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    Where Are China’s Business Ethics?

    The evolution of morality in Chinese industry and commerce has been stifled throughout history by war and Confucian ideology.

    In 1905 the German political economist and philosopher Max Weber analyzed humanity’s latest revolution, modern capitalism, in his book “The Protestant Ethic and the Spirit of Capitalism.” In it he examined capitalism on a cultural instead of an economic level, reinterpreting and defining its spirit from the angles of religious ethics and national traditions. He argued that capitalism had been formed through Protestant work ethic.

    The business ethics put forth by Weber in the early 20th century have been steadily evolving over the last century. Many of Weber’s ideas formed a universal consensus, which continue to persist to this day. The developed business ethics of the modern Western world therefore have their roots in religious morality. Yet these same ethics are noticeably absent in modern China.

    A year before Weber’s book, in 1904, the Qing dynasty government in China issued the “Concise Regulations for Chambers of Commerce.” This new law permitted merchants to form their own organizations outside of government administration.

    Merchants had long been discriminated against in China, meaning the 1904 directive was of particular significance in the history of Chinese commerce — it implied that merchants had gained public political recognition as an independent social stratum.

    Encouraged by the government, chambers of commerce sprang up all over China in the years after 1904. They were established in provincial capitals and other thriving commercial areas.

    These chambers of commerce even partially assumed the function of economic management, previously exclusive to the government. The formation of chambers of commerce in every province, city, and town gathered together the strength of the business community and made it a significant public force.

    It would have seemed to an outside observer that China’s business community in 1904 was not lagging behind the rest of the world in terms of organizational independence and growth. Unfortunately, this state of affairs would ultimately be stifled in the tide of violent revolutions that afflicted the country throughout the 20th century.

    The rise of New Confucianism in the 1980s saw scholars of Chinese ancestry — like Yu Ying-shih and Tu Weiming — resolve to find an alternative route in the Weberian-dominated battleground of business ethics by attempting to establish a point of congruence between the millennia-old Confucian ethical tradition and the modern spirit of industry and commerce in China. But if their reasoning is sound, then why does the process of modernization in China continue to prove so arduous?

    I believe the answer is twofold. The first reason is that the masters of Confucian tradition — which has traditionally dominated Chinese political thought in the way that Weber argued Protestant ethics had dominated modern Western politics — have always held contempt for economic activity. Confucius and Mencius offered little elaboration on the topics of industry and commerce. Following the adoption of a state policy of exclusive reverence for Confucianism in the 2nd century B.C., generations of Confucians went by with few innovations in economic policy.

    The second has to do with China as a unified polity. Following the unification of China in 221 B.C., an elaborate Chinese model of administration and economic governance experience formed over generations of centralized imperial rule. This was accompanied by the appearance of a rather idiosyncratic waxing-and-waning commercial culture. 

    Whenever a new centralized government took power, it would spawn an autocracy and previously established organs of industry and commerce would suffer. The rise, decline, and supersession of the multitudinous Chinese dynasties made industry and commerce their casualties time and time again.

    Thus, no independent system for commercial operations ever existed under China’s specific regime model. When Chinese commercial culture finally gained exposure, the mercantile stratum was, regretfully, unable to establish a new and independent model of business ethics, leaving the entrepreneurial stratum with a feeble sense of its own identity.

    Since ancient times, people in China involved in business have been treated with disdain not only by rulers and intellectuals, but have themselves harbored a degree of contempt for their trade. In “The Cambridge History of China,” John K. Fairbank, a China historian, said that the dream of the Chinese businessman was for his sons and grandsons to no longer be businessmen.

    Even in the decades leading up to the fall of the Qing dynasty in 1912, prominent Chinese entrepreneurs like Zhang Jian still referred to their business exploits as “dangerous activities.” In the 1920s the Shanghai publishing industry was flourishing like never before, and the total volume of magazines and books printed exceeded even that of the United States. And yet, while every manner of publications was in circulation, only one business magazine existed among them. However, this magazine — the Bankers’ Weekly  had zero influence in society at large.

    Deng Xiaoping’s opening-up reforms in the 1980s gave rise to many nongovernmental capital groups. In the past thirty years entrepreneurs have begun to gain a sense of their own identity, which is certain to play a part in China’s progress towards modernity. However, their core puzzles of “Who am I? Where do I come from? What is my significance to society?” — questions relevant to business ethics — remain unaddressed.

    (Header image: People traverse an elevated walkway in Shanghai’s financial district, Nov. 20, 2013. Carlos Barria/Reuters)