Nes China Case Study
Nes China Case Study
1. Chen was told by her former colleague, Zhu, to give RMB 3000 (US $360) to each of the two government officials. What would be the consequences of doing so for the involved parties and other relevant stakeholders?
The core issue around this case is the major differences between Chinese and western ethical values. It is common, in most developed Western countries, for businesses and government officials to closely follow business rules and regulations that are straightforward and by the books. There is absolutely no room for working around any of them, without risking your reputation and ultimately your career. It is common for Western cultures to implement internal audits to make sure no violations to the rules exists. Regarding business practices, dinner parties are common, but expensive gift giving is seldom used in a business setting.
On the other hand, in China, building strong relationships and trust is a huge factor involved in their business practices. It is preferable for Companies and government agencies to conduct business with groups their associated with, rather than outsiders. For the Chinese, giving gifts shows a sign of reciprocity between the two parties. It will be almost impossible for NES to built a strong relationship with the Chinese officials without understanding the basics of how they do business.
As Chen, what would you suggest to Mueller? Why?
As Chen, I would suggest creating a separate business code of conduct especially for the China region. Chen should suggest that NES should not continue to make business decisions based on Western values because China has their own set of unique business norms and cultural values. If they want to be successful in their business dealings in China they need to implement a new plan. They can start by informing the Representative office, especially Steinmann and Dr. Perrin, of the importance of gift giving in the Chinese culture. As stated in the China State Council Article 382 and 383 that gifts given in the amount less than RMB200 do not need to be handed over to the gift administrative department. Also, as long as those gifts are not given for securing illegitimate benefits they are not considered illegal.
Therefore, it would be in the best interest of NES representative office to implement a new established code of conducts for the Beijing office. This will help eliminate uncertainty of the rules and regulations that apply in NES dealings with China and create a business culture that is more diverse and applicable to China’s business culture.