Ethical Dilemmas of Relationship Building in China Business

We analyze and discuss some ethical dilemmas of doing business on the Chinese Mainland, referring to detailed accounts of the gift‐giving and contract‐getting experiences of two overseas Chinese managers in dealings with Mainland Chinese managers in the sporting and leisure industries. We compare these cases with accounts of transactions in worldwide ship repair, and with a newspaper report of a sport‐related case in Hong Kong. Using a version of Kohlberg's moral‐stages model, and identifying key differences between guanxi and rational‐legal ethics, we explain how guanxi can become entangled with corruption in China. We link our explanations to the absence of rational‐legal moral governance, and to the sociological phenomena of anomie and relative deprivation. We conclude with suggestions about the conduct of China business.