Since the Cultural Revolution, people have been considered Chinese businesses far from ethical as many companies such as Orient Paper, Spreadtrum Communcations, and Focus Media have all been accused of fraud. The Chinese market though, has been thriving and–if it were not for ethical problems within companies–would be a wise investment for investors. Companies hire research firms such as Citron Research and Muddy Waters in order to investigate whether Chinese companies are committing fraud. These firms though, have also been accused of faulty research and the accused companies have argued against their claims.
Because both sides have both violated ethical guidelines, it is difficult to determine which side has the more legitimate argument. As more companies join in on the argument–some of which include IBM and SAP–this disregard for business ethics on both sides could have consequences.
Now, people should be wary when investing in these companies mostly due to their questionable liability. While the Chinese Market does have potential benefits, the risks caused by faulty ethics within companies outweigh them. If these companies want to have a larger impact in the market, they first need to build trust and communicate that they are following business ethics.