Business Ethics - Cross Border Business

Published: 2021-09-13 17:25:09
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Category: Philosophy

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Cross –Border BusinessWith the trend of globalization among the world, business of enterprise no longer limit on specific region, but can be expanded everywhere on the earth. Cross-border business allows enterprises to trade easily, which not only increase the revenue and reputation across different territories, but also convenience that people can purchase the goods and services without the boundary.Meanwhile, cross-border benefits the enterprises to minimize the costs of production and laboring by located certain units in some low cost regions. Such practice obviously takes place in developing countries, like China, India, Vietnam, etc.In the mid of 20 century, development of light manufacturing mostly dominated by small-and medium enterprises (SMEs) boosted in Hong Kong. Such development supported great portion of the economy in different areas like employment, import/export, wholesale and retail, etc.Since 1987, China government executed an open door policy, SMEs in Hong Kong took such advantage to re-site their manufacturing and operating units back to Mainland which could enjoy the lower wages and operating costs derived in China.Although the financial advantage maximize the profit cross-border business brings, couple of integrity management challenges SMEs would face during the relocation.Integrity Management ChallengesConflict of InterestIn China, the establishment of a trade or business relationship usually does not base on the price or quality of goods or services, but mostly on the personal relationship of the director or top management. It is not difficult to observe this “practice” in Chinese enterprises that the business partners mostly linked in various ways, maybe family member/relative, or maybe through the friendship.Bribery and CorruptionEven though bribery and corruption is violated the criminal law of PRC, enforcement measures seemed not that enforceable, and ignored by the public as usual. In order to make a deal or affect someone to act/forbear, an inducement (pecuniary or non-pecuniary advantage) can be treated as rewards, or what Chinese called “sincerity”.Lack of Quality AssuranceWith the benefit of low manufacturing cost, enterprises can produce the goods in high quantity and take the advantage of economic of scale. However, enterprises seem emphases on the profit maximization, and neglect the quality control on what they have made. From the news, we can see that the quality control of the goods produced from mainland raised certain problems, especially in the safety, chemical used, as well as the maintenance service after sale.Check and BalanceAs the directorship and managing power of SMEs are focused on minority of people, ability of monitoring and equal authority are definitely invalid among Asian enterprises. The decisive right, voting power, even the decisions made are reluctant to disclose as much as they can. The external stakeholders probably obtain the information which have already modified and cannot reflect the real financial and non-financial situation of the institutions.EmbezzlementIn the preceding paragraph mentioned, lacking an effective check and balance mechanism will cause several ethical issues. Embezzlement is one of the problematic causes due to low transparency and poor internal control procedure. Colleagues abuse or occupy the company’s asset without tracing or penalize. It seems conniving and encouraging such unethical behavior, and no longer treats as a problem.

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