Thinking Aloud: Missing Ingredient in the Chinese Business Model

August 3, 2014 by Darius

Yesterday, nearly 70 people died in a Chinese auto parts factory after a fire in a polishing room caused an explosion.  The disaster was blamed on negligence and failure to follow safety standards.  This follows on the heels of reports of a Chinese meat-processing plant creating fraudulent documents in order to use meat past its expiration date.   It seems that Chinese companies could benefit from a lesson from 18th-century German philosopher Immanuel Kant about the principles of universalizability.

Put simply, universalizability means that you should avoid committing an action unless you would desire that everyone in a similar situation were to commit that same action.

Instead, in the Chinese economy, it seems the only priority is getting ahead, which in the business world is measured by profit – seemingly regardless of quality and safety.  The various industrial accidents and forced product recalls stand as testimony to Chinese priorities.  Why Western companies with a reputation to lose in the international marketplace continue to source key components (like car wheels and food) in China is a bit of a mystery: it seems only a matter of time before one of them is embroiled in a scandal caused by the practices of its Chinese subcontractors.  This week it is General Motors; two weeks ago it was McDonald’s, KFC, and Chicago-based meat packer OSI.

To be fair, a lack of morals in business is far from unique to China.  But the Chinese have elevated it to an art form.  Cutting costs is one thing; cutting costs to a degree that endangers workers and consumers is something quite different.  Kant isn’t easy reading, but if American business school students can manage it (and most have to take a business ethics class as part of their curriculum) then certainly Chinese business school students can manage it too. 

Until there is evidence that Chinese companies have taken the ethics of universalizability to heart, I will continue to look very carefully at the labels on things I buy to avoid many sorts of products made in China.

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