Walking the Blurry Line in China: Negotiation Deals and Staying Out of Jail
Walking the Blurry Line in China
Rio Tinto Corporation has faced a lot of challenges in China including the arrests and sentencing of its employees on different counts of breaking the law. These employees are accused of espionage and stealing of state secrets, which are against the Chinese laws. Despite the government spelling the charges against the employees as bribery other theories, surround the arrest such as payback for the Rio Corporation scraping off a deal them had with a Chinese aluminium corporation Chinalco. The breaking of the deal on their partnership would ruin their face in China, which was held highly. Also, rumours had it that the arrests were to help China improve their negotiation power and due to a battle between the government and the steel companies. Often multinational corporations are faced with challenges they cannot avoid in their day-to-day operations in foreign countries. At the end of it all, the four employees were not charged with espionage or spying in the country, but they were charged with taking bribes and obtaining information about the state economic secrets (Rivers 2013).
As a corporation undertakes its operations, they have to put into consideration the business ethics and the laws that govern business in a country. Business ethics and the law can exist independently though they intersect in most cases. What is always legal does not necessarily mean that it is ethically right. The laws deal with the set of rules that govern business operations in a country while the business ethics deal with the morality point of view of the business. Ethics give a business a wide range of standards that govern its operations. For an instance where business ethics and the law intersect is whereby there is a false representation. A salesperson may sell an individual a second-hand car as a brand new car. Furthermore, it is unethical to lie to a client is wrong and that exactly what the salesperson did by selling the client a used car instead of a brand new car. Hence, he violates the code of ethics of business and negates the law that governs false presentation whereby he or she can be a parade in court by the false presentation. In another case, some practices may be legal, but they are unethical. Acquiring information from an employee of another competitor company behind their back may be legal but against the business ethics. Although the employee may divulge the information without being coerced, it is still not right according to business ethics.
Multinational companies are forced to operate according to the legal boundaries of a certain country. What is legal in one country could be illegal in another country. Thus, before setting up a business in a country, the corporation should do thorough research on the country’s legal obligations and also compare to the code of ethics of the corporation. Cultural practices of the people in a certain country have a great effect on the operations of a company in a country. Therefore, to understand the culture of the people the multinational corporations should ensure that they incorporated locals in their day-to-day operations. This would ensure that the employees interact with each other they learn about the culture of the people, and this will help the corporation to make policies and design their business operations in ways that suit the culture of the people where it is based (Ghemawat & Reiche 2011). Despite putting the laws and cultural practices into considerations while undertaking its operations, a multinational corporation should also consider the standard global ethics. They should put in mind that the operations should always fulfil the ethical obligation since some legal and cultural right operations may not be ethical; the morality governs each globally, and these may bring about controversies in business.
Laws, culture, and ethics change with the place an individual is in the globe. Hence, as multinational companies try to establish a business in a different location in the world they should always try to adhere to the three as governed by that particular location and not use one mode of operations in all the countries they are based in. Thus, to be successful in business one has to follow the entire legal obligation and fulfil their social and cultural obligation to the community and also ensure that all business operations are ethically upright and does not violate any moral values (Mayer & Jebe 2010).
Question 2.2. Despite Rio Corporation, having a strict code of conduct to regulate its operations the four employees ended up breaking them. They were both strict on the code of conduct, and they often checked the adherence to the code frequently. For a multinational corporation to thrive in different countries, they have to have a strict code of conduct to govern its employees on their daily business operations on behalf of the company. This helps ensure they do not end up in problems such as those facing Rio in China. They should ensure that their employees uphold their integrity, objectivity and uphold their professional behaviour (Emmanuela 2015).
In this situation, the Rio code of ethics should have spelled out the obligation of the employees to uphold the integrity of the corporation. All the members of the cooperation should have been straightforward and honest in carrying out the usual business and creating a relationship in the business world. This could have helped regulate the four cases of bribery, and the employees could have thrived in business without acquiring information through bribery.
In any business, one should fulfil their moral obligation to objectivity no matter the situation is and one need to get out of it should not influence other to compromise them. Since the companies were desperate, to do business with the corporation, its employees took advantage of this and obtained bribes and secrets on the prices CISA would bring to the table during negotiations. This compromised the integrity and the trustworthiness of the Chinese companies that participated in bribery, and this had a negative influence on the face of the companies.
Rio Corporation should have regulated the professional behaviour of its employees. With scrutiny by one’s employer, most employees try all their level best to uphold their professionalism in all their business operations. This could have helped a great deal in preventing the occurrence of the bribery cases. Having a stringent code of conduct does not mean all the bases that govern business ethics have been covered hence all multinational corporations should ensure that they cover all the necessary principles that govern morally upright business operations. Rio should have incorporated integrity, objectivity and also professional behaviour so as its employees do not deviate from carrying out legal and ethically right business operation no matter how important those operations will be to the corporation at large (Roa 2007).
Question 2.3. In many instances of a scandal, the press plays a very big role in the public’s opinion. In Rios situation, the press compared it to a dishonourable woman who only loves a man for their money and not the man himself. This affected Rios public image since by scrapping the partnership with Chinalco was compared to a gold-digger woman thereby it affected the corporation’s public image. Not only is their image ruined but also its future business dealing is affected greatly (Wesser 2009).
Most people in China are concerned with the face of the corporation. Shaming tactics can ruin a company’s face, and these can force them to go under business wise. In such an instance, most people try to distance themselves from the scandal as much as they can to preserve their face. For instance, after the charges were laid out and the four employees were charged the Rio Corporation fired them. This shows that they did not want any association with the four since they had brought a bad reflection on the corporation hence they had to put distance between them. Although their face had already been affected, they had to do something to change their public image, which had already been painted as a negative one and try to do something positive. Furthermore, the sacking of the employees makes other employees be morally upright and follow the code of conduct without violating it since they know the consequences.
The Chinese government was quick to distance itself from that scandal. As the scamming was going around as this was a fight between the government and steel companies and also was to boost the negotiation power of China the government did all their best to prevent their name being tainted. The foreign affairs minister, a representative of the government, issued a statement that all foreign corporations had an obligation to fulfil by obeying the laws of China that governed the business operations in the country. By issuing this statement was a way to show that the arrest was not related to the rumour that was going around in the press that it was a way of the Chinese government paying back Australian for the concerns they had raised about their military power. The Chinese government wanted to preserve it face so as not to be seen as bad government and not to affects its relations with the Australian government. This worked but when the press has something to you, it will rarely fade away and be forgotten.
The CISA was another player in this scandal. It continued its negotiations although they reached a stalemate and officials of the negotiating teams were arrested on counts of bribe taking. The CISA negotiators were majorly political representatives and did not know what they were dealing with like their counterpart that is Rio staff did. If this came out, it would ruin the face of CISA. Also, CISA had been involved in hacking the systems of Rio Corporation, and they were updated on each step they were to take in the negotiations. To keep their face, they insisted that the staff of Rio had taken bribes and obtained information on Chinese economic secrets, which was against the Chinese law.
Ensure that they stayed in business, and they were not cut off supply by Rio the small steel companies decided to pay bribes and also trade secrets on China’s iron ore data. This was to prevent their face of being successful in the steel company being ruined if they would be thrown out of business. A company has to do anything to survive the day-to-day challenges of the business world even if it means playing dirty and trading the secrets to foreign corporations.
In doing business, each participant should ensure they gain the best out of a deal without ruining their face. Foreign corporations should carry out deals in proper legal and ethically right manner to ensure they do not affect the public image of their counterparts. Since the image is important in China, all business people should ensure they abode by the law to make sure no criminal activity is undertaken when making deals with foreign corporations as this will end up in the press and their face will be greatly damaged.
The press has a great role to play in public relations of any corporation. Once a certain image is painted on the minds of the public, it can rarely be erased. Hence, the press should ensure they get their facts right6 before reporting on a certain matter as it can affect the reputation of a corporation positively or negatively. The face of a corporation plays an important role in the deals they make and also in the businesses they are involved in. The public relations department of a corporation should always be ready to counter press attack properly since they can ruin them.
Question 2.4. Different Corporation adopts different types of international staffing. Some opt for polycentric where they employ nationals of Host Company to head the subsidiary, ethnocentric whereby key positions are given to nationals of the host country of the parent company or geocentric whereby the best people suit for the position are employed despite their nationality (Mossler 2003). Often these options have their pros, cons, and work differently for each corporation. Rio Corporation chooses a polycentric approach in their staffing. This approach has many pros and cons toward selling their products in China.
Language barrier is always one of the major challenges to multinational corporations. To counter this, Rio employed a Chinese-born manager who could counter this major challenge. A native of the host country ensures that there is effective communication since he or she is conversant with the language of the locals so handling employees and matter concerning the locals would be easy. The manager was a Chinese. Thus, the language barrier was not a problem to him, and these make it easier for them to start and steer the company operation with little difficulties.
Having a native as the head of the corporations reduces the problems associated with adjusting. In a foreign country, one has to adjust to the weather, the culture, the food and also ways of living of the people. This affects greatly on the performance of the staff hence having a native to head a company ensures that they do not affect their work and managing capabilities’ adjusted to the new environment they are subjected to. They also know the country pretty well and thus, know business laws and these will ensure they experience fewer problems in adhering to the laws and regulations of the country that govern foreign corporation’s business operations.
Hiring nationals of the host country are less expensive, and this saves a lot on the salaries and allowances. Most foreigners appointed to other countries to head subsidiary companies tend to be paid high amounts of money to cater for their housing transport and also vacations so as they can visit their families in their countries. This makes employing locals very cheap cutting on the costs the company incurs on salaries.
With foreign management, there is always tension between the locals and them. This is because the locals feel that the foreigners have been sent to pry on them. With a host country national these tension is lessened and operations are undertaken pretty well. This method of staffing also ensures that the locals have a chance at career opportunities. Through the creation of different job position, it helps the locals advance in their careers to appoint they may even get international appointments where they better themselves and take major steps in their careers. Most governments support multinationals that employ its natives at the top positions of the subsidiary company thus it gets many favours from the government (Engardio & Geri 2006).
Every approach has its disadvantages. This form of staffing has its shortcomings, though. There is always limited effective communication between host country nationals managers and the parent country managers. The host country managers may also find it difficult in coordinating activities between headquarters and subsidiary due to many factors and since it takes the time to understand t6he parent company operations to ensure operations are effective. The managers lack international experience thus, some of the operations in the business might pose a great difficulty for them. With this technique of staffing, it limits the opportunity of gaining experience abroad. Many employees from the parent company miss the opportunity to head subsidiary companies in the foreign country, and this bars them from getting experience abroad since natives of the host country are preferred for the positions.
With the recent problems facing Rio Corporation, I would recommend them to use the geocentric technique in their staffing this is because the person who will be hired for the job will not only be qualified but the best in that field and this will help in ensuring that cases of corruption do not occur. With the tainted face of Rio due to the arrested corrupt Chinese officials, having another individual from another country to head the company would play an important role in changing its public image.
This will also help the corporation have not only national connections but also international relations that will help in business. In this case having a geocentric leader will also help in abolishing of the idea that the boss will identify with us in case the parent company decides to do something to the employees, so they have to observe the code of conduct keenly. It also helps in eliminating favouring of employees of a certain community in the country since the head does not identify with a specific community in that country.
Multinational companies should put in place the staffing technique that will suit the company well. They should consider the pros and cons of each technique and weigh them according to the host country of the subsidiary company. Companies can also consider using two or more techniques so as to suit the needs of the business in that country. The human resource department should be competent enough to choose the best staffing technique for the subsidiary company (Thite, Wilkson & Shah 2008).
Rio Corporation thrived in the midst of all the challenges it faced in China. All multinational corporations should borrow a leaf from the corporation on how to survive a wave that defaces the corporation. The corporation had in mind the best time to stand for its employees until when they are proven guilty that when they sacked the employees (Mc Donald 2009). This shows that they care for their employees and until through investigations have been done then they cannot lay off their employees based on rumours and allegations. This ensures that employees have trust in the corporation because it does not let it’s down it gives them all the support they require despite the situation they are in. On ethics, the corporation is quite strict, and those who break it are bound to face the consequences. Often the employees are audited to determine if they are following the code of ethics. As soon as the four employees of Rio were confirmed guilty, they faced the consequences of both breaking the law and going against business ethics by taking bribes. This sets an example for the rest of corporations to be strict in setting principles that govern their corporation in all the businesses they indulge in.
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