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Issues In Doing Business In China

2264 words - 10 pages

Business Culture:The business culture existing in the host country plays a key role in doing business successfully across borders. The Chinese culture of business practice, 'guanxi', based on reciprocal exchanges of favors (Christopher, 2007), has contributed immensely towards the country's economic growth over the years but also had a share of doubts of its practice being ethical . However, because of widespread importance and practice of guanxi, Australian, North American and European firms operating in China often face a tough task in adapting to the norms of Chinese business culture at the same time continuing to honor company policy (Orfield, 2008).It's not enough to have a good ...view middle of the document...

However, from an international business perspective, one of the biggest issues or challenges faced by these companies is defining and enforcing appropriate ethical standards and operating in a socially responsible manner (Christopher, 2007).Violation of labor rights has been a widespread phenomenon mostly evident in rapidly growing countries offering low cost production and low cost labor for MNC's. Issues regarding child labor, forced labor, health and safe working conditions of the workers, wages, control over bodily functions and physical mistreatment, violence by police and security guards etc still demand a stringent action by the law and government (Chan, 1997, Shah, 1998). Big American giants for instance such as, Coca-Cola has been accused for working against environment and health of consumers and violation of human rights; Nike being alleged with real evidence of child labor abuses, unsafe working conditions, violations of local regulations (Christopher, 2007). Mc Donald's, Kentucky Fried Chicken (KFC), General Countrywide (GE), Wal-Mart being the recent biggies accused of violating labor rights in China (Qiang, 2008, Levinson, 2008). Also, there have been safety and quality issues about Chinese products. Cheap substitutes for raw materials are a common practice by suppliers in China in order to cut down cost. As a matter of fact, Chinese suppliers or dealers do everything possible to cut down their costs. The main underlying reason for this is lack of compliance and enforcement of laws by the local government. As a result, companies are trying urgently to figure out how to do business here, without risking their reputation, consumer trust, or customers' lives.Mattel's business relationship with China goes way back before it was cool. Bearing the knowledge of protecting its brand and trademark, Mattel invested, adapted and learned to make good business by building large factories and owning them.Despite all the hurdles, Mattel shows how successfully a mammoth toy making firm can deal with cross-cultural ethical issues of offshore manufacturing and efficiently fulfills its responsibility towards its economic agents and stakeholders. The case also throws light on the firm's ethical organization culture and practices which are discussed later. A land of opportunities where all big MNCs faced problems setting ethical standards and behavior, Mattel just seems to have found some answers to it.MANAGING CROSS-CULTURAL ETHICAL BEHAVIOR AND TREATMENT TOWARDS ITS EMPLOYEES:The role and fundamental reason for the existence of business has been to create value (usually in terms of profits) by making use of the available resources and engaging into activities that increase profits or reduce expenses for an individual or for the business in whole (Christopher, 2007). Multi-national Corporations (MNCs) have been subjected to intense public criticism because, in seeking new markets, they have ignored the oppressive working conditions and abuse of...


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