Business Ethics

In the article “Chinese Enterprises Baffled by Having to Practice Social Responsibility Overseas”, as more and more Chinese corporations invest overseas, problems are arising because they are neglecting the need to listen to the voice of the local people and to protect the environment. Most companies are only placing importance in negotiating with the governments of countries they are investing in. Chinese companies are indeed, according to Friedman, “increas[ing] its profits” while “stay[ing] with the rules of the game, in other words following local laws and “engag[ing] in free and open competition”, as they do communicate with and respect governments in order to operate a business in the country. However, Chinese corporations largely ignore the local people and NGO’s, who are one of the “stakeholders” in the Stakeholder Theory. Freeman states that the interests of all stakeholders need to go in the same direction for a business to be successful. In the cases for many Chinese companies, the managers and financiers have interests that differ from those of the community. The managers and financiers are concerned with maximizing profit, while the community is determined to protect their home and environment. The divergent goals of these “stakeholders” explains why Chinese corporations are facing an increasing number of problems in foreign investments.

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