Corporate Integrity in Modern China
August 30, 2011
On July 10 2011, CCTV, during their “Weekly Quality Report” produced a report titled: “DaVinci Furniture, Alleged Identity Fraud.” The report discussed how DaVinci Furniture became known as influential supplier of high-end and expensive Italian made furniture. DaVinci sales staff commented on why the company can sell their furniture at such a high price: they said that the furniture they sell is 100% Italian, using only the highest quality, all-natural materials. However, after a recent investigation, reporters discovered that DaVinci’s overly priced furniture was, in fact, not ‘100% Italian’ as the company had previously claimed. Much of the furniture that the company sold had actually been produced in Dongguan using fake materials such as the polymer resins Daixinban and MDF rather than the Poplar root thorns they advertised as using.
In another example, on July 12 of this year, a Sina Weibo user named ‘Fu Xiaoxiao’ posted a micro-blog exposing the truth about KFC soya bean milk, which was that the drink was in fact made from a powder. By the 28th of July (just 2 weeks after the post) it had been viewed 15,556 times and had 1,715 comments. The following day on 29th July, the public relations department of the Beijing branch of KFC made a media statement on the matter. They said that the milk in KFC restaurants in Beijing was made mostly from condensed milk whereas in the rest of the country, the milk was produced from powder modulation. An interesting response, however KFC has never advertised its milk products as “ground on the spot”.
In another example of false advertising, WeiQian Ramen has always claimed that its “pig soup is brewed for more than 20 hours” and “a bowl of soup contains up to 1600 mg of calcium.” After this was investigated, the reality became known that the soup is condensed and made by liquid blending. According to Food Science and Nutrition Engineer Dean LuoYunbo at the China Agricultural University, “the test sample is a concentrated sample” and “a bowl of the soup has, in reality, only 48.5mgs of calcium”, a massive amount less than the advertised 1600 mg.
There have been many other examples of similar PR disasters in China with many large companies such as McDonalds and Dairy Queen falling victim.
What the Chinese Tradition Says
Since ancient times, integrity in business has been a strong Chinese virtue. Confucius once said, “If people have no faith in a man, I wonder what else he can achieve?” Mo said that “Integrity is the spiritual link of social interpersonal relationships”; Hanfeizi said that “keeping faith on the little things can build great credit” and Luxun said that “integrity is the essence of man.” In this sense, if integrity is the essence of man, it may also be the essence of how to gain a foothold in society, thus, a micro unit of the market economy.
What is the importance of corporate integrity?
Integrity and Competitiveness
A unique take on corporate integrity can form a core basis for competitiveness for a firm within the market economy. Competition is a constant theme in the market so firms must seek to differentiate themselves in order to increase their market share. Heterogeneity in value-added products has become a strong way for a company to seize market domination. The CEO of the Thingk3 Group, Yang Shitou, said that a “product’s selling points is quality and a service’s selling point is that you serve it with your heart”. In this author’s opinion, to form successful relationships in business one must first be honest, sincere and trustworthy. A company selling high-end products can create a unique core competitiveness if they employ sincerity within their business model.
Corporate integrity is the basis for enterprises to maximize profits.
Survival and development is the objective for a company attempting to maximize economic benefits. However, real and lasting long-term economic benefits come from integrity within a business model. All things are changing and evolving, so we should think in the long-term to pursue business interests and not just focus on the immediate, local and short-term interests. Only with integrity as a business goal can a company truly focus on promoting the establishment of not only long-term business relationships but also long-term economic benefits.
Corporate integrity is a catalyst for successful business execution.
Execution of successful enterprise depends largely on the strength of cohesion within a company. Corporate integrity is undoubtedly the best cohesive gel. A company which focuses on building an ethical culture will instill a strong sense of belonging and ownership within its employees. This will form strong cohesion and will aid in the promotion of common business goals.
Corporate integrity is the key to good public relations.
Markets do not believe in tears, thus the “DaVinci’ Crisis” has not yet created a systemic crisis of confidence. A company with honesty and sincerity as a part of its business model and integrity as its corporate culture will be successful in ‘word-of-mouth’ marketing.
Corporate integrity is the key to the integrity of the whole market environment.
In an open letter addressed to the media, DaVinci pleaded to them to allow a ‘problem-solving environment’ in order to re-build their damaged reputation. They also said, “Please know that our problems are a common industry problem and not company specific”. Only if each enterprise or company has measures in place to enforce self discipline, honesty and integrity can a true business environment be created and PR disasters avoided.
Thus, even in China, integrity is integral for the long term growth of the country’s businesses particularly in a global market. Furthermore, ensuring integrity is an ongoing process that requires tireless persistence. It is thus important to remember when doing business in China, that though it may not always at first appear so, integrity and “saving face” is very important to business in this country, and thus an awareness of this fact can go a long way
- Sophia Yang- CPG HR Assistant
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除此之外，还有麦当劳“质量门”——包装破损、暴晒； DQ”冰淇林”——北京芯 等等。