West meets East can be bad for business

By Xu Huili

Shanghai Star. 2004-04-29

Recently, four top officials working for the Chinese subsidiary of Lucent Technologies Inc were dismissed. They included one president and three other executives. It was certainly a piece of shocking news in the business arena. But the two times I read about it, the story was not in the business section but in the national news section. Is it really worth all the trouble to publicize some individual dismissals as well as the establishment of national hotlines and stories about the convictions of some corrupt bureaucrats?

Unfortunately, the answer is "Yes". Almost all the news reports will remind you that the reason for the dismissals was an internal investigation which found possible violations of a US law prohibiting the payment of bribes while doing business overseas.

This is not the first time when we have heard of certain kind of "internal control deficiencies". But to let a foreign company make such a announcement about its Chinese division seems quite embarrassing, especially when it is emphasized that during a review of business practices in 23 major foreign subsidiaries - including operations in Brazil, India and Russia - the company found no violations of US corruption laws in any other country.

Of course, I don't want to talk about the Sino-US relationship here, which is an important and never-ending topic, but it doesn't seem to have much practical use in this case to link it to the political field. The basic difference is our attitudes towards such kinds of internal controls.

We are often proud of our humaneness and the complex way China conducts itself in the management of human resources. If such deficiencies occurred in a local company, in all probability, the head office would let it slide by or make internal reforms rather than expose any problem to the media.

There is a Chinese saying: "It's better not to let the bad news out." And perhaps the first thing top management takes into consideration is how much achievement the people in trouble have contributed to the company. If they have a splendid record or long-term service with the company, the result might be different. Although many Chinese companies are trying to adopt modern managerial policies, the traditional humane approach is still the paramount concern in any crisis.

By contrast, we tend to regard Western people as being linear thinkers. Their direct way in dealing with business has long been labeled as materialistic and heartless. I remember one American company has this slogan as their "golden rule": "If you make a mistake in the interest of the corporation, you can have a second chance, but if you violate the law, no matter in whose name, you are to be sacked at once."

And they really do have one of the most efficient teams of workers in the world.

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