In late 2021, President Biden signed the bipartisan Uyghur Forced Labor Prevention Act. This law requires that companies headquartered in the United States or that do business within the territorial limits of the United States cease importing all goods and services from China’s Xinjiang region. The origination of this law was that China is presently engaged in genocide and modern-day slavery against a non-Han people group that resides in the northwestern portion of the country. This mandate by the most powerful nation on earth dictates to companies whether corporate social responsibility is important to them or not — it is required within the United States. This puts private industry and thus human resource departments on notice that previously tolerated behaviors such as Chinese sweatshops, Chinese child labor, and other shameful behaviors are no longer accepted, allowed, or tolerated by the nations of the Free World.
China adheres to human resource standards nearly as well as it complies with the international rules-based system. Within China, it is common for many places of employment to have “substandard working conditions” that regularly cause “major workplace safety accidents,” such as explosions that kill hundreds of people (Dai et al., 2022, p. 1). From this alone, it is clear that human resources are ineffective or utilized as designed in China. While in Free World countries, human resource departments protect employees from abusive, unsafe, and criminal behavior, in China, they exist merely to ensure that “decisions are politically correct” (Law, 2003, p. 263). In addition to dangerous and sometimes deadly work environments, the average Chinese employee is severely underpaid compared to their Free World counterpart (Whalley, 2016, p. 70). These ethics, or lack thereof, are not Chinese alone. Many companies, such as Walmart, who attempt to expand into China are forced to adapt to local Chinese practices such as “questionable accounting tactics,” “inflated sales figures,” “inventory pileups,” and “pricing discrepancies” among a litany of other unethical practices to try to survive (Nisen, 2014).
A company will be hard-pressed to engage in ethical practices, have an empowered human resource department that protects the employees, and be a good steward of the environment with the current Chinese government (Zhang et al., 2016, p. 333; Wedeman, 2021). Thus, if owning the controlling interest in a company, the choice would be clear — leave China. The lack of adherence to Judeo-Christian values, the governmental promotion of corporate espionage, governmental blackmail against private industries, and antagonistic attitude towards the civilized world makes China an untrustworthy, unreliable, and unethical partner (The Federal Bureau of Investigation, 2022, p. 2).
To conclude, the Free World, based on Judeo-Christian mores, has increasingly chosen to confront China’s disregard and disrespect for the rules-based environment established at Bretton Woods, which has brought some of the longest stretch of peace in the history of man (Zeihan, 2014, p.14). This confrontation affects businesses because it requires that they take an active stand to promote corporate social responsibility in order to be able to do business within the United States. Overall, this is a net positive. Nations and actors that mistreat their people, legalize theft, and blackmail should not be allowed to enjoy the bounty of the Free World without cost.
References
Dai, Y., Tong, X., & Wang, L. (2022). Workplace safety accident, employee treatment, and firm value: Evidence from China. Economic Modelling, 115, 1–16. https://doi.org/10.1016/j.econmod.2022.105960
The Federal Bureau of Investigation, Executive Summary — China: The Risk to Corporate America1–3 (2022). Washington, D.C.; The Department of Justice.
Law, K. S., Tse, D. K., & Zhou, N. (2003). Does human resource management matter in a transitional economy? China as an example. Journal of International Business Studies, 34(3), 255–265. https://doi.org/10.1057/palgrave.jibs.8400026
Nisen, M. (2014, December 11). Wal-Mart is the Latest Company to Badly Overestimate China. Quartz. Retrieved September 27, 2022, from https://qz.com/310142/wal-mart-is-the-latest-company-to-badly-overestimate-china/
Wedeman, A. (2021, June 2). Flies into Tigers: The Dynamics of Corruption in China. China Research Center. Retrieved September 27, 2022, from https://www.chinacenter.net/2021/china_currents/20-1/flies-into-tigers-the-dynamics-of-corruption-in-china/#fnref-5773-1
Whalley, J., & Xing, C. (2016). Ownership Restructuring and Wage Inequality in Urban China. International Labour Review, 155(1), 57–72. https://doi.org/10.1111/ilr.12005
Zeihan, P. (2014). The Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder . Twelve.
Zhang, B., Cao, C., Gu, J., & Liu, T. (2016). A new environmental protection law, many old problems? challenges to environmental governance in China. Journal of Environmental Law, 28(2), 325–335. https://doi.org/10.1093/jel/eqw014
An answer to a graduate school prompt of how do human resource practices work in a country different than the United States and what would you do to adapt to those differences.
