![]() Google, for example, pulled out of the country in 2010 over censorship concerns. And investor holdings of Chinese equities and bonds are steadily rising.įor the moment, most companies navigate the challenges of operating in China on an ad-hoc, per issue basis. American businesses have invested over $275 billion in the country since 1990. China is America’s largest supplier of imports. This has created an unprecedented dilemma. As China has rolled back freedoms in Hong Kong and rolled out new repressive policies across the mainland, a growing list of products and services are becoming compromised. Companies can, for example, unintentionally become complicit in the government’s cultural genocide against Uyghur Muslims in Xinjiang, where there’s well-documented mass detention, forced labor, separation of children from parents, forced sterilization, and destruction of mosques. There’s a high risk of inadvertently being involved in human rights violations or efforts to build up the Chinese military, especially through third parties. The opacity of the party-state and businesses, the growing influence of the party over business, and the difficulty of monitoring supply chains all make it hard for businesses to know where they stand. Moreover, China’s size, state capacity, and specific policies create unique ethical risks. interests in particular.Īs a result, Xi Jinping’s China is different than the country companies dealt with in the 1990s and 2000s. And second, instead of becoming a responsible member of the liberal international order, China is increasingly seen as a threat to it - and to U.S. ![]() First, instead of becoming more democratic as the country grew richer, the Chinese party-state has grown increasingly repressive. There are two factors that are driving this changing context. But in recent years the situation has changed dramatically, and companies such as Google, Disney, and the NBA have to steer through a much more perilous, and in some cases impassable, ethical landscape. While firms were largely aware of potential business risks, like intellectual property theft and the need to navigate corruption, executives have been less concerned about risks to their firms’ ethics and reputation. To find the right strategy, executives should follow these five principles: 1) increase your due diligence on any initiative involving China, 2) proactively consider the alternatives to doing business in China, 3) avoid transferring technology that might have military or surveillance applications, or investing in ways that will make sensitive tech more available, 4) be as transparent as possible about your operations and investments, and your ethical safeguards, 5) give employees with conscientious objections to doing business with China a way to voice these concerns and opt-out of specific projects.įor decades, companies have poured into China to take advantage of the country’s manufacturing prowess and to serve its enormous market. Firms have dealt with this situation through four common strategies: withdraw, continue and contain, operate with opposition, and support China’s standards. China’s size, state capacity, and specific policies create unique ethical risks companies can inadvertently become involved in human rights violations or military projects. Xi Jinping’s China is different than the country companies dealt with in the 1990s and 2000s.
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