Ethics

Globalization has been on the rise since the late 1990s and this trend is expected to continue in the future. This has been as a result of increasing economic integration around the world. Countries are forming trade unions and trade agreements with an aim of encouraging international trade. With the rise of globalization, there has been creation of a large world economy with most national corporations going global. Economic integration has led to the opening up of countries boundaries and an increase in foreign direct investment. Given the fact that different countries have different rules and regulations pertaining to trade and business practices, many ethical issues have arose in the past few decades. Businesses are today faced with many ethical dilemmas especially when operating in foreign companies. The objective of this paper is to evaluate the business dilemmas that American corporations face following the formation of trade agreements between the United States and China.

Ethical dilemmas faced by American corporations in China
As mentioned, globalization has led to economic integration of and the opening up of countries borders for foreign investments. Some of the China based United States corporations that have in the past been faced with ethical dilemmas include Google, Yahoo and Cisco companies (Heskett, 2006). Following the signing up of China to the world trade organizations, American corporations and investors were able to gain access to Chinese markets that were previously protected. However, these corporations are faced with many obstacles emanating from different business policies and business cultures. One of the major ethical dilemmas that the above mentioned companies faced included the issue of Guanxi. According to Chinese business world, guanxi is essential in establishing or striking business deals. Guanxi is equivalent to bribe in the United States. For business deals to be concluded, businessmen must be willing to give something in return as part of the negotiations. In China, guanxi determines to a great extent how successful a business is. It enables businessmen to get connected to the right persons in the government or in other vital business circles. While in Chinese business culture guanxi is widely accepted, this is a crime in the United States attracting very heavy penalties. This was a major ethical dilemma for Cisco, Google and Yahoo companies as they were trying to penetrate the Chinese business markets.

Another ethical dilemma was brought about by government policies and practices as far as business are concerned. Traditionally, China was not a democratic country although it is currently moving towards democracy. Being a communism country, performing private business in this country especially in the initial stages was very challenging for Google and Yahoo companies. China for a long time has had state owned corporations with very few private corporations. The government has had a tendency of probing to the private lives of its citizens practices termed as illegal in the United States. Following introduction of Google, Yahoo and Cisco companies in China, the government began using these technologies to invade the privacy of Chinese citizens, practices these companies felt that they were not only unethical but also unacceptable. Ethical dilemmas for the companies revolved around issues of compliance, deviance or withdrawal from the country.

Other ethical dilemmas that these companies faced as a result of doing business in China include hiring and selection process, business relationships and various taboos pertaining to social conversations. According to Chinese culture, relationships are very crucial during the hiring and recruitment processes. Individuals with close ties to the managers or other prominent persons in organizations are recruited first before other individuals can be considered. Personal relationships are more valued than experience, qualifications or skills. This was a major dilemma especially because these companies engaged Chinese recruitment firms to aid them in choosing the right candidates to work for them. According to the American labor laws, equal employment should be given to all individuals regardless of their relationship with the managers or directors of the company.
Business relationships on the other hand are vital for recommendations and referrals. Being connected with the right persons gives a business a lee way to better business terms and is also a major determinant of the pricing of contracts and other business deals. Doing this in America is unacceptable and may lead to criminal charges. Also China has taboos as far as social conversations are concerned. For example, a person is not allowed to praise Japanese as this is viewed as being friends with them. Japanese are rivals to Chinese hence the taboo. Also, in China, one is not allowed to say that Taiwan is independent. All these factors were major ethical dilemmas for Google, Yahoo and Cisco companies.

Various risks and consequences are associated with the above ethical dilemmas. According to Chinese business culture and government practices, it is very difficult to change or demand for reforms in the way government is run. A company can either comply, resists or quit. If a company decides to resist the practices, it is difficult to be successful given that business success is directly tied to the relationships created by the business in question. The risks that Google and Yahoo faced in the issue of governments use of their services to invade the privacy of its citizens, was loss of business as Chinese people would have been afraid to use these services. Another risk was on deciding to fight these unethical business practices by the business. In doing so, the companies could have decided whether to cease operating in China, comply with the standards, or refusing to comply with these practices of the government. Seal consequences could have arisen from these. Ceasing operation in this area would have created a chance for China to come up with similar services and a loss of market for the United States while failing to comply with the standards would have resulted to loss of business as government controls business in this country. Complying on the other hand would have meant that these companies agreed with these unethical practices. From Chinese business environment analysts, it is difficult to change government policies by fighting them. The only possible means of doing this is to comply especially during the introduction stages and then seek for better terms later. The introductory phase is very essential in Chinese markets.

Other risks that the companies faced emanated from employment practices. On normal circumstances, these companies would have employed the most qualified employees. However, doing so had a risk of negatively affecting business. On the other hand, this would have gone against the managers ethical standards regarding employment and would have denied well qualified individuals employment chances.

Conclusion
The United States organizations based in China have been facing various ethical dilemmas most of which threaten the survival and profitability. This was worse in the past especially due to the communism form of government and differences in business culture, etiquette and laws. This is slowly changing as China is transforming from being a communist country to a democratic country. Economic integration has continued to pose major ethical dilemmas especially for foreign directors as they are required to adopt the business culture in the host country even when such business cultures tend to be unethical. This has been the case for Google, Cisco and Yahoo companies.