17: To become a refined player, sharpen your discernment and cultivate good manners.

Rule 18: Care for your business by caring for society.

Miriam Schulman is the communications director of the Markkula Center for Applied Ethics.