I believe that it is unethical for multinationals to comply with Chinese terms while searching for markets or building plants in the country. China is one country that is growing at an alarming rate. Only recently did the country become the second-largest economy after the U.S (DDhooge, 2007). It is estimated that in the next three years, the Chinese economy will surpass the U.S economy. Interestingly, America leads all countries in innovation, and it is anybody’s wonder why multinationals are closing shops and going to China.
According to Haley (2010), “American multinationals are not shutting factories in the U.S. and transferring production to China because of China’s superior innovation culture or superior educational achievements” (4). According to the writer, the multinationals are lured by bribes as well as threats of losing market if they do not relocate to the country. In addition, the Chinese government employs many underhand tactics to lure multinationals to their country, including subsidies. These tactics force multinationals to transfer their technology to China. These shorter gains might turn out to be harmful to America in the end. China has been building alliances with countries hostile to American policies. More worrying is the trend of the subsidies that China gives multinationals which can be as high as 70% of a products’ cost (Haley, 2010). While working in a foreign country, multinationals must always adhere to standards that are practiced in the home country.
America should also review its foreign policy. China has been using a foreign policy that seems to irritate the U.S. In the last few years, the Chinese government has been providing funds to countries that defy U.S policies, including North Korea and Zimbabwe. The aim is to undermine the U.S economy as well as influence on the global scale. If the U.S will not deal with China in a decisive manner, the country will continue to defy any norm in its practices including unethical business practices to gain a stronghold in the global arena.
Based on this argument, multinationals should avoid sacrificing ethical norms for short-term gains. It is highly unlikely that these multinationals will survive in the next 50 years (DDhooge, 2007). China has a large population and after acquiring the needed technology, the country might as well close all multinational companies. Therefore, these companies should refuse to sell their technology. Companies need to relocate to areas where the cost of production is low. However, this does not mean decisions that violate human rights should be allowed.
A response to Stephanie Curry
You say well that China is an emerging market. However, you do not take a position on the issue at hand. First, you say the companies must adhere to Chinese terms and secondly you disagree with this prepositions. To me this sounds a contradiction. If you believe that the companies must comply with Chinese terms, then you might be supporting unethical deal that China offers to multinationals such as bribes and kickbacks. Take a firm stand on these issues please.
A response to Francisco Moreno
I agree with some aspects of your arguments. You say that the country is growing and needs technology. However, I disagree with your assertion that what China is doing is good for the citizens. China has a strategic focus that is harmful to America and her citizens too. To understand better, look at countries or people whom American helped build. They turned around and are haunting America today.
DDhooge, J.L. (2007). International Business Law and Its Environment. New York: Academic Books.
Haley, C.V. (2010). Multinational Corporations in Political Environments: Ethics values and strategies. New York: McGraw-Hill.