Baseball Players took Steroids. So what?
Great article about Baseball and business ethics at the site Knowledge@Warton . The point there being that gaffes, mistakes or even all out lies are not damaging to a companies value until those (un)ethical events strike directly at the core of their consumers’ mission/vision/values. I would add: until those issues cost consumers money.So what does baseball’s current steroid problem have to do with China? Maybe nothing directly (unless we find out later that the roids came from here), but the parallels are there for sure. Baseball is scoring record high attendance numbers despite the steroids scandals of the last few years. Similarly, no matter what the perception of human rights, disease control, freedom of information, or even illegal work-place activities, FDI is at record highs in China right now. Like baseball fans who aren’t personally affected/affronted by the steroids issues and so still going to games in record numbers, foreign companies will continue to work in China until their bottom line is seriously and directly impacted.One particularly applicable example from the article tells a story about a company in New York that could just as easily be told about any factory in China. From the article:
“The Soho, New York-based company Yellow Rat Bastard is another example, says Schweitzer. The trendy clothier faced an employment suit from the state in which it was accused of violations such as unpaid overtime, below-minimum-wage salaries and improper employee firing. In early January this year, the company settled the suit by agreeing to pay $1.4 million in fines and back wages. But because their closes still look cool, they probably won’t take a hit from customers, says Schweitzer.”
Exactly. Because things are still cheap, quality is continually rising and no one is really getting “busted,” business as usual will continue in China. (If you missed it, the implication here is that the situations in most factories in most third world countries are pretty bad.)Where does this lead? To an entire society that is “unethical” in both practice and perception. Speaking about Moscow the article states:
“Economies where kick-backs and bribes are the norm or considered part of “relationship-building,” represent s similar sort of ethical dysfunction. Schweitzer relates how a businessman in Moscow told him recently: “‘I spend as much of bribes as I do on taxes. I have to. Otherwise, I can’t compete.’ Once that behavior is the norm, it’s very hard to break out: It’s a corrosive atmosphere.”
Amen. This is the same environment that exists in China and, as I mentioned before, shows that China is not as unique as many think. But more important than that is the reality that, like in baseball, the desire to compete, both from inside China and from foreign companies investing here, will drive people to do anything they can get away with to get an edge. And while this desire to get ahead is not any different than the US or anywhere else, the frequency at which it is pushed to unethical levels and the degree to which it is (not) controlled is much greater here in China.So what is the answer to China’s (perceived, real or ignored) problems? It’s certainly not a boycott of China (or the Olympics) as some have called for. And a call for higher standard is meaningless without enforcement. The answer is, the same thing that is required for any project any where: Investment into the process, regular testing, on-site confirmation and consistent detailed reporting. This means holding individuals and companies responsible to clear and consistent guidelines.