For decades, companies have poured into China to take advantage of the country’s manufacturing prowess and to serve its enormous market. 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. 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.
How to Navigate the Ethical Risks of Doing Business in China
Xi Jinping’s China is different than the country companies dealt with in the 1990s and 2000s. China’s size, state capacity, and specific policies create unique ethical risks; companies can inadvertently become involved in human rights violations or military projects. Firms have dealt with this situation through four common strategies: withdraw, continue and contain, operate with opposition, and support China’s standards. 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.