Business Consultant
The issues raised by operations in China based on ethical principles.
The ethical issues are very much involved when it comes to business. Especially, when it comes to China these issues are very commonly observed. The ethical issues are emerged mostly during the international business operations. The major unethical issue that has been observed is the violation of the rules that have been developed for the business. In most of the cases, it is seen that most of the Chinese business operations do follow their rules in the homeland but not in overseas countries. This is quite unethical, as rules should be the same at every place. The business operations in China are observed to work more attentively in their own country. But in other countries many aspects are ignored by the businesses. The aspects that are facing unethical behavior may include concentration over working conditions, working safety and product safety. (Ada, 2007)
The Chinese businesses also do face the problem of labor rights violation. This unethical practice is being observed widely in many Chinese business operations. Such businesses do not even consider the labor laws that have been defined. This unethical practice makes the labor to feel insecure. No protection is being provided to the labor in most of the cases. Surveys have proved that almost half of the labor of Chinese business operations is not contented with the working conditions. The rights of the labor are not being protected and it gives rise to the unethical activities. For the success of any business operation, it is necessary to satisfy the labor by respecting their rights. (Ada, 2007)
During the time period from late 1980s to early 1990s, many Chinese business operations have been observed for violating the human rights as well. Different kinds of human rights violations were observed like torture, beating, captivity and implementation of political dissidents. Many human rights international organizations indicated these activities in the Chinese business operations. Although these activities were observed to the large extent but still record levels of foreign direct investments were being made in China by the countries like Japan, United States and Germany. Torturing the labor and staff is a very unethical practice. The existence of this practice clearly defined the conditions of working in China business operations at that time. The rights of the workers in Chinese business operations are totally ignored in many cases, which is quite unethical. This issue is needed to be addressed and resolved as it violates the ethics of the business and the workers would not feel satisfied in working. (Ada, 2007)
In Chinese manufacturing business operations, corruption of local government has also been noticed. The manufacturing facilities are being managed by the government bodies by enforcing the regulations and taxes. A large level of corruption is involved in the Chinese foreign business operations. The local government corruption is also a major ethical issue to be discussed and avoided. The involvement of under table transaction has also seen largely in the Chinese foreign business operations. Enticements and transactions are being made under the table in the form of expensive gifts and money and so on. This activity is not only unethical but is also illegal as well. This unethical activity has also ruined the working atmosphere of the Chinese business operations. This unethical activity has also affected the quality of the production. (Chen, 2008)
The Chinese business operations and managements do not offer their employees with large incentives. This act is equal to discouraging the employees which is again unethical. Encouragement is very necessary for every person in order to improve his working performances. This encouragement is being provided in the shape of bonuses and incentives. If this encouragement is not being provided to the employees then the motivation for working will be reduced. It is ethically a necessary act to appreciate the efforts of the workers. The absence of this appreciation also disturbs the working environment. The Chinese labor in the business operations is really not satisfied with the working conditions and the situations. The Chinese businesses perform this unethical act as they want to save money from the labor costs and apply it over the improvement of business efficiency. But it has been seen that even this strategy does not work. It just results in proving the Chinese business conditions as unethical. (Chen, 2008)
The above are the major ethical issues that are observed in the Chinese business operations. We have tried to develop our course of action in such a way so as to reduce these ethical problems. It is very necessary to pay attention over these matters in order to improve the working conditions of the Chinese manufacturing business.
Available course of actions to the company.
Chinas Trade Strategy
Before establishing a business in China, business organizations must need to study and analyze very deeply the changes that are happening in China. It is very essential, as business and market conditions are changing rapidly. After closely examining the ongoing changes, the companies then develop a rational visualization of the direction towards which the countrys market conditions are going. At one side we have the quickly changing demographic trends, increasing costumer purchasing capability and advancement and development in technology which can enhance the rate of demand for goods and services. On the other hand we have variables like policy decisions and altering regulatory, financial and legal infrastructures which can influence the existing tactics for investment direction, framing a cost structure and market distribution. The business organizations that properly and completely analyze these changes and market factors and recognizing the resulting development differences will surely gain most of the profit from their business activities in China. (Doing Business in China, 2004)
Chinas Operational Strategy
There is no set trend that can be followed when any operational strategy is being developed for any business. Every business requires a total different strategy and approach. An operational strategy has to be developed depending on the type of operation that a company is going to perform. It is necessary to target every segment and category while developing an operational strategy. In case of manufacturing industry in China the operational strategy should be developed by keeping the following issues in mind
Preferable mode of relationship.
Targeted Geographic region.
Market Intelligence.
Logistics and distribution support. (Doing Business in China, 2004)
Investing in the Manufacturing Business in China
Chinas manufacturing industry attains the 4rth rank in worlds top manufacturing industries after US, Germany and Japan. Chinas fast growing domestic market, the worldwide demand for Chinese products and services and the cost advantage that China is offering to its manufacturers is enhancing and flourishing the development of manufacturing industry in China. Following are some of the major areas of investment in the manufacturing sector of China.
Metallurgy Due to the increased demand for steel, Chinas crude steel production went up by 28.25 in 2005.
Chemicals The chemical has also been benefited and the investment in the chemical industry has expanded by 35.9 in year 2005.
Electronics As china is famous in manufacturing low cost electronic goods so investment in electronic sector is also growing. (Ghimire, 2006)
Investment in China is a difficult decision and cannot be made at one time as the Chinese currency is inconvertible. Therefore most of the companies prefer to start with a small amount of investments or with a simple outsource agreement. Then when they gain knowledge and confidence about the market they start to build a larger business. If the company is making products whose targeted region is North Americas market then the company should make sure to form an outsourcing agreement. It may also hire a local quality inspector to supervise and asses the manufacturing processes. Establishing a wholly-owned business provides you control in most of the areas such as in terms of intellectual property, financial and quality controls. It is very important to set up a full time base of operations. As the operation of manufacturing industry grows and changes on timely basis. An observation post is required that will help a company to build and sustain relationships. Apart from this it may help in measuring the progress, solving payments and employment issues and identifying new opportunities. (Ghimire, 2006)
Every region in China is having its own economic base, development policies and a competitive landscape. Each region offers its own distinctive opportunities and challenges that are to be faced by the manufacturing industry. Due to this reason it is very much important to find a location that is in accordance of your manufacturing business. The highly technical people in china reside around major coastal cities and regions such as Pearl River Delta and North Region are also experiencing quick development. But besides quick development manufacturing costs are rising in these areas and this rising can lead to reduced profit margins as time passes. On the other hand Beijing is quite close to major banks, corporations operating internationally and insurance companies. Unemployment rate is high and labor is available at very low costs in remote areas, other than this the workers are not that much skilled and a greater level of cultural dissimilarity means a higher amount of risk. (Ghimire, 2006)
The Chinese Government accepts and understands the importance of foreign investments that can be beneficial to its economic growth in the long run. Although there are definitely a large number of highly skilled workers available in China, the overall labor market is still in developing state. Due to the large population and size of China the labor market will take more time to develop as compared to Taiwan or Korea. Nowadays, every 15 miles that a company travels outside of an important center takes it back after two years with respect to skill level. Besides every fact China still provides the Worlds cheapest labor and there are around ten million new workers that are entering into the industry every year there is unlimited cheap cost labor available. (Doing Business in China, 2004)
Consider the ramifications of those choices from the perspectives of various stakeholders.
By observing the available course of action to the Chinese business operations we can observe the few ramifications from the stakeholders perspectives. The stakeholders are of different kinds and all are having the different perceptions. Following is the description of the perspective of different stakeholders
Employees The employees want to have a change in the traditional Chinese business infrastructure which does not consider labor laws. The employees want to have complete rights and privileges. They do not want that their incentives and pay costs are cut in order to utilize that amount somewhere else.
Customers The customers do not want to consider the policies, rules, laws or budget of the business. They just want that in any case their requirements should be met.
Government The different working government bodies want to have permission to interfere. They want to have some benefits out of the business in the form of under table agreements.
The above are the few ramifications that may be needed by the different stakeholders. These are the basic issues that are associated with the Chinese business course of action. (Zadek, 2009)
Recommending and defending a course of action for all situation
Before developing the course of action, it is very essential that the owner of the business should consider every part and every situation of the organization. The course of action should cover all the activities that may help the business to grow. Following is the course of action that we have defined for the Chinese manufacturing business. For our point of view, this course of action will help the business to grow in all the conditions.
The customer satisfaction should be given the highest priority. The manufacturing business should focus over producing and delivering the products that are required by the customers.
The laws for the labor and workforce should be respected and followed.
The rules and regulations should be same no matter where the operations are being performed.
The employees should be given bonuses and incentives so as to encourage and appreciate them.
The unnecessary interference of local government should be prohibited.
Matrices and indicators should be measured that may help to improve the growth of the business.
The analysis of the historical statistics and performance should be regularly performed. It will help in avoiding the past mistakes.
The usage of products should be monitored so that the most valued products are manufactured.
The systematic training should be provided to all the employees.
The rules, laws and procedures should be consistent for everyone and at every place.
The leaders and managers should perform their roles with full enthusiasm.
The business should be done on the basis of increasing the productivity and profit while satisfying the customers requirements.
The changes should be made in the business and should be tried to manage efficiently.
The rights of the labor and workforce should be protected.
The corruption should be discouraged.
The workforce should be organized in to teams that are given specific tasks.
The above course of action is neutral and can be applied in every situation. This course of action will be effective in every situation and condition. It will also help to resolve the biggest issue of performing business in China which is ethical problems. The ethical problems are the major hindrances in the Chinese business industry. When the labor or workforce of any business is not satisfied then the progress and productivity of that business will also be slow. It is necessary to protect the rights of the labor and employees as for the manufacturing industry the workforce is the key to success. We also have developed the course of action that is focusing over eliminating the corruption. This can be done by eliminating the unnecessary interference of the government bodies. Also, we have focused over encouraging the workforce by introducing the different incentives and bonuses. This practice will force the workers to work harder. As a result, the performance level will also be increased. It will be also an effective decision to divide the workforce in to the different teams. Specific tasks will be then provided to the members. This strategy will enhance the level of performance. We have developed this course of action as it will help the business to grow by improving productivity and performance.
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