INDIA-CHINA : BUSINESS ETHICS ENVIRONMENT
Team : Jenkin JS (52)/ Kritika Chaturvedi (62) / Manivel (69) / Nishanth G (79) / Poonam Chauhan (87) / Raghav Preethi N (95)
India - ChinaINDIA
2nd most populous country in the world, with over 1.21 billion people (2011 census),
Projected to be the world's most populous country by 2025, surpassing China, its population reaching 1.6 billion by 2050.Its population growth rate is 1.41%, ranking 93rd in the world.
50% of its population below the age of 25 and more than 65% below the age of 35. By 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan.
Indian life revolves mostly around agriculture and allied activities in small villages
CHINA China's population is over 1.3
billion. China's population growth rate is only 0.47%, ranking 156th in the world.
Urbanization Urban population: 47% of total
population (2010) Rate of urbanization: 2.3%
annual rate of change (2010-15 est)
Age structure 0-14 years: 17.6% 15-64 years: 73.6% 65 years and over: 8.9%
Indian Ethics and Value System
Business Ethics In India
Co-operation: Indian philosophy instead of killer instinct and tough competition focuses more towards co-operation.
Family oriented, more emotional: The value system of India is oriented towards family. Even grown ups while taking any decision consult with seniors. Indian ethos emphasizes to respect the elders specially the parent and teachers
Respect to others: It focuses to show respect to others. Others means not only the fellow human beings but objects as well.
Self management: Indian Ethos believe that self management is the essence of management. Before managing others effectively, a person should know how to manage himself. Then only he can manage others effectively.
Harming environment consider as dishonest Indian managers are more intuitive while decision making. Indian managers rely more on rational attributes of specific
cases.(e.g. assessment of who involved in the particular situation)
People are loyal to their organization- ethical behavior. Indian business culture puts a premium on favors, friendship
andclanship.
In terms of Govt. rules and regulation- the govt. act as gatekeeperrather than an enabler- with slow approval, a complex bureaucracy and corruption.
In order to get things done money play and influence within highlevels of management play a pivotal role.
Strong belief in CSR in India. Business environment is highly bureaucratic and participatory.
Important ethical principles that a business should follow Do not deceive or cheat the customers by selling
substandard or defective products by under measurement or any other means.
Do not report to hoarding, black marketing or profiteering. Do not destroy or distort competition. Treasure sincerity and accuracy in advertising, labelling and
packaging. Do not furnish the image of competitors by unfair practices. Make accurate business records so that transparency to the
share holders can be achieved. Pay taxes and discharge other obligation promptly. Do not form castle agreements, even informal, to control
production, prices etc to the common detriment.
Chinese Ethics Practices and Value System
Value System Confucian philosophy Dominated the Chinese way of life for 2,000
years. Value
The importance of the family The hierarchical structure of social life The cultivation of morality and self-restraint The emphasis on hard work and achievement
Emphasis on being truthful, generous, sincere, kind hearted and selfless by nature.
Collectivism
Values
Thought
CountsJen & Yi Guanxi
Business Ethics China Social Transformations
Transition to socialism Culture Revolution 30 years of economic development Exposure to Western Business Practices
Confucian influence on Business ethics Companies based on Benevolence, Harmony,
Learning, Loyalty, righteousness, humility Culture- Paternalism and Collectivism
Confucian principle of trustworthiness Less reliance on formal contacts for Business
partners- prefer informal agreements and Trustworthiness
Trustworthiness Blind adherence to rules Trustworthiness Fine to break important
Business meeting to help people in need Judge action by looking at context and relevant
factors
Guanxi – enhances social harmony, maintains correct relationships, reciprocal obligation
Violating rules of Guanxi Lose of social reputation Mianzi – image a person strives to maintain before
others Losing Mianzi Humiliation Within In groups of Guanxi
Acquire resources Personnel information Favoritism Personal benefits Discriminates against members of out-groups
Guanxi takes precedence- skews manager’s decisions Reciprocation Or corruption Unethical conducts within Guanxi
Decisions based on situational and particularistic criteria
Ethical behavior depends on informal agreements, informal networks, reciprocal exchanges of favors.
Rarely formal code of ethics in business Business ethics emphasized on personal
assessment of trustworthiness and leader’s benevolence
Impact Of Religion On Business Ethics&
Comparison of Religion between India - China
Impact Of Religion On Business Ethics Centuries before there was not many philosophical
approach to business, religions had already offered norms of conduct and values to business people.
Many believers want to know how they can translate their religion's vision into the business environment.
Moreover, religious ethics provides a set of consistent and reasonable statements regarding business.
It's a different approach that provides new horizons for thinking.
A deeper knowledge of religious business ethics might bring about a better understanding of people worldwide.
Impact Of Religion on Business in IndiaHinduism Islam Christianity
• 3,000 and 1,500
B.C
• Hinduism has a
positive attitude
towards business
and creating
wealth.
• wealth is not the
supreme goal.
• Ethics (dharma)
and salvation
(moksha) are more
important.
• A.D. 570.
• Islam business
scholars agree to a
central concept of
the religion is
tawhid, or unity
with God.
• Business should be
run according to
the laws of nature
dictated by God.
• Is Against greed
and excessive
anxiety toward
future needs.
• Human dignity is
cruitial.
• Stresses on strict
observance of
contracts,
observing
regulations and
working for the
sake of the
common good.
Impact Of Religion on Business in ChinaBuddhism Confucianism Taoism
• Began In 560 B.C.
• Buddhists Search
For "Right
Livelihood“.
• Against companies
that do not care for
the environment
• Solutions are found
under liberalism in
business
operations
• Emphasizes on
both ends in
business issues.
• 5th and 6th
century
• Profit is acceptable
as long as it is
acquired with
righteousness
• Quality services
and politeness to
customers are
priorities.
• Believes honesty
and
trustworthiness
could lead to a
harmonious and
benign society
• “Path" or "the
way.“
• In business aim
should not be
personal success or
gain, but the
common good.
• Follow their Passion
• Seeks to promote
the inner peace.
• Encourages
companies to
nourish people.
Indo-China Ethics Comparison
Two Core Issues Convergence of business ethics practice
in India-China? Difference between ethical practices?
India – China : A Hofstede Framework comparison (2011)
PDI IDV MAS UAI LTO0
20
40
60
80
100
120
140
IndiaChina
Transparency International
Corruption Perception Index 2011
Bribe Payers Index 2011
Scoring done 0-10 [0-most corrupt; 10-incorrupt] [183 countries]
Anything below 5 - bad India – Rank : 95th
Score : 3.1 (2011); 3.3 (2010)
China – Rank : 75th
Score : 3.6 (2011)
India most improved on the index
Score (0-10)2011 2008 Chang
e
India 7.5 6.8 0.7
China 6.5 6.5 0.0
Ranking2011 2008 Chang
e
India 18 19 1
China 21 21 0
Convergence Points Natural equality and Social Inequality
Income inequality Masculinity versus Feminity
Both countries increasingly becoming aware of gender egalitarianism with growing clout of women in business, family, and the society at large
Uncertainty Avoidance
Divergence Points Individualism versus Collectivism
China’s collectivism stems from its communist roots
Growing westernization of Indian society leading to increased individualism.
Long term versus short term orientation Growing trend in both countries but less in India
than China Humane Oriented (the GLOBE project)
Issues in Business Ethics
Corporate Governance
Source:“A survey by CLSA Emerging Markets and the Asian Corporate Governance Association”
Corporate Social Responsibility
Level India ChinaManagement responsibility
Targeted towards every individual of the society.
Labor laws issues
Market responsibility Advertising products appropriate to cultural values.
Made in china products.
Social responsibility Putting money in respect to the mission.
Usually philanthropic efforts fails.
Environmental responsibility
Going green and complying with the environmental policies
Not much of a importance is given. Much anticipated “Charity law” is due to be
passed on 2012 in China.
Corruption Both the countries are in the bottom list
created by transparency international for corruption indices, But
China- a constructive corruption. India- a non constructive corruption.
Issues and Ethical dilemmas
India China
You cannot grow unless you compromise
Reconciling competition between Chinese firms and Chinese collective culture-”Bull business ,Kill Each other”
Set of designed values- think outside the box
Seeking Foreign Capital and labor protection.
Rampant corruption and unfair means are correct
Communism Vs utilitarianism
Cases in India
Tata SingurIssues with the project Controversies over land acquisition Multiple allegations of Government hypocrisy Capitalist greed Manipulations of farmers by political groups
QuestionWhy didn’t Ratan Tata react until the farmers threatened the security of employees who would be working at Singur for the Nano project?
Satyam Scam Issue of Corporate Governance Was not detected until Ramalinga Raju
confessed Diverting funds and fudging the accounts Government steps in and takes charge No government policy change to avoid such
things in the future
Cases in China
Google’s Pullout Google’s refusal to come under Chinese
Censorship Moving the servers to Hong Kong (March
2010) China blocks search results of Google Google’s threat to Chinese Sovereignty?
Yahoo’s Betrayal? Yahoo sold its soul to Beijing In 2002, Yahoo agreed to government-
mandated restrictions on taboo topics like democracy and Taiwanese independence
Chinese security forces used the help of Yahoo to imprison Shi Tao, a journalist
In Summary
CHINA INDIAActive government involvement Passive government actions
Regulators and governments work together
Regulators are independent but not efficient
Conclusion
“In God we trust, all others bring data”- Edward Deming
Dynamic markets are changing the rules of the game rapidly in both countries which gives rise to two views: Corporates cannot afford to be Unethical – lose of
business, customers, goodwill, etc. Corporates compelled to be unethical – “If you
can’t beat them, join them” Globalization causing global convergence but
roots from which ethics stem are not all lost. Balancing traditional value systems with
modern management styles is a challenge that the emerging economies face.
Thank you
Team : Jenkin JS (52) Kritika Chaturvedi (62) Manivel (69) Nishanth G (79) Poonam Chauhan (87) Raghav Preethi N (95)