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)